Reporting its financial results for the first time since announcing its plan to sell its trade division to HarperCollins, learning technology company Houghton Mifflin Harcourt said first quarter sales dipped 3.7%, to $146 million, compared to the first period of 2020. Still, its loss from continuing operations plunged to $49 million from $338 million last year, a figure which includes a one-time charge of $262 million. The company also said that it had adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $15 million—the first time, HMH noted, it had positive first-quarter EBITDA since the company went public in 2014.
Results do not include the Houghton Mifflin Harcourt Books & Media group, which is now classified as a discontinued operation. Sales in the trade unit jumped 12% in the quarter, to $42.7 million, and the pre-tax loss was cut to $2.9 million, from $7.7 million in the first quarter of 2020. HMH said it still expects the sale to HC to be completed in the current quarter, which ends on June 30. The company expects to earn net proceeds of about $337 million from the sale, and will use those proceeds to pay down debt.
HMH had nothing else to say about the trade division other than to note it will enter into a "transition services agreement" with HC to perform certain support functions for a period of up to 12 months. While HMH still awaits the completion of the sale, it has already closed its New York City office.
In prepared comments on the quarter, HMH CEO Jack Lynch said: "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."