BOSTON, May 6, 2021 /PRNewswire/ -- Learning
technology company Houghton Mifflin Harcourt ("HMH" or the
"Company") (Nasdaq: HMHC) today announced financial results for the
first quarter ended March 31, 2021.
All financial results and metrics are reported on a continuing
operations basis. HMH delivered strong growth in billings of 11%
during the first quarter. Coupled with solid growth in Annualized
Recurring Revenue2, the company is off to a strong start
to 2021.
Q1 2021 Financial Results and Headlines:
|
|
Three Months Ended
March 31,
|
|
(in millions of
dollars)
|
|
2021
1
|
|
|
2020
1
|
|
|
Change
|
|
Net sales
|
|
$
|
146
|
|
|
$
|
152
|
|
|
|
(3.7)
|
%
|
Change in deferred
revenue
|
|
|
(42)
|
|
|
|
(59)
|
|
|
|
27.8
|
%
|
Billings
2
|
|
|
104
|
|
|
|
93
|
|
|
|
11.4
|
%
|
Impairment charge for
goodwill
|
|
|
—
|
|
|
|
262
|
|
|
NM
|
|
Loss from continuing
operations
|
|
|
(49)
|
|
|
|
(338)
|
|
|
|
85.5
|
%
|
Adjusted EBITDA
3
|
|
|
15
|
|
|
|
(20)
|
|
|
NM
|
|
Pre-publication or
content development costs
|
|
|
(14)
|
|
|
|
(18)
|
|
|
|
22.4
|
%
|
Net cash used in
operating activities
|
|
|
(101)
|
|
|
|
(172)
|
|
|
|
41.5
|
%
|
Free cash flow
3
|
|
|
(125)
|
|
|
|
(202)
|
|
|
|
38.3
|
%
|
|
|
|
|
|
|
1
|
All amounts have been
adjusted to eliminate the impact of the HMH Books & Media
business which has been removed from continuing
operations and classified as discontinued
operations.
|
2
|
An operating measure.
Please refer to "Operating Metrics" for an explanation.
|
3
|
Non-GAAP measure,
please refer to Use of Non-GAAP Financial Measures for an
explanation and reconciliation.
|
NM = not
meaningful
|
Highlights from the quarter include:
- Trailing twelve-month free cash flow of $72 million, an improvement of $77 million, demonstrating strong positive free
cash flow generation
- Rapid year-over-year growth of 80% in Annualized Recurring
Revenue (ARR) 2 to $65
million. Net Retention Rate (NRR) 2 was
142%.
- Connected Sales 2 made up 51% of billings for the
trailing twelve months ended March 31,
2021
- 42% of billings were digital for the trailing twelve months
ending March 31, 2021
- Adjusted EBITDA improved $34
million to $15 million,
marking the first time HMH produced positive Adjusted EBITDA in the
first quarter since it became a public company
"We entered the new year keenly focused on executing our Digital
First, Connected strategy. As our market stabilizes, our first
quarter results represent a strong start to the new year. We
continue to see impressive growth in important key performance
indicators, positioning HMH amongst the largest and fastest growing
companies in the edtech market," said Jack
Lynch, President and Chief Executive Officer of Houghton
Mifflin Harcourt.
Joe Abbott, HMH's Chief Financial
Officer said, "We delivered strong growth in billings and ARR in
the first quarter, which positions HMH well to deliver growth in
2021. Importantly, we have dramatically improved free cash flow
despite the pandemic's impact on our billings over the last twelve
months. We continue to expect the previously announced divestment
of HMH Books & Media to close during the second quarter of
2021, which will transform our capital structure following the
paydown of debt with net proceeds from the transaction, providing
the company additional operational and financial flexibility going
forward."
First Quarter 2021 Financial Results:
Net Sales: HMH reported net sales of
$146 million for the first quarter of 2021, down 4% compared
to $152 million in 2020. The decrease was primarily due to
lower net sales in Extensions, which primarily consists of our
Heinemann, intervention and supplemental products as well as
professional services, which decreased by $9 million from
$86 million in 2020 to $77 million due to lower
professional services with the decline of the in-person learning
environment as a result of the COVID-19 pandemic. Partially
offsetting the decline in Extensions was an increase in Core
Solutions of $3 million from
$65 million in 2020 to $68 million, driven by strong international net
sales and net sales of social studies and math programs in
California.
Billings2: Billings for 2021
increased $11 million, or 11%, from 2020. The billings
increase was driven by an increase in Core Solutions which
increased by $17 million due to
strong international sales as well as growth in social studies and
math program sales in California.
Partially offsetting the increase were lower Extensions billings
which decreased by $6 million due to lower professional
services sales.
Cost of Sales: Overall cost of sales
decreased by $12 million to $86 million in 2021,
primarily due to lower print costs, increased virtual delivery of
products and services and lower amortization expense.
Selling and Administrative Costs: Selling and
administrative costs decreased by $34 million in 2021,
primarily due to lower labor costs and other fixed cost reductions
due to the 2020 restructuring plan.
Operating Loss: Operating loss for 2021 was
$37 million, a $301 million favorable change from the
$338 million operating loss in 2020 primarily due to a
non-cash impairment charge for goodwill in 2020 of $262 million which was a direct result of the
adverse impact that the COVID-19 pandemic had on our Company.
Additionally, there was a decrease in selling and administrative
expenses.
Net Loss: Net loss of $52 million for
2021 was $294 million lower compared to a net loss of
$346 million in the same period of 2020. Loss from continuing
operations for 2021 was $49 million, a $289 million
improvement from the $338 million loss from continuing
operations in the same period of 2020 due primarily to the same
factors impacting operating loss offset by an unfavorable change in
our tax provision of $11 million due primarily to the non-cash
impairment on goodwill. Also, loss from discontinued operations,
net of tax decreased $5 million to $3 million from a loss
of $8 million in 2020.
Adjusted EBITDA from continuing
operations: Adjusted EBITDA from continuing operations
for 2021 was $15 million, a $34 million favorable change
from a loss in 2020.
Cash Flows and Liquidity: Net cash used in
operating activities for 2021 was $81 million compared to
$157 million in 2020. Net cash used in operating activities
from continuing operations was $101 million in 2021, a
$71 million favorable change compared to 2020. The decrease in
net cash used in operating activities from continuing operations
resulted from an increase in operating profit, net of non-cash
items, of $32 million. Further, the
improvement was also due to favorable changes in net operating
assets and liabilities of $39 million. Net cash used in
operating activities included $19 million and $15 million
of cash flow from discontinued operations in 2021 and 2020,
respectively. HMH's free cash flow from continuing operations,
defined as net cash from operating activities minus capital
expenditures, favorably changed $77
million from a usage of $202 million in 2020 to a usage
of $125 million in 2021.
As of May 6, 2021, there were no
amounts outstanding under our revolving credit facility. We expect
our net cash from operations combined with our cash and cash
equivalents and borrowing availability under our revolving credit
facility to provide sufficient liquidity to fund our current
obligations, capital spending, debt service requirements and
working capital requirements over at least the next twelve
months.
Conference Call:
At 9:30 a.m. ET on Thursday, May
6, 2021, HMH will host a conference call to discuss the results
with its investors. The call will be webcast live at ir.hmhco.com.
The following information is provided for investors who would like
to participate:
Toll Free: (844) 835-6565
International: (484) 653-6719
Passcode: 4741847
Moderator: Brian Shipman, Senior Vice President,
Investor Relations
Webcast Link: https://edge.media-server.com/mmc/p/fpqj4zrf
An archived webcast with the accompanying slides will be
available at ir.hmhco.com for one year for those unable to
participate in the live event. An audio replay of this conference
call will also be available until May 16,
2021 via the following telephone numbers:
(855) 859-2056 in the United
States and (404) 537-3406 internationally using
passcode 4741847.
Use of Non-GAAP Financial Measures:
To supplement our financial statements presented in accordance
with Generally Accepted Accounting Principles (GAAP) and to provide
additional insights into our performance (for a completed period
and/or on a forward-looking basis), we have presented adjusted
EBITDA from continuing operations and free cash flow. These
measures are not prepared in accordance with GAAP. This information
should be considered as supplemental in nature and should not be
considered in isolation or as a substitute for the related
financial information prepared in accordance with GAAP. Management
believes that the presentation of these non-GAAP measures provides
useful information to investors regarding our results of operations
and/or our expected results of operations because it assists both
investors and management in analyzing and benchmarking the
performance and value of our business.
Management believes that the presentation of adjusted EBITDA
provides useful information to our investors and management as an
indicator of our performance that is not affected by fluctuations
in interest rates or effective tax rates, non-cash charges and
impairment charges, levels of depreciation or amortization, and
acquisition/disposition-related activity costs, restructuring costs
and integration costs. Accordingly, management believes that this
measure is useful for comparing our performance from period to
period and makes decisions based on it. In addition, targets in
adjusted EBITDA (further adjusted to include the change in deferred
revenue) are used as performance measures to determine certain
incentive compensation of management. Management also believes that
the presentation of free cash flow provides useful information to
our investors because management regularly reviews these metrics as
an important indicator of how much cash is generated by general
business operations, excluding capital expenditures, and makes
decisions based on it.
Other companies may define these non-GAAP measures differently
and, as a result, our use of these non-GAAP measures may not be
directly comparable to adjusted EBITDA and free cash flow used by
other companies. Although we use these non-GAAP measures as
financial measures to assess our business, the use of non-GAAP
measures is limited as they include and/or do not include certain
items not included and/or included in the most directly comparable
GAAP measure. Adjusted EBITDA should be considered in addition to,
and not as a substitute for, net income or loss prepared in
accordance with GAAP as a measure of performance; and free cash
flow should be considered in addition to, and not as a substitute
for, net cash from operating activities prepared in accordance with
GAAP. Adjusted EBITDA is not intended to be a measure of liquidity
nor is free cash flow intended to be a measure of residual cash
flow available for discretionary use. You are cautioned not to
place undue reliance on these non-GAAP measures. A reconciliation
of these non-GAAP financial measures to the most directly
comparable GAAP financial measures (to the extent available without
unreasonable efforts in the case of forward-looking measures) and
related disclosure is provided in the appendix to this news
release.
Operating Metrics:
Annualized Recurring Revenue (ARR) for a given
period is the annualized revenues derived from termed subscription
contracts existing at the end of the period. ARR excludes contracts
that are one-time in nature. ARR is currently one of the key
performance metrics being used by management to assess the health
and trajectory of our business. ARR does not have a standardized
definition and is therefore unlikely to be comparable to similarly
titled measures presented by other companies. ARR should be viewed
independently of U.S. GAAP revenue, deferred revenue and unbilled
revenue and is not intended to be combined with or to replace those
items. ARR does not represent revenue for any particular period or
remaining revenue that will be recognized in future periods. ARR is
not a forecast and the active contracts at the end of a reporting
period used in calculating ARR may or may not be extended or
renewed by our customers.
Net Retention Rate (NRR) is the rate at which existing
customers are renewing and expanding. The dollar-based net
retention rate is calculated as of a period end by starting with
the ARR from all customers as of the 12 months prior to such period
end. The ARR is then calculated from these same customers as of the
current period end, which includes customer renewals, upsells and
expansion and is net of contraction or churn over the trailing 12
months, but excludes revenue from new customers in the current
period. The dollar-based net retention rate is calculated by
dividing the ARR from these customers as of the current period end
by the ARR from these customers as of 12 months prior to such
period end.
Connected Sales are billings from the sale of core,
intervention, supplemental, assessment and service offerings hosted
on or transitioning to be hosted on our Ed: Your Friend
in Learning® teaching and learning platform.
Billings is an operating measure which we derive
from net sales taking into account the change in deferred revenue.
Billings for Core Solutions and Extensions is an operating measure
based on invoiced sales adjusted for returns, other publishing
income and change in deferred revenue.
About Houghton Mifflin Harcourt
Houghton Mifflin Harcourt
(Nasdaq: HMHC) is a learning technology company committed to
delivering connected solutions that engage learners, empower
educators and improve student outcomes. As a leading provider of
K–12 core curriculum, supplemental and intervention solutions, and
professional learning services, HMH partners with educators and
school districts to uncover solutions that unlock students'
potential and extend teachers' capabilities. HMH serves more than
50 million students and 3 million educators in 150
countries. For more information, visit www.hmhco.com
Follow HMH on Twitter, Facebook, YouTube and Instagram.
Contact
Investor Relations
Brian S.
Shipman, CFA
SVP, Investor Relations
(212) 592-1177
brian.shipman@hmhco.com
Media Relations
Bianca
Olson
SVP, Corporate Affairs
(617) 351-3841
bianca.olson@hmhco.com
Forward-Looking Statements
The statements contained herein include forward-looking statements,
which involve risks and uncertainties. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes," "estimates,"
"projects," "anticipates," "expects," "could," "intends," "may,"
"will," "should," "forecast," "intend," "plan," "potential,"
"project," "target" or, in each case, their negative, or other
variations or comparable terminology. Forward-looking statements
include all statements that are not statements of historical facts.
They include statements regarding our intentions, beliefs or
current expectations concerning, among other things: 2021 outlook
for billings and unlevered free cash flow margin; the expected
impact of our Digital First, Connected strategy and the actions
described in this press release; the expected timetable for closing
the disposition of HMH Books & Media, including satisfaction or
waiver of closing conditions; the use of the net proceeds from the
proposed transaction to pay down debt; the expected impact of the
COVID-19 pandemic; our future results of operations, financial
condition, liquidity, prospects, growth and strategies; the timing,
structure and expected impact of our operational efficiency and
cost-reduction initiatives and the estimated savings and amounts
expected to be incurred in connection therewith; and potential
business decisions. We derive many of our forward-looking
statements from our operating budgets and forecasts, which are
based upon many detailed assumptions. We caution that it is very
difficult to predict the impact of known factors, and, of course,
it is impossible for us to anticipate all factors that could affect
our actual results. All forward-looking statements are based upon
information available to us on the date of this report.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. We caution
you that forward-looking statements are not guarantees of future
performance and that actual results may differ materially from
those made in or suggested by the forward-looking statements
contained herein. In addition, even if actual results are
consistent with the forward-looking statements contained herein,
those results or developments may not be indicative of results or
developments in subsequent periods.
Important factors that could cause actual results to vary from
expectations include, but are not limited to: the duration and
severity of the COVID-19 pandemic and its impact on the federal,
state and local economies and on K-12 schools; any delays in
receiving the required regulatory approvals for the proposed sale
of HMH Books & Media; the risk that disruption resulting from
the proposed transaction my adversely affect the Company's
businesses and business relationships, including with employees and
suppliers; delays in satisfying other closing conditions and
disruptions in the global credit and financial markets that could
have a negative impact on the completion of the proposed
transaction; the rate and state of technological change; state
requirements related to digital instructional materials; our
ability to execute on our Digital First, Connected growth strategy;
increases in our operating costs; management and personnel changes;
timing, higher costs and unintended consequences of our operational
efficiency and cost-reduction initiatives, including the actions
described in this press release; and other factors discussed in the
"Risk Factors" section of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2020.
In light of these risks, uncertainties and assumptions, the
forward-looking events described herein may not occur.
We undertake no obligation, and do not expect, to publicly
update or publicly revise any forward-looking statement, whether as
a result of new information, future events or otherwise, except as
required by law. All subsequent written and oral forward-looking
statements attributable to us or to persons acting on our behalf
are expressly qualified in their entirety by the cautionary
statements contained herein.
Houghton Mifflin
Harcourt Company
Consolidated
Balance Sheets (Unaudited)
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
(in thousands of
dollars, except share information)
|
|
2021
|
|
|
2020
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
170,901
|
|
|
$
|
281,200
|
|
Accounts receivable,
net
|
|
|
92,477
|
|
|
|
88,830
|
|
Inventories
|
|
|
175,790
|
|
|
|
145,553
|
|
Prepaid expenses and
other assets
|
|
|
25,105
|
|
|
|
19,276
|
|
Assets held for
sale
|
|
|
140,971
|
|
|
|
160,053
|
|
Total current
assets
|
|
|
605,244
|
|
|
|
694,912
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and
equipment, net
|
|
|
86,248
|
|
|
|
88,801
|
|
Pre-publication
costs, net
|
|
|
191,232
|
|
|
|
202,820
|
|
Royalty advances to
authors, net
|
|
|
2,064
|
|
|
|
2,425
|
|
Goodwill
|
|
|
437,977
|
|
|
|
437,977
|
|
Other intangible
assets, net
|
|
|
391,412
|
|
|
|
402,484
|
|
Operating lease
assets
|
|
|
123,565
|
|
|
|
126,850
|
|
Deferred income
taxes
|
|
|
2,415
|
|
|
|
2,415
|
|
Deferred
commissions
|
|
|
30,319
|
|
|
|
30,659
|
|
Other
assets
|
|
|
29,991
|
|
|
|
31,783
|
|
Total
assets
|
|
$
|
1,900,467
|
|
|
$
|
2,021,126
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
19,000
|
|
|
$
|
19,000
|
|
Accounts
payable
|
|
|
47,336
|
|
|
|
38,751
|
|
Royalties
payable
|
|
|
21,503
|
|
|
|
34,765
|
|
Salaries, wages, and
commissions payable
|
|
|
14,460
|
|
|
|
21,723
|
|
Deferred
revenue
|
|
|
320,988
|
|
|
|
342,605
|
|
Interest
payable
|
|
|
4,136
|
|
|
|
11,017
|
|
Severance and other
charges
|
|
|
11,434
|
|
|
|
19,590
|
|
Accrued pension
benefits
|
|
|
1,593
|
|
|
|
1,593
|
|
Accrued postretirement
benefits
|
|
|
1,555
|
|
|
|
1,555
|
|
Operating lease
liabilities
|
|
|
9,948
|
|
|
|
9,669
|
|
Other
liabilities
|
|
|
23,468
|
|
|
|
22,912
|
|
Liabilities held for
sale
|
|
|
32,505
|
|
|
|
30,662
|
|
Total current
liabilities
|
|
|
507,926
|
|
|
|
553,842
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
of discount and issuance costs
|
|
|
621,319
|
|
|
|
624,692
|
|
Operating lease
liabilities
|
|
|
129,269
|
|
|
|
132,014
|
|
Long-term deferred
revenue
|
|
|
542,065
|
|
|
|
562,679
|
|
Accrued pension
benefits
|
|
|
17,240
|
|
|
|
24,061
|
|
Accrued
postretirement benefits
|
|
|
15,605
|
|
|
|
16,566
|
|
Deferred income
taxes
|
|
|
18,503
|
|
|
|
16,411
|
|
Other
liabilities
|
|
|
152
|
|
|
|
398
|
|
Total
liabilities
|
|
|
1,852,079
|
|
|
|
1,930,663
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01
par value: 20,000,000 shares authorized; no shares issued
and
outstanding at March 31, 2021 and December 31, 2020
|
|
|
—
|
|
|
|
—
|
|
Common stock, $0.01
par value: 380,000,000 shares authorized; 151,987,387
and 150,459,034 shares issued at March 31, 2021 and December
31, 2020, respectively; 127,410,353 and 125,882,000 shares
outstanding at March 31, 2021 and December 31, 2020,
respectively
|
|
|
1,520
|
|
|
|
1,505
|
|
Treasury stock,
24,577,034 shares as of March 31, 2021 and December 31, 2020,
respectively, at cost
|
|
|
(518,030)
|
|
|
|
(518,030)
|
|
Capital in excess of
par value
|
|
|
4,921,845
|
|
|
|
4,918,542
|
|
Accumulated
deficit
|
|
|
(4,307,813)
|
|
|
|
(4,255,830)
|
|
Accumulated other
comprehensive loss
|
|
|
(49,134)
|
|
|
|
(55,724)
|
|
Total stockholders'
equity
|
|
|
48,388
|
|
|
|
90,463
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,900,467
|
|
|
$
|
2,021,126
|
|
Houghton Mifflin
Harcourt Company
Consolidated
Statements of Operations (Unaudited)
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
(in thousands of
dollars, except share and per share data)
|
|
2021
|
|
|
2020
|
|
Net
sales
|
|
$
|
146,195
|
|
|
$
|
151,843
|
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
Cost of sales,
excluding publishing rights and
pre-publication
amortization
|
|
|
58,137
|
|
|
|
63,652
|
|
Publishing rights
amortization
|
|
|
3,166
|
|
|
|
4,432
|
|
Pre-publication
amortization
|
|
|
25,051
|
|
|
|
30,562
|
|
Cost of
sales
|
|
|
86,354
|
|
|
|
98,646
|
|
Selling and
administrative
|
|
|
89,235
|
|
|
|
123,341
|
|
Other intangible
assets amortization
|
|
|
7,906
|
|
|
|
5,856
|
|
Impairment charge for
goodwill
|
|
|
—
|
|
|
|
262,000
|
|
Operating
loss
|
|
|
(37,300)
|
|
|
|
(338,000)
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
Retirement benefits
non-service (expense) income
|
|
|
(200)
|
|
|
|
61
|
|
Interest
expense
|
|
|
(8,564)
|
|
|
|
(9,253)
|
|
Interest
income
|
|
|
20
|
|
|
|
766
|
|
Change in fair value
of derivative instruments
|
|
|
(674)
|
|
|
|
(380)
|
|
Loss from continuing
operations before taxes
|
|
|
(46,718)
|
|
|
|
(346,806)
|
|
Income tax expense
(benefit) for continuing operations
|
|
|
2,310
|
|
|
|
(8,780)
|
|
Loss from continuing
operations
|
|
|
(49,028)
|
|
|
|
(338,026)
|
|
Loss from discontinued
operations, net of tax
|
|
|
(2,955)
|
|
|
|
(7,947)
|
|
Net loss
|
|
$
|
(51,983)
|
|
|
$
|
(345,973)
|
|
Net loss per share
attributable to common stockholders
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(0.39)
|
|
|
$
|
(2.71)
|
|
Discontinued
operations
|
|
|
(0.02)
|
|
|
|
(0.06)
|
|
Net loss
|
|
$
|
(0.41)
|
|
|
$
|
(2.77)
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
|
126,473,317
|
|
|
|
124,688,974
|
|
|
|
|
|
|
|
|
|
|
Houghton Mifflin
Harcourt Company
Consolidated
Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
(in thousands of
dollars)
|
|
2021
|
|
|
2020
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(51,983)
|
|
|
$
|
(345,973)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
|
|
|
Loss from discontinued
operations, net of tax
|
|
|
2,955
|
|
|
|
7,947
|
|
Depreciation and
amortization expense
|
|
|
47,818
|
|
|
|
53,033
|
|
Amortization of
operating lease assets
|
|
|
3,285
|
|
|
|
3,632
|
|
Amortization of debt
discount and deferred financing costs
|
|
|
660
|
|
|
|
646
|
|
Deferred income
taxes
|
|
|
2,085
|
|
|
|
(9,128)
|
|
Stock-based
compensation expense
|
|
|
2,607
|
|
|
|
3,268
|
|
Impairment charge for
goodwill
|
|
|
—
|
|
|
|
262,000
|
|
Change in fair value
of derivative instruments
|
|
|
674
|
|
|
|
380
|
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(3,647)
|
|
|
|
29,057
|
|
Inventories
|
|
|
(30,238)
|
|
|
|
(51,580)
|
|
Other
assets
|
|
|
(3,851)
|
|
|
|
(335)
|
|
Accounts payable and
accrued expenses
|
|
|
3,322
|
|
|
|
(19,878)
|
|
Royalties payable and
author advances, net
|
|
|
(12,924)
|
|
|
|
(34,816)
|
|
Deferred
revenue
|
|
|
(42,231)
|
|
|
|
(59,529)
|
|
Interest
payable
|
|
|
(6,881)
|
|
|
|
(12)
|
|
Severance and other
charges
|
|
|
(8,156)
|
|
|
|
(5,320)
|
|
Accrued pension and
postretirement benefits
|
|
|
(855)
|
|
|
|
(1,108)
|
|
Operating lease
liabilities
|
|
|
(2,466)
|
|
|
|
(3,304)
|
|
Other
liabilities
|
|
|
(720)
|
|
|
|
(948)
|
|
Net cash used in
operating activities - continuing operations
|
|
|
(100,546)
|
|
|
|
(171,968)
|
|
Net cash provided by
operating activities - discontinued operations
|
|
|
19,290
|
|
|
|
15,201
|
|
Net cash used in
operating activities
|
|
|
(81,256)
|
|
|
|
(156,767)
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Additions to
pre-publication costs
|
|
|
(14,354)
|
|
|
|
(18,489)
|
|
Additions to
property, plant, and equipment
|
|
|
(9,949)
|
|
|
|
(11,875)
|
|
Net cash used in
investing activities - continuing operations
|
|
|
(24,303)
|
|
|
|
(30,364)
|
|
Net cash used in
investing activities - discontinued operations
|
|
|
(400)
|
|
|
|
(262)
|
|
Net cash used in
investing activities
|
|
|
(24,703)
|
|
|
|
(30,626)
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Borrowings under
revolving credit facility
|
|
|
—
|
|
|
|
150,000
|
|
Payments of long-term
debt
|
|
|
(4,750)
|
|
|
|
(4,750)
|
|
Tax withholding
payments related to net share settlements of restricted stock
units
|
|
|
—
|
|
|
|
(48)
|
|
Issuance of common
stock under employee stock purchase plan
|
|
|
410
|
|
|
|
503
|
|
Net cash used in
financing activities
|
|
|
(4,340)
|
|
|
|
145,705
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
(110,299)
|
|
|
|
(41,688)
|
|
Cash and cash
equivalents at the beginning of the period
|
|
|
281,200
|
|
|
|
296,353
|
|
Cash and cash
equivalents at the end of the period
|
|
$
|
170,901
|
|
|
$
|
254,665
|
|
Houghton Mifflin
Harcourt Company
Non-GAAP
Reconciliations (Unaudited)
|
|
|
|
Adjusted EBITDA
1
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Net loss from
continuing operations
|
|
$
|
(49,028)
|
|
|
$
|
(338,026)
|
|
Interest
expense
|
|
|
8,564
|
|
|
|
9,253
|
|
Interest
income
|
|
|
(20)
|
|
|
|
(766)
|
|
Provision (benefit)
for income taxes
|
|
|
2,310
|
|
|
|
(8,780)
|
|
Depreciation
expense
|
|
|
11,695
|
|
|
|
12,183
|
|
Amortization
expense
|
|
|
36,123
|
|
|
|
40,850
|
|
Non-cash charges –
goodwill impairment
|
|
|
—
|
|
|
|
262,000
|
|
Non-cash charges –
stock compensation
|
|
|
2,607
|
|
|
|
3,268
|
|
Non-cash charges –
loss on derivative instruments
|
|
|
674
|
|
|
|
380
|
|
Fees, expenses or
charges for equity offerings, debt or
acquisitions/dispositions
|
|
|
1,826
|
|
|
|
27
|
|
Adjusted EBITDA from
continuing operations
|
|
$
|
14,751
|
|
|
$
|
(19,611)
|
|
|
|
|
|
Free Cash Flow
1
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
|
$
|
(100,546)
|
|
|
$
|
(171,968)
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Additions to
pre-publication costs
|
|
|
(14,354)
|
|
|
|
(18,489)
|
|
Additions to
property, plant, and equipment
|
|
|
(9,949)
|
|
|
|
(11,875)
|
|
Free Cash
Flow
|
|
$
|
(124,849)
|
|
|
$
|
(202,332)
|
|
|
|
1
|
All amounts have been
adjusted to eliminate the impact of the HMH Books & Media
business which has been removed from continuing operations and
classified as discontinued operations.
|
Houghton Mifflin
Harcourt Company
Calculation of
Billings (Unaudited)
|
|
|
|
Billings
1
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Net sales
|
|
$
|
146,195
|
|
|
$
|
151,843
|
|
Change in deferred
revenue
|
|
|
(42,231)
|
|
|
|
(58,529)
|
|
Billings
|
|
$
|
103,964
|
|
|
$
|
93,314
|
|
|
Billings is an
operating measure utilized by the Company derived as shown
above.
|
|
|
1
|
All amounts have been
adjusted to eliminate the impact of the HMH Books & Media
business which has been removed from continuing operations and
classified as discontinued operations.
|
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SOURCE Houghton Mifflin Harcourt