Thank you for joining us, and welcome to today's program focused on Scholastic's Fourth Quarter and Fiscal Year 2023 Results. Currently, all participants are in listen-only mode. Following the presentation, there will be a question-and-answer session. Please note that this program is being recorded. Now, I would like to introduce your host for today, Mr. Jeffrey Mathews, Executive Vice President of Corporate Development and Investor Relations. Please proceed.

Hello, and welcome everyone to Scholastic's fiscal 2023 fourth 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 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 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, [email protected]. 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 finished fiscal 2023 strongly with fourth quarter operating income up 40% from the prior year's record level on modest revenue growth. Full-year results met or exceeded our revised guidance. I’m especially proud of the excellent performance management achieved across Scholastic last quarter. In response to the cost and selling headwinds that we've experienced this year and which caused us to revise our guidance in March, thanks to quick actions to align spending with the revised revenue outlook and to unlock sales, including delayed opportunities in our Education Solutions division, margins and profits rose across all business segments in quarter four. The operational efficiencies that Scholastic has achieved since the pandemic, especially in our Book Fairs nationwide operations and in our centralized supply chain and distribution functions also contributed to operating leverage and the considerable flow-through of sales to profits that we saw in quarter four. Thanks to a strong quarter four, full-year adjusted EBITDA was $196 million, up from $189 million a year ago, and within our original guidance range of $195 million to $205 million. Free cash flow was also robust relative to net income in fiscal 2023, even as we increased investments to grow and maintain our divisions and to rebuild inventory levels post-pandemic. This afternoon, I'd like to review our fiscal 2023 results briefly before turning to our strategy and outlook for 2024 and beyond. Ken will then discuss our financial results in more detail, including our fiscal 2024 guidance. But first, I'd like to spend a few moments discussing the macro environment in which we operate. First, reading, literacy, and learning have never been more pressing needs for our kids. Sadly, this was again recently confirmed by nine and thirteen-year-olds' performance on the National Assessment of Educational Progress or NAEP. Already low before the pandemic, these scores have fallen steeply since and are now at their lowest levels in decades. Reading and math achievement declined across all groups of children, but vulnerable children generally experienced bigger declines. These scores emphasize the critical need for children's books and for solutions to help kids and young students learn and love to read, something all parents, teachers, and leaders across our country can agree on. Second, while demand for children's books and literacy is as strong as ever when you look across the many channels and stakeholders that buy them on behalf of kids, there continue to be short-term headwinds in the retail bookselling market. From March through May, Scholastic's fiscal quarter four retail sales of children's and young adult books were down approximately 3%, according to NPD's BookScan. We believe some of the year-over-year declines in the retail market largely reflect a return to pre-pandemic purchasing patterns. Relative to March through May of 2019, that's before the pandemic, the retail children's book market is still up by 13%. As we said, even in periods of lower consumer confidence, as we are seeing currently, consumer spending on children's books is typically less cyclical than other areas of discretionary spending. In fact, in contrast with retail we've been encouraged to see strong growth in participation and same fair sales in our Book Fairs as I will discuss in a moment. Third, sales of supplemental instructional materials remained slow in the fourth quarter. Another headwind we've navigated this year. School and district administrators continue to manage their immediate challenges including staffing. Fourth, the steep rise in paper, manufacturing, freight, and shipping costs that we saw in late calendar 2021 and early 2022 are now largely reflected in our inventories and prior year results. We are cautiously optimistic about potential improvements in freight and shipping costs. Any disruption to service by our national shipping partners, one of which is in the process of renegotiating long-term labor contracts this summer could materially impact our shipping costs and revenues overall. With that, I will provide a high-level overview of our fourth quarter and fiscal 2023 results. In the children's book segment revenues increased 5%, continuing to outperform the softness in the children's book market due to strong results in our school Book Fairs and multiple trade bestsellers. Operating income increased 25%, driven by higher revenues, operating leverage, and continuing improvements in operational efficiencies. Book Fairs revenues grew 12% in the quarter and were up 29% for the year, benefiting from increased fair count which reached approximately 85% of pre-pandemic levels. Strong growth in revenue per fair was also a key factor contributing to growth and operating leverage in the quarter and the year. In line with recent quarter's trends, Book Clubs revenues declined compared to the prior-year period, driven by lower teacher participation. In our trade channel, sales declined in the quarter and the full year, in line with overall softness in the retail market. This dynamic impacted backlist titles and was partially offset by bestselling new titles in quarter four, including number 11 in Dav Pilkey's series Dog Man, Twenty Thousand Fleas Under the Sea, as well as Hunger Games titles in advance of the November release of The Ballad of Songbirds and Snakes movie. Scholastic Entertainment continued to be a key component of our strategy to build must-read series and franchises last year. We successfully launched Eva the Owlet on Apple TV Plus in quarter four. The Scholastic Entertainment production based on our New York Times' bestselling book series Owl Diaries. We also launched new licensing programs for Eva and our Emmy Award-winning, Stillwater series also streaming on Apple TV Plus. Last quarter Education Solutions delivered higher sales and substantially improved margins. Strong management of the sales pipeline in quarter four allowed us to partially overcome softness in supplemental curriculum sales earlier in the year. The strong fourth quarter also indicated the growing size and contribution of our summer reading business and the seasonal importance of quarter four. In our International segment, revenues declined as the strong dollar negatively impacted foreign exchange. But profits rose in quarter four, largely driven by the exit in quarter one of the unprofitable direct-to-consumer business in Asia. As we begin fiscal 2024 we are focused on executing an integrated strategy to drive growth, impact and shareholder value creation over the next few years. At the same time, we protect margins and sustain the growth we achieved in fiscal 2023. I'd like to discuss the four pillars of this strategy as context to our fiscal 2024 and long-term plan. The first pillar of our overall strategy is focused on leveraging the strengths and operating leverage of our market-leading Children's Book businesses to achieve sustainable long-term revenue growth and higher earnings. Scholastic's content and direct access to customers provide a unique strategic position to further grow our share of the Children's Book market. Just as exciting, we have an opportunity to grow the market and bring the power, and joy of reading and books to more kids. Strong operating leverage on over $1 billion in segment sales as we saw in fiscal 2023 means that modest top-line growth in this business can generate substantial growth in the company's overall earnings and free cash flow. Scholastic's Children's Book segment is coming off a strong year, especially considering industry-wide challenges in the retail market. In addition to our continued best-selling publishing, a bright spot for Scholastic and the industry has been our School Book Fairs, which delivered high-impact events, focused on building book access, choice and reading environment. The combination of Scholastic's Book Fairs and Book Clubs into the newly formed School Reading Events division is expected to be a key driver of future growth in our Children's Book segment. Over the past two years, new customer-centric strategies and operational improvements have transformed Book Fairs, resulting in higher participation, strong growth in revenue per fair and higher operating contribution. We've also begun implementing these strategies and operational improvements in Book Clubs since integrating with fairs. We are optimistic that our Integrated School Reading Events will remove structural barriers and leverage synergies for more profitable long-term growth and enable a more holistic approach to serving our kids and adult customers. Scholastic's high quality engaging children's and young adult publishing, including some of the biggest titles and series in history, is another part of our strategy to profitably grow our Children's Book segment. In fiscal 2024, we are focused on continuing to develop unrivaled content, including driving revenue and building on our key series and titles as we acquire and develop our next wave of hits. Following the strength of Dav Pilkey's latest Dog Man book, we are excited about a new title in another of his series Cat Kid Comic Club later this fall. The 25th anniversary in September of the publishing of Harry Potter will create an opportunity for a new generation of kids to discover the series, while The Hunger Games' prequel movie is expected to drive backlist sales of the series. With new titles to be published this year from bestselling graphic novel series, including Amulet, Bone, and Heart Stopper, we look to grow our commanding market share in that market too. We are also excited to continue to innovate the multiplatform model with Zombie Season, a heart-pounding new series that we are launching in partnership with Roblox. We are one of the first major publishers to do so. Scholastic has a history of innovation, most notably with The 39 Clues, which has over 17.5 million copies in print. As we've discussed, Scholastic Entertainment contributes to long-term growth in Children's Books by creating a virtuous circle of content, from page to screen, to merchandising and then back to page. In October, Disney Plus will release the live-action Goosebumps series starring Justin Long. This project is a new interpretation of our best-selling Goosebumps series. It's already generated a lot of buzz and we are excited about the many potential new readers who will discover the books through it. The second pillar of Scholastic's strategy is to invest to grow our digital sales in Education Solutions with new blended literacy programs which combine digital and printed components. They all build on the long-term strengths of our profitable print content businesses. Here again, our opportunity is both strategic and financial. Scholastic's strong reputation in schools and with teachers, our unique reading and literacy content, and our sales and distribution capabilities position us to grow our blended sales with new solutions that address the critical and growing need to improve reading skills, while investments to build new products and new platform capabilities that enable future products and reinvention of existing ones impact short-term earnings as we saw in fiscal 2023 and expect to continue in fiscal 2024. We are optimistic that over the long term they will result in new, faster-growing, higher-margin revenue streams on top of our profitable core print offerings. Looking to fiscal 2024, we are very excited to be in the market with Ready for Reading, which was launched last month and is already generating substantial interest. Ready for Reading is a simple-to-implement, speech recognition-enabled print and digital K3 foundational reading phonics program, aligned with science-based approaches to literacy. Ready for Reading leverages core IP from Learning Ovations, the ed-tech we acquired last year that's built on 10 years of efficacy research in reading instruction. It's also the first blended program to launch under our new strategy for this business. Of course, we are keenly focused on protecting and growing Scholastic's strong print-based education offerings including our summer programs, classroom and library connections, state-based partnerships and programs with community-based organizations. Not only are they profitable and highly strategic, leveraging Scholastic's unique content and distribution capabilities, these programs provide access to engaging books at school and at home for millions of kids, many of whom could not afford them otherwise. These products diversifies Scholastic's customers beyond the limits of school and district budgets, while expanding our reach and impact. The third pillar of our strategy is continuing to improve operating efficiencies across the company, both domestically and internationally, including holding recent gains achieved during the pandemic. As we've discussed in previous calls, Scholastic is a much more efficient organization today, both in our centralized functions and in our divisions compared to three years ago before the pandemic. These gains, in particular, in our overheads and fixed costs enabled the strong operating leverage and earnings growth we saw last quarter. Even as we invest in new capabilities to support our long-term strategy, we're committed to protecting the hard-fought gains that we've already achieved. Looking ahead, we're pursuing further opportunities to lower costs and improve efficiencies in fiscal 2024. These include the integration of school reading events, a reorganization of our Canadian book clubs, centralizing some of the go-to-market capabilities across the company and investments in process improvements in our manufacturing and distribution functions. Last, like companies across many industries, we're excited about the potential to better and more efficiently serve our customers with generative AI, for example, by integrating it into customer service and marketing processes. With the recent advances in generative AI, more remains to be seen in this area. Finally, the fourth pillar of our strategy is continuing to use Scholastic's strong free cash flow and balance sheet to invest in profitable growth and to return capital to shareholders, thus driving sustainable growth and shareholder value. In fiscal 2023, Scholastic invested to grow our Education Solutions business, including acquiring Learning Ovations, increasing spending on new products and investing in new go-to-market capabilities, which have impacted near-term margins. We intend to continue this strategy, while also making strategic investments to profitably grow our Children's Books segment, generating income from our real estate assets and build new revenue and efficiency opportunities in our supply chain and distribution. Last year, Scholastic returned over $160 million to shareholders through the regular dividend and share repurchases, another sign of our renewed focus on deploying capital for shareholder returns as well as for growth. Looking ahead, Scholastic is committed to continuing to return to our shareholders capital that's not needed to maintain a secure balance sheet and to invest in growth. To this end, yesterday, the Scholastic Board authorized a $100 million increase in our open market share buyback authorization. I'm optimistic that the strategy that I've just laid out provides a compelling path for Scholastic to grow profitably and sustainably for the long term, meeting the needs of our stakeholders and balancing investment and profitability now and into the future. Just as importantly, I'm confident that the core markets that Scholastic serves are sustainable and the mission we pursue will be relevant for many years to come. With that, I'll turn the call now over to Ken to review our fiscal 2023 results and 2024 guidance.

Thank you, Peter, and good afternoon, everyone. Today, I will refer to our adjusted results for the fourth quarter and full fiscal year, excluding one-time items in the prior year period, unless otherwise indicated. There were no one-time items in fiscal 2023. Please refer to our press release tables and SEC filings for a complete discussion of last year's one-time items. As Peter noted, we finished fiscal 2023 strongly generating record operating income in the fourth quarter. On a full-year basis, revenues and profits rose despite headwinds in the retail book-selling market, longer selling cycles for instructional materials, and higher cost and supply chain pressures. We also increased spending on go-to-market capabilities to support long-term growth in education solutions. Our positive results, in spite of these factors, highlight the company's operating leverage and improved efficiencies achieved since the pandemic, which I'd like to discuss before turning to financial results. Over the last 36 months, triggered by the pandemic's impact on our business and customers, we have worked and invested to transform key components of Scholastic's supply chain, operations, logistics, and go-to-market capabilities. As a result, these functions are vastly more resilient, more agile, and more efficient today. As Peter just described, we also have additional opportunities that we are pursuing in fiscal 2024. Greater efficiencies in areas we control have partially offset higher costs in other areas, especially paper, manufacturing, shipping, and freight. They have also helped preserve the strong variable margins and operating leverage inherent in our businesses, as we saw in Book Fairs and in education solutions. Like Peter, I am proud of our team for the hard work and look forward to continuing our progress in the upcoming fiscal year and beyond. Turning to our consolidated financial results. The fourth quarter revenues rose 3% to $528.3 million. Operating income of $92 million was up $25.9 million from the prior year period. Net income was $75.7 million compared to $61.2 million in the prior year period, and adjusted EBITDA increased to $115 million from $88.5 million in the prior year period. Earnings per diluted share was $2.26 compared to $1.72 last year. For the full year, revenues increased 4% to $1.7 billion. Operating income was up 9% to $106.3 million. Net income was $86.3 million, up from $85.1 million in the prior year period, and adjusted EBITDA increased to $196.3 million from $188.9 million in fiscal 2022. Full-year earnings per diluted share were $2.49, up 5% from $2.38 in the prior year period. Now turning to our segment results. In Children's Book Publishing and Distribution, revenues for the fourth quarter rose 5% to $291 million, and were up 10% to over $1 billion in the full fiscal year. Q4 segment operating income was up $11.6 million from the prior year period to $58.4 million. For fiscal 2023, operating income for the Children's Book Publishing segment increased $28.1 million to $143.4 million from fiscal 2022. Strong segment performance in the fourth quarter and fiscal year was primarily driven by school book fairs, which continued to achieve impressive growth and profitability in fiscal 2023, driven by a focus on our customers, strong execution, and more efficient operations. Book fairs revenues rose 12% in Q4 to $180.5 million and 29% for the full year to $553.1 million, an all-time high. Participation at our in-person book fairs remains strong and fair count reached approximately 85% pre-pandemic levels, up from 72% in fiscal 2022. Book Clubs revenues in the fourth quarter of $26.2 million were down versus the prior year period revenues of $27.2 million. Full-year revenues of $117.8 million trailed the prior year revenues of $126.4 million. While Book Clubs revenues continue to trend lower, mainly due to lower revenue per order and lower participation by hard-to-reach clubs, remains a vital component of the company's outreach to teachers and students and of our integrated school reading event strategy. Trade revenues in the fourth quarter were $84.3 million, trailing prior year period revenues of $88.5 million. Full-year revenues in trade were $367.1 million versus $390.4 million a year ago. The current quarter benefited from the release of the 11th title in Dav Pilkey's Dog Man series as well as strong sales of Hunger Games and Harry Potter titles. Trade sales, however, continued to be impacted by headwinds in the retail book-selling market, as Peter discussed. Education Solutions finished the year with a strong fourth quarter. Segment revenues were up 4% to $163.4 million, largely due to strength in scholastic summer reading programs and state-sponsored programs. These results partly offset earlier quarters, reflecting both slower selling cycles this year and shifting seasonality in the business. Full-year segment revenues of $386.6 million were down only 2% from the prior year period. In the fourth quarter, operating leverage on higher sales and lower marketing costs, primarily related to sponsored programs, which seasonally incur higher marketing during the early months of the year, benefitted segment results. Operating income rose 20% to $55 million in Q4 compared to the prior year period. Full-year segment operating income of $58.4 million, however, trailed $81.8 million in the prior period, reflecting higher organic investments and go-to-market capabilities to support our long-term growth strategy in this business. As discussed on previous calls, we also recorded approximately $3 million in expenses related to the acquisition and integration of Learning Innovations, which was not anticipated in our original plan. International segment revenues of $73.9 million in the fourth quarter trailed the prior year period revenues of $80.4 million, reflecting a $4.7 million year-over-year impact of unfavorable foreign currency exchange and lower revenues of $4.4 million due to the successful Q1 disposition of the direct sales business in Asia. Excluding these factors, International revenues rose 3% or $2.6 million, reflecting higher revenues from book fairs in the U.K. and Canada and modest recovery of results in Asia. Segment operating income increased 16% to $2.2 million as the segment benefited from the recovery in Asia, as well as the exit from the direct sales business, which generated losses in the prior year period. For the full year, International segment revenues of $279.4 million were down from the prior year's revenues of $302.8 million, reflecting a $23 million negative impact of foreign exchange and the exit of the direct sales business. Excluding these factors, segment revenues rose approximately 5% in fiscal 2023. For the full year, the International segment reported an operating loss of $3.6 million versus operating income of $5 million in the prior year, primarily reflecting costs and operating pressures in Canada. Unallocated overhead costs of $23.6 million in the fourth quarter declined from $28.4 million in the prior period. For full year unallocated overhead costs of $91.9 million were also lower than the prior year's $104.6 million. I'm pleased to report that we have signed several new tenants at our own headquarters building in SoHo, including Capital One this spring and now have rented all of our first floor retail space. The lease terms with our tenants typically range from 10 to 15 years. We're currently marketing floors two through four, which are available for lease. As we now disclosed in our filings with the SEC, we recognized rental income of $7.1 million in fiscal 2023. On the approximately 26,600 square feet leased as of today, we expect annualized straight-line rental income to total approximately $10.6 million. Now turning to cash flow and the balance sheet. For the full year, net cash provided by operating activities was $148.9 million compared to $226 million in the prior period, largely reflecting higher inventory purchases this year. As the company replenished inventory levels post-pandemic to meet demand and mitigate shipping delays and by lower net refunds from income taxes of $51.3 million relative to the prior year. These factors were partially offset by higher customer remittances on receivable balances in fiscal 2023 of approximately $62.6 million, reflecting this year's strong sales. We have seen dramatic reductions in overseas lead times for inventory purchases and along with the return to pre-pandemic inbound freight costs. Accordingly, we expect to manage inventory purchases substantially closer to our demand cycle in fiscal 2024. Free cash flow of $60 million in fiscal 2023 compared to $182.8 million in the prior year period reflects lower cash from operations, as well as $88.9 million in CapEx and prepublication spending on new products and growth initiatives compared to $59.2 million in fiscal 2022. At the end of the fiscal year, cash and cash equivalents, net of total debt was $218.5 million compared to $310.1 million at the end of the prior year period. In addition to increasing growth investments, we accelerated capital returns to shareholders in fiscal 2023 through a tender offer and open market share repurchases. Together with our regular dividend, we returned over $160 million in fiscal year 2023, including $63 million in this past quarter. In total, we repurchased 3.3 million shares last year, which, net of 800,000 shares issued related to stock compensation represents 7% of the company's outstanding shares. As we look ahead, we'll continue to pursue opportunities to leverage our balance sheet and deploy capital by: First, investing in growth opportunities; second, maintaining a strong and efficient balance sheet; and third, returning excess cash to shareholders to enhance their returns. Our priority in fiscal 2024 is to protect margins and sustain growth as we execute on long-term growth and shareholder value creation strategy that Peter has described. In fiscal 2024, we expect revenue growth of 3% to 5% and are targeting adjusted EBITDA of $190 million to $200 million. This excludes the impact of one-time charges related to restructuring and cost-saving activities of approximately $7 million to $10 million, as Peter has already discussed, which we expect in the first and second quarters. In Children's Books, we expect growth in book fairs with fair counts increasing to approximately 90% of pre-pandemic levels. As a reminder, we do not see a return to 100% of in-person book fairs held before the pandemic as many of these fairs were not profitable. We also expect revenue per fair to continue to modestly grow on continued strong participation in customer-centric strategies. In trade, front and backlist sales should continue to be solid, as Peter described. These positive factors are expected to be partially offset by lower revenues in book clubs as we shrink the business to a profitable core and in Scholastic Entertainment, which is recorded in consolidated trade due to the timing of production revenues. Operating income and margin should rise modestly for the year. In Education Solutions, revenues are expected to be up modestly, driven in part by continued growth in state-sponsored programs in the latter half of the year. We will continue to invest in new products and capabilities to grow our blended literacy solutions as demonstrated by our recent launch of Ready for Reading. We expect the International segment will benefit from continued recovery in major markets and in Asia as well as the reorganization in Canada, generating modest top line growth and a lower operating loss. We remain committed to returning our international business to profitability in the coming years. We expect unallocated overhead costs to increase modestly next year as we continue to invest in improving efficiencies and building capabilities to support long-term growth. As a reminder, Scholastic's results are highly seasonal. We generally record an operating loss in our first and third quarters, coinciding with summer and winter school vacations, while profitable in the second and fourth quarters. Year-over-year, we expect our first quarter seasonal loss to grow. We are looking forward to an exciting and busy year ahead. Thank you for your time today. I will now hand the call back to Peter for his final remarks.

Thank you, Ken. In summary, Scholastic delivered solid results in fiscal 2023, reflecting the unique strength of our businesses and effective performance management in response to market headwinds. We continued our investments in growth opportunities, especially in Education Solutions, while returning substantial capital to our shareholders. We're enthusiastic about our plan for fiscal 2024 as we begin the year and prepare for back-to-school. The new school reading events division has great promise to continue our momentum in schools, while connecting kids to the joy and power of reading with new go-to-market strategies that leverage Scholastic's content and brand as never before. We have exciting new frontlist titles publishing and streaming series launching, as well as new products in education solutions like Ready for Reading and our growing state-sponsored programs. This plan aligns with Scholastic's larger multiyear strategy and opportunity as we grow our profitable core Children's Book businesses, build out our blended literacy offering, continue improving efficiencies, and allocate our capital to sustainably grow and generate higher shareholder returns. I'm grateful for the hard work of Scholastic's employees and for the support of our shareholders as together we bring the power of reading and books to all kids. Thank you very much. Let me now turn the call over to Jeff.

Thanks, Peter. We appreciate everyone's time today and your continuing support. With that, we will open the call for questions. Operator?

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

Yes. Thank you for taking my question and congratulations on the strong results. My question is regarding the new school reading events business. Just wondering if you can provide some color on the timing of that combination? And when we might expect to see margin improvement in the Children's Book Publishing and Distribution segment? I know margins were up in Q4 year-over-year, but I was also wondering if you're able to quantify the margin improvement with that combination.

Thanks, Brendan. I mean, the whole strategy of the school reading events business is really to take two of our activities that have got a lot of overlap within the schools and to be able to make much more of a joined-up business with individual schools. We've had a great start in planning for that, and we'll be underway really from the start of the new school year from sort of mid-August in the South to early September in the North and East. And that we have got a lot of materials ready to go and we would expect to see a really strong start. The clubs part of that business traditionally starts strongly at the beginning of the school year, and we hope that, that obviously is going to continue with the new program that we've got for that. And we're very well set up in the book fairs area to get off to a very, very strong start. So I'm very enthusiastic about this part of our business. And I think that we'll be able to talk very positively about how the team, which is an excellent team, has performed. On the financial side, I'm going to turn that over to Ken just to make some comments.

Thank you, Peter. Hello, Brendan. It's great to see you. Yes, as Peter mentioned, we acted swiftly, and the team collaborated to develop a solid operating plan in a short timeframe. We anticipate margin improvement this year, albeit with lower revenue from clubs as we refine the business to its core. Our long-term vision is that the combined revenues from this business will ultimately be stronger, but first, we need to focus on identifying what is profitable. Phase 1 is going to be very exciting for us. It will be more kid-centric and customer-focused than before. We are eager about this development, and while we expect immediate margin improvement, we will see a decrease in club revenues.

Got it. That's helpful. And then if I could pivot to the Education Solutions segment. Yes, I know you mentioned in your results, there was some benefit from the state-sponsored programs. Were there any additional states added regarding your new state business? I know Florida and Louisiana, I think are the primary two. But were there any additional states added?

We have added new business primarily for next year, and Tennessee is another state where we will have more opportunities. We already have some business in Tennessee this year, but there is more to come. Louisiana has been our significant new addition. We also see promising opportunities in Florida moving forward, especially since we've been able to include pre-K kids in the project. We're making adjustments to our marketing strategies that should also prove beneficial. Additionally, there is considerable concern among parents, teachers, administrators, and policymakers regarding literacy, and this is a critical initiative to address that issue. I believe this will play a major role in our efforts. Another important point is that we are gaining a lot from a wider range of funding opportunities aimed at improving literacy for children in disadvantaged communities, and we are finding more ways to contribute in this area. One of the reasons we appointed one of our most seasoned executives as Chief Impact Officer is to focus on providing more literacy resources to disadvantaged communities and to intensify our efforts in securing funding for these initiatives. Overall, we are very pleased with our progress in this sponsored aspect of our business, which we view as a growth area for the future.

Great. Thank you. One more, if I may. Sorry, go ahead, Ken.

Yes. No, just adding to that, it's nice having the Florida model out there, because now we can replicate it, and that's largely what happened in Louisiana. So, there was a learning curve just to acquire that first business. And now we're out there trying to do this in other places. So having that model is great, and I'll speak as the CFO here. Also, the revenues are not because they are addressing kids who are disadvantaged, not cannibalistic to our clubs and fairs business, which is really great for us too, and both on mission and financially beneficial to us.

Got it. That's helpful. And lastly, I know spending by schools in the Education Solutions segment has been lower due to teacher staffing issues. Are you still expecting that trend to ease as we approach the new school year in fiscal 2024? Secondly, what specific data points are you seeing that indicate this?

We expect that the overall environment in fiscal year 2024, especially regarding school spending, will be similar to what we saw in fiscal year 2023. The additional asset funding is set to conclude in the fall of next year, and we are uncertain if this will lead to a quicker depletion of funds towards the end of the next school year. Staffing issues remain a significant concern, and there has been considerable pressure from parents to ensure that schools can continue purchasing books with the asset funding available in our upcoming financial year. As we look ahead to fiscal year 2025 and beyond, it's important to note that asset funding is additional funding, not part of the core funding that will be lost. It's crucial for everyone concerned about education, regardless of political affiliation, to focus on literacy. It would be unexpected if there weren't ongoing and possibly increased federal and state funding measures to tackle this issue, as enhancing literacy is vital for the success of both society and our economy.

Great. Thank you, Peter. Thank you, Ken. 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.

Well, thank you, everyone, for joining today's call and for your continued support. To summarize, we're focused on executing a long-term strategy to drive growth, impact, and shareholder value creation over the coming years, while protecting margins and sustaining the growth we achieved in fiscal 2023. We're confident about Scholastic's opportunities, and we're excited to execute our strategy in fiscal 2024 and beyond.

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