A boost in state adoptions, particularly in Texas, helped lift revenue at McGraw-Hill Education 5.5% in the third quarter, to $1.1 billion, while operating profits, aided by cost controls, increased nearly 20%, to $357.5 million. Revenue for the school education group rose 6.7%, to $534.7 million in the quarter, while sales in the higher education, professional and international group increased 4.3%, to $520.0 million.
In the school group, MHE did well in the major adoption states of Texas, California, and Florida, offsetting a decline in sales to open territories. Fueled by a 65% to 75% increase in state new adoptions this year, MHE expects the entire elementary-high school market to grow 4% to 6% in 2010.
In the higher education education, professional and international segment sales were led by higher college enrollments and “robust” digital sales, the company reported. The number of students using MHE’s online homework and assessment offering, McGraw-Hill Connect, increased 26% in the quarter, to 1.9 million, and all four of the higher ed division’s major subject categories had gains in the period.
In professional publishing, online sales of books and digital products produced” solid” growth, the company said with double-digit e-book sales offsetting sluggish results in the retail book market. More than 5,000 M-H professional titles are now available as e-books. Top-selling e-books in the quarter were Crucial Conversations, Current Medical Diagnosis and Treatment, 49th Edition, Presentation Secrets of Steve Jobs, How to Talk to Anyone, and Security Analysis, 7th Edition.
In the international segment, gains in India, Europe, the Middle East, Asia, and Latin America were offset by declines in Canada, Spain, and Italy.
To enhance its lineup of digital products and services, MHE recently acquired Tegrity, an automated lecture capture service that is now part of McGraw-Hill Connect, and also launched McGraw-Hill Create, a Google-like search engine that enables instructors to customize content for their courses.
For the first nine months of the year, sales at MHE rose 3.7%, to $1.94 billion, while operating profits jumped 43%, to $347.3 million; profits in 2009 were depressed by an $11.6 million restructuring charge, while earnings in the most recent quarter benefitted from a $3.8 million gain on the sale of an Australian secondary education business.
