Houghton Mifflin Harcourt (HMHC) Reports Q3 Loss of $0.10/sh, to Explore Potential Sale of HMH Books & Media Consumer Publishing Business

Houghton Mifflin Harcourt (NASDAQ: HMHC) reported Q3 EPS of ($0.10), versus $0.56 reported last year. Revenue for the quarter came in at $386.6 million versus the consensus estimate of $516.59 million.

"HMH remains focused on our digital-first, connected strategy which has proven to be more important than ever in this unique back-to-school season. We are supporting teaching and learning nationwide whether done in person, fully remote or hybrid. Even as the near-term pressures of the COVID-19 pandemic impacted our billings for the third quarter, we are seeing very strong growth across the key indicators of our digital transformation, positioning HMH's SaaS offerings amongst the largest and fastest growing in the edtech market," said Jack Lynch, President and Chief Executive Officer of Houghton Mifflin Harcourt.

"We also announced our intention to explore a potential sale of HMH Books & Media. As we further advance our learning technology strategy, we believe this is the right time to focus our portfolio, which we believe will help to maximize shareholder value," added Lynch. "At HMH we are very proud of our trade publishing heritage, and our Books & Media colleagues who have continued to innovate and evolve as the consumer publishing market has changed over time. Because of this heritage, we know the power a story has to inspire generations to make lives of meaning. We have grown and invested in this business over many years, and it has continually demonstrated strength and resilience – particularly this year through the challenges of the pandemic."

Joe Abbott, HMH's Chief Financial Officer said, "HMH remains in a position of financial strength, as we look to the end of 2020 and beyond. During the quarter, we continued to manage our expenses with discipline, and as a result, delivered adjusted EBITDA margins on par with the prior year despite net sales and billings declines. We generated strong cash during the third quarter, and we were near free cash flow break even for the year-to-date."

Outlook:

HMH expects billings in a range of $1.05 billion to $1.10 billion, and expects free cash flow to be between ($5) million to ($15) million for the full year 2020. Based on what management knows today, HMH expects positive free cash flow in 2021.

For earnings history and earnings-related data on Houghton Mifflin Harcourt (HMHC) click here.

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