Houghton Mifflin Harcourt Company (HMHC) has reported a 31.32 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $90.02 million, or $0.73 a share in the quarter, compared with $131.08 million, or $0.94 a share for the same period last year.
Revenue during the quarter dropped 7.38 percent to $533.02 million from $575.51 million in the previous year period. Gross margin for the quarter contracted 109 basis points over the previous year period to 54.96 percent. Total expenses were 84.36 percent of quarterly revenues, up from 82.18 percent for the same period last year. That has resulted in a contraction of 218 basis points in operating margin to 15.64 percent.
Operating income for the quarter was $83.37 million, compared with $102.56 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $168.37 million compared with $191.54 million in the prior year period. At the same time, adjusted EBITDA margin contracted 169 basis points in the quarter to 31.59 percent from 33.28 percent in the last year period.
"While we are disappointed with the Company's performance year to date, especially in the domestic education market, we are squarely focused on restoring growth to the business," said Gordon Crovitz, Interim chief executive officer of HMH. "We are taking necessary steps to remedy issues which resulted in loss of market share in California this year, as well as to accelerate growth in our adjacent markets in order to create greater value for shareholders and improve our financial performance."
For fiscal year 2016, Houghton Mifflin Harcourt Company forecasts revenue to be in the range of $1,320 million to $1,380 million.
Operating cash flow drops significantly
Houghton Mifflin Harcourt Company has generated cash of $9.46 million from operating activities during the nine month period, down 94.21 percent or $153.92 million, when compared with the last year period.
The company has spent $54.87 million cash to meet investing activities during the nine month period as against cash outgo of $566.60 million in the last year period.
The company has spent $38.75 million cash to carry out financing activities during the nine month period as against cash inflow of $323.68 million in the last year period.
Cash and cash equivalents stood at stood at $150.10 million as at Sep. 30, 2016.
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