The absence of licensing income earned in last year’s third quarter led to a 27.9% decline in sales at the Houghton Mifflin Harcourt Books & Media group for the period ended September 30, 2019, compared to last year’s third quarter.
Revenue in the division fell by $18.5 million, dropping to $48.1 million, from $66.6 million. $16 million of the decline came from licensing fees earned last year for 1984 and Animal Farm. Books that sold well in the quarter included Antoni in the Kitchen by Antoni Porowski as well as Lori Gottlieb's Maybe You Should Talk to Someone. In the the children's group, HMH's Little Blue Truck franchise also did well. EBITDA (earnings before interest, taxes, depreciation, and amortization) fell to $8.3 million, from $15.5 million, in last year's third period.
For the first nine months of 2019, revenue in the division declined 8.2%, to $127.9 million, from $139.4 million in the comparable period in 2018. EBITDA fell to $12.3 million, from $14.7 million. HMH attributed the declines primarily due to the 2018 licensing income from 1984 and Animal Farm, partially offset by licensing revenue of $7.7 million related to the Carmen Sandiego series on Netflix generated in the current year.
For the entire company, revenue in the third quarter rose 9.7%, to $565.7 million, due to a strong showing by the education division, where sales increased 15%, to $517.6 million. EBITDA slipped slightly in the education group, to $153.4 million, from $154.9 million in last year’s third quarter.
Total company revenue at HMH rose 7.5% in the first nine months of 2019 over 2018, to $1.15 billion. The net loss, however, increased to $88.7 million, from $38.2 million, in the first nine months of 2018.
Earlier this month, HMH said that, to better align costs, it was cutting about 8% of its workforce, with all of the layoffs coming in its education group. In its filing with the SEC, HMH reported that the job eliminations will be “substantially” completed by the end of 2019. The company is taking a charge of approximately $11.0 million to $13.0 million in connection with severance and other termination benefit costs.
