Houghton Mifflin Harcourt Announces First Quarter 2018 Results

Global learning company Houghton Mifflin Harcourt (“HMH” or the “Company”) (Nasdaq: HMHC) today announced its financial results for the first quarter ended March 31, 2018.

“We began 2018 with a solid first quarter,” said Jack Lynch, Chief Executive Officer of HMH. “We remain focused on the execution of our strategy, which includes three main pillars – enhancing and extending our core business, developing integrated solutions, and achieving operational excellence. As we look ahead to the future, we are excited about our prospects for growth.”

Joe Abbott, Chief Financial Officer of HMH added, “While the first quarter has historically been a small contributor to our annual results, we are encouraged by our early performance this year. The solid start, combined with our expectations for the remainder of 2018, gives us confidence in the outlook we provided in February.”

First Quarter 2018 Financial Results:
Net Sales: HMH reported net sales of $220 million for the first quarter of 2018, down $2 million compared to $222 million in the same quarter of 2017. The net sales decrease was driven by a $2 million decrease in our Education segment, partially offset by a slight increase in our Trade Publishing segment. Within our Education segment, the decrease was primarily due to lower Core Solutions sales, which declined by $4 million from $65 million in 2017 to $61 million in 2018. The primary drivers of the decrease in our Core Solutions sales were anticipated lower net sales of Reading programs in the third year of California’s English Language Arts adoption as well as the non-recurrence of the $5 million one-time fee we recognized in 2017 in connection with the expiration of a distribution agreement. Partially offsetting the decrease in our Core Solutions net sales were greater sales from our Extension businesses, which primarily consist of our Heinemann brand, intervention, supplemental and assessment products as well as professional services. Extension businesses net sales for the current period increased $2 million from $120 million in 2017 to $122 million in 2018 primarily driven by higher Heinemann net sales. The primary driver of the increase in our Heinemann net sales was sales of the Fountas & Pinnell Classroom product, which was introduced in the third quarter of 2017. Within our Trade Publishing segment, the increase was primarily due to higher licensing income along with print titles sales such as the Instant Pot series and Whole30 series.

Billings: HMH reported billings of $182 million for the first quarter of 2018, a decline of $2 million compared to $184 million in the same quarter of 2017. Education and Trade Publishing segment billings for the first quarter of 2018 were $145 million and $37 million, respectively, compared with $148 million and $36 million, respectively, for the same period in 2017. The primary drivers of the decrease in billings in our Education segment were lower Core Solutions billings, which declined by $10 million due to anticipated lower billings of Reading programs in the third year of California’s English Language Arts adoption as well as the non-recurrence of the $5 million one-time fee we recognized in 2017 in connection with the expiration of a distribution agreement. Partially offsetting the decrease in Core Solutions billings was billings growth of $7 million from our Extensions businesses, driven by growth in Heinemann and professional services. Trade Publishing segment billings increase was driven by higher licensing income along with print titles such as the Whole 30 series and the Instant Pot series.

Cost of Sales: Overall cost of sales decreased 3%, or $5 million, to $144 million in the first quarter of 2018 from $149 million in the same period of 2017, primarily due to a $4 million net reduction in publishing rights and pre-publication amortization. Cost of sales, excluding publishing rights and pre-publication amortization, decreased $1 million from $108 million in 2017 to $107 million in 2018 primarily due to lower volume. As a percent of net sales, cost of sales, excluding publishing rights and pre-publication amortization, increased slightly in 2018 from the same time period in 2017 due to product mix carrying higher costs.

Selling and Administrative Costs: Selling and administrative costs decreased $5 million to $151 million for the first quarter of 2018 from $156 million in the same period of 2017, primarily due to a reduction in internal and outside labor related costs of $4 million, a decrease in office lease cost of $1 million due to office space reductions and lower IT expenses of $2 million relating to maintenance contracts, hardware and telecommunications mostly associated with actions taken under the 2017 Restructuring Plan. Additionally, variable expenses such as commissions, samples, transportation and depository fees were $1 million lower in the current period. Offsetting the reductions in costs was an increase in professional fees of $3 million in 2018 as the prior year benefited from a $5 million non-recurring insurance reimbursement pertaining to a legal matter in 2016.

Operating Loss: Operating loss for the first quarter of 2018 was $87 million, a $9 million improvement from the $96 million operating loss recorded in the same period of 2017 primarily due to the aforementioned changes in net sales, cost of sales, and selling and administrative costs.

Net Loss: Net loss of $101 million in the first quarter of 2018 was $19 million, or 16%, lower compared to a net loss of $121 million in the same quarter of 2017, due primarily to the same factors impacting operating loss and a favorable change in our tax provision of $9 million, from an expense of $14 million for the same period in 2017 to an expense of $5 million in 2018. The reduction in expense was primarily due to the Tax Cuts and Jobs Act of 2017 resulting in a lower annual effective tax rate and our ability to utilize indefinite-lived deferred tax liabilities as a source of future taxable income in our assessment of realization of deferred tax assets.
more detail at: https://www.hmhco.com/about-us/press-releases/houghton-mifflin-harcourt-announces-first-quarter-2018-results

Related Posts

Over 970 Companies Removed Misleading Anti-Paper Statements

Since the campaign began in 2010, globally, Two Sides has successfully challenged over 970 organisations that subject their customers to repeated greenwashing messages which are damaging to the paper, print and mailing industry. With huge pressures on the economy; banks, telecom providers, utility companies and even governmental organisations are increasingly focused on switching their customers from paper to digital services to cut costs. All too often their customer communications attempt to mask these cost-saving efforts, justifying the switch with unfounded environmental marketing appeals such as “Go Green – Go Paperless” and “Choose e-billing and help save a tree.” “Not only are these greenwash claims in breach of established environmental marketing rules, but they are hugely damaging to an industry which has a solid and continually improving environmental record,” says Two Sides Europe Managing Director Jonathan Tame. “Far from ‘saving trees,’ a healthy market for forest products such as paper encourages the long-term growth of forests through sustainable forest management. Many of the organisations we engage are surprised to learn that European forests have actually been growing by 1,500 football pitches every day.”

The ODP Corporation Announces Sale of Its CompuCom Subsidiary in Transaction Valued up to $305 Million

The ODP Corporation announced that it has sold its CompuCom Systems subsidiary to an affiliate of Variant Equity in a transaction valued up to $305 million. “This action represents an important step in continuing to align our business model and resources towards our core strategy,” said Anthony Scaglione, chief financial officer of The ODP Corporation. “By enhancing our core focus and leveraging our B2B assets and digital commerce platform, we are in an excellent position to maximize returns for our shareholders.”

YETI Reports Third Quarter 2023 Results

Sales were flat at $433.6 million compared to the same period last year. Sales and adjusted sales for the third quarter of 2023 include $6.3 million of sales related to gift card redemptions in connection with recall remedies. Our 2023 results have been materially adversely impacted by the stop sale of the soft coolers included in the recalls initiated during the first quarter of 2023. Gross profit increased 13% to $251.3 million, or 58.0% of sales, compared to $222.4 million, or 51.3% of sales, in the third quarter of 2022. Gross profit included a $0.8 million, or 20 basis points, favorable impact related to lower than anticipated recall-related costs. The increase in gross margin was primarily due to lower inbound freight costs and lower product costs. Operating income decreased 10% to $61.9 million, or 14.3% of sales, compared to $68.5 million, or 15.8% of sales during the prior year quarter. Net income decreased 6% to $42.7 million, or 9.8% of sales, compared to $45.5 million, or 10.5% of sales in the prior year quarter; Net income per diluted share decreased 6% to $0.49, compared to $0.52 in the prior year quarter.
Back To Top
×Close search
Search