School Specialty, Inc. reported consolidated earnings results for the second quarter and six months ended June 25, 2016. For the quarter, the company reported revenues of $145,858,000 against $140,970,000 for the same period a year ago. Operating income was $2,004,000 against operating loss of $7,292,000 for the same period a year ago. This was a result of higher revenues, improved gross profit margins and lower SG&A costs. Additionally, the prior year operating loss included $3.8 million of accelerated amortization charges referenced above and an intangible asset impairment charge of $2.7 million. Loss before provision for income taxes was $2,360,000 against $12,226,000 for the same period a year ago. Net loss was $1,986,000 or $1.99 per basic and diluted share against $12,394,000 or $12.39 per basic and diluted share for the same period a year ago. Adjusted EBITDA was $9,375,000 against $7,656,000 for the same period a year ago.

For the six months, the company reported revenues of $239,583,000 against $232,552,000 for the same period a year ago. Operating loss was $10,008,000 against operating loss of $25,900,000 for the same period a year ago. Loss before provision for income taxes was $18,677,000 against $35,211,000 for the same period a year ago. Net loss was $14,289,000 or $14.29 per basic and diluted share against $35,809,000 or $35.81 per basic and diluted share for the same period a year ago. Adjusted EBITDA was $3,835,000 against $1,581,000 for the same period a year ago.

The company reiterated earnings guidance for the year ending December 31, 2016. Total 2016 revenues are anticipated to increase by approximately 2.5% to 3.0%, and reported gross profit margins are anticipated to improve by 30 to 50 bps, driven by lower product development amortization costs. The company anticipates adjusted EBITDA to be approximately $48 - $52 million, representing year-over-year improvement of 6.7% to 15.6%. The company expects continued strong leveraged free cash flow of approximately $20.0 million. The company expects cash taxes for 2016 to be approximately 7% to 9% of pretax income or approximately $1.3 million to $1.7 million. The anticipated cash tax rate for 2016 is lower than its previous estimate as the sale of its interest in Carson-Dellosa, will trigger the realization of certain deferred tax assets. Beginning in 2017, the company expects effective tax rate and cash tax rate to return to more traditional levels of between 35% and 40%. Full year interest expense is expected to decline by approximately $1.5 million.