Houghton Mifflin Harcourt Announces Strong Second Quarter 2021 Results

“We delivered a strong quarter with 25% billings growth; based on this growth and our robust pipeline, we are raising our full year guidance,” said Jack Lynch, President and Chief Executive Officer of Houghton Mifflin Harcourt. “As educators plan for the return to classrooms and school funding begins to stabilize, we are seeing growing demand for our teaching and learning solutions. School districts are looking for support and partnership to address achievement gaps created by interrupted learning, and HMH is collaborating with them to increase student outcomes. Importantly, we continue to execute on our Digital First, Connected strategy and our growth in ARR accelerated to 106% in the second quarter.”

Highlights from the quarter include:
*Raising 2021 billings guidance to $980-1,020 million and unlevered free cash flow guidance to 12-14% of billings
*Strong billings growth across the Company of 25% in Q2 and 21% YTD as demand for teaching and learning solutions grows with students returning to classrooms this fall
*Annualized Recurring Revenue (ARR)2 growth accelerated 106% bringing ARR to $77 million, or 8% of trailing twelve-month billings. Net Retention Rate (NRR)2 was 154%
*Trailing twelve-month free cash flow of $101 million, an improvement of $29 million compared to the first quarter of 2021, reflecting strong operating leverage and the benefits of 2020 actions to align HMH’s cost structure with its Digital First, Connected strategy
*Gross leverage ratio of 1.8x, below HMH’s target leverage ratio of 2.0x adjusted EBITDA

Joe Abbott, HMH’s Chief Financial Officer said, “The robust billings recovery and high operating leverage in our business, made stronger by the actions we took last year to reduce costs, propelled free cash flow growth during the second quarter. Furthermore, our recent efforts to strengthen our balance sheet resulted in upgrades from two rating agencies this year. This underscores our commitment to maintaining a strong financial position as we grow, which gives us the flexibility to further broaden our solutions portfolio.”
details at: https://www.hmhco.com/about-us/press-releases/houghton-mifflin-harcourt-announces-strong-second-quarter-2021-results-delivers-billings-growth-of-25-raises-full-year-guidance

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