Houghton Mifflin Harcourt is one of the world’s largest providers of educational products and solutions for pre-K–12 learning, with a 40% global market share. Ninety percent of its revenues coming from education, with the remaining 10% from reference and trade, HMH reaches 57 million students in all 50 U.S. states as well as 120 countries. HMH is an innovator in the digital school-home market, offering blended and all-digital offerings such as HMH Fuse™, Write Source®, Singapore Math, Bar Models, and SkillsTutor, which help assess, extend and enhance classroom learning.
Houghton Mifflin’s history as an educational publisher goes back to 1832. In 2006, Houghton Mifflin was acquired by the Irish company Riverdeep, which was started by ex-banker Barry O'Callaghan. By the end of 2007, it acquired Harcourt from Reed Elsevier.
Key Company Developments in 2012 & 2013
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 USD of its debt, the company eliminated 250 million USD 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 USD, while adjusted EBITDA rose 34.4% to 320 million USD. The net loss was cut to 87 million USD from 2.2 billion USD in 2011, a figure that includes a 1.7 billion USD impairment charge.
Ownership, Mergers & Acquisition, Internal Organization:
According to Zecher, HMH has to meet several objectives to restore profitability, including international expansion, an investment shift from print to digital, and more direct-to-consumer sales. HMH is working to 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.
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.
The educational business features a new e-commerce platform, which will unite most of HMH’s Web sites. The platform will be released in the first half of 2013.
Houghton Mifflin Harcourt, one of the largest US educational publishers, struggled for the second year over a huge debt of $7 billion, derived mostly from a merger with Education Media & Publishing Group (EMPG, formerly Riverdeep), a company helmed by Irish entrepreneur Barry O’Callaghan.
After reports of an imminent collapse of EMPG by year’s end of 2009, CEO Barry O'Callaghan and Reed Elsevier engineered a financial shake up, converting, as the Financial Times reported, “EMPG's $5 billion in first lien debt and all of the $2 billion second lien loans to equity," which wiped out much of the shareholders’ stake. “The process has been driven in part by Paulson & Co, John Paulson's hedge fund, which has bought up EMPG debt and is expected to emerge as its main shareholder, ahead of Apollo, BlackRock and Guggenheim Partners, with board representation and more than 30 per cent of equity“ (Financial Times, January 14, 2010). On March 10, 2010, HMH announced that it had completed its re-capitalization, with debt levels reduced by 60%.
In February 2009, HMH CEO Tony Lucky announced his retirement and will be replaced by O’Callaghan. Lucky, CEO of HM since 2003, oversaw the integration of Harcourt after its purchase from Reed Elsevier.
2007 was a watershed year for Houghton Mifflin Harcourt (formerly Houghton Mifflin Riverdeep) in its restructuring and expansion as one of the leading providers of learning materials notably in the USA.
Education Media and Publishing Group Limited, the parent company of Houghton Mifflin Harcourt, resulted from Houghton Mifflin Riverdeep with the acquisition of Harcourt Education, Harcourt Trade and Greenwood-Heinemann from Reed Elsevier in December 2007 for roughly $4 million, making it the industry leader in its segment.
Houghton Mifflin acquired and integrated Harcourt Education from Reed Elsevier, and projected to sell off its College Division to Cengage.