Houghton Mifflin Harcourt (HMH) is a global education and learning company that reaches 50 million students throughout the U.S. and in 150 countries.
Ninety percent of its revenue comes from education, with the remaining 10% from reference and trade books. HMH mainly targets the K-12 market, which the company leads with a market share of 38%.
Houghton Mifflin’s history as an educational publisher dates back to 1832. In 2006, Houghton Mifflin was acquired by the Irish company Riverdeep, which was started by ex-banker Barry O'Callaghan. The company acquired Harcourt from Reed Elsevier at the end of 2007.
Analysis & Key Developments
Financial
In fiscal 2013, Houghton Mifflin Harcourt performed well in trade and education. While trade sales rose 9% to $171 million in 2013, adjusted EBITDA increased to $29 million from $24 million in 2012. Overall, HMH posted revenues increasing 7% to $1.38 billion as the education segment contributed $1.21 billion, a gain of 6.5%. Adjusted EBITDA for the entire company rose to $325 million from $320 million, although the net loss rose to $111 million from $87 million in 2012. Trade Publishing was helped by strong children’s and young adult sales and cookbooks.
Ownership, mergers & acquisition, internal organization
HMH was listed as a public company on NASDAQ in November 2013.
International
International sales of educational solutions accounted for approximately 5.4% of overall turnover in 2013.
Digital
Digital products and net sales from e-books reached $23 million in 2013, representing approximately 13.2% of trade sales. HMH’s digital products portfolio includes approximately 34,000 titles.
Bestselling authors and titles
Bestselling titles include Curious George, Carmen Sandiego, The Oregon Trail, The Little Prince, The Lord of the Rings, Life of Pi, Webster’s New World Dictionary and CliffsNotes.
Earlier Developments
Financial
2012 was a turbulent year for Houghton Mifflin Harcourt. After filling for prepackaged bankruptcy in order to achieve a second major restructuring of $3 billion of its debt, the company eliminated $250 million in annual debt services in May 2012.
Linda Zecher, CEO and director of HMH (and former corporate VP at Microsoft) said they are “positioned well for acquisitions” just four months after emerging from bankruptcy.
After restructuring the sales organization of its education group, HMH’s revenue figures totaled of $1.29 billion, while adjusted EBITDA rose 34.4% to $320 million. The net loss was cut to $87 million from $2.2 billion in 2011, a figure that includes a $1.7 billion impairment charge.
Ownership, mergers & acquisition, internal organization
According to Zecher, HMH had to meet several objectives to restore profitability, including international expansion, an investment shift from print to digital, and more direct-to-consumer sales. HMH worked workedto build on its well-known children’s brands.
“We’re positioned well for growth, we’re positioned well for acquisitions. We are moving quickly into leveraging our content with technology and strategic partnerships. There are some acquisitions we could make with small technology companies that can really support us in the education space, and we want to be able to do that,” Zecher said, according to The Bookseller. In November 2012, HMH’s trade division acquired Wiley’s culinary portfolio and reference works published under the Webster’s New World Dictionary and CliffsNotes brands.
International
HMH partnered with Hachette in international markets including Latin America, South America, Asia, and Europe. Hachette will be responsible for sales, billing, returns, credit processing and collections services for HMH general interest titles and books for young readers. HMH will handle order fulfillment. The partnership excludes Canada, UK and Ireland, Australia, New Zealand, and India.
“To demonstrate to the marketplace, our customers, and our employees an intent to start a new chapter as a company, in an industry going through significant transformation,” as a HMH spokesperson said, the company introduced a new logo, replacing its old dolphin colophon.
Digital
The educational business features a new e-commerce platform, which united most of HMH’s Web sites. The platform was released in the first half of 2013.
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