With educational publishers continuing efforts to come to grips with the shift from print-based to digital learning at schools nationwide, Houghton Mifflin Harcourt announced today that it has implemented a restructuring plan that will eliminate about 22% of its workforce and cut annual expenditures by $95 million to $100 million.
In a filing, HMH reported that the reorganization will result in eliminating about 525 positions, and that the downsizing should be "largely completed" by October 1.
"The Covid-19 pandemic has cemented the central role of technology within the K–12 space,” said Jack Lynch, president and CEO of HMH in a statement. "The actions we announced today will help us to realize our digital first vision by creating a more focused company with increased recurring digital subscription revenue that produces higher margins and free cash flow.”
According to HMH, the reduction in its workforce includes positions that had been cut in an early retirement incentive program the company implemented this spring as part of cost-cutting measures it took in response to the outbreak of the pandemic. A spokesperson for HMH’s Book & Media group told PW the changes are focused on the education side of the business, and do not affect the trade group.
In addition to cuts to the workforce, HMH said it expects to generate other cost savings by putting more emphasis on the creation of digital content over print product, resulting in lower manufacturing and “service delivery” costs, as well as a streamlining of back office costs “as legacy systems and print-centric processes are retired.”
HMH estimated that total one-time charges associated with the reorganization will be in the range of $34 million to $36 million, including $21 million in costs associated with the cuts to the workforce.
