HMH Q2 2026 Earnings Report

HMH EPS Results

• Actual EPS: $0.42
• Consensus EPS: $0.23
• Beat/Miss: Beat by +$0.19
• One Year Ago EPS: N/A

HMH Revenue Results

• Actual Revenue: $170.82 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

HMH Announcement Details

• Quarter: Q2 2026
• Date: 8/5/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 9:00AM ET

Houghton Mifflin Harcourt (HMH (NASDAQ:HMH)) is an education and learning company that produces curricular content, instructional materials, assessment tools and digital learning platforms primarily for the K–12 market. The company develops and licenses print and digital resources designed to support classroom instruction, remote and blended learning, and student assessment across a range of subjects and grade levels.

HMH’s offerings include core and supplemental curricula, adaptive and online learning technologies, formative and summative assessments, and professional development services for educators. The company distributes materials through direct relationships with school districts, state education agencies and education partners, and its product set spans traditional textbooks, digital courseware, learning management integrations and teacher support resources intended to help districts implement standards-aligned instruction and measure student outcomes.

Formed from long-established publishing lines, HMH operates from its headquarters in the United States and serves predominantly U.S. K–12 customers while maintaining a presence in international markets through distribution and licensing arrangements. The company focuses on blending content expertise with technology to support district- and school-level priorities in curriculum adoption, intervention and assessment.

HMH Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Adjusted EBITDA margin increased to 19.8% in the second quarter, supported by cost discipline, favorable mix, and operational efficiency; adjusted EBITDA rose 3% year over year to $34 million.
• Positive Sentiment: Orders grew 19% year over year to $205 million, producing a 1.2x book-to-bill ratio, while aftermarket service orders increased 50% due to strong demand for digital technology upgrades.
• Positive Sentiment: Management cited improving offshore fundamentals, longer-duration contracts, rising floater utilization, and increased visibility into 2027; approximately 80% of projected 2027 floater rig years tied to HMH’s installed base are already covered by contracts or options.
• Negative Sentiment: Product revenue fell 66% year over year and repair activity was below expectations, with customer approvals delayed amid geopolitical uncertainty; Middle East installation and commissioning delays created an estimated $10 million revenue headwind.
• Neutral Sentiment: HMH maintained its 2026 adjusted EBITDA guidance of $157 million to $177 million and expects second-half revenue to be meaningfully stronger, although some delayed repair and equipment spending may not occur until 2027.

Presentation

[Operator]

Hello, everyone. Thank you for joining us and welcome to HMH Holding second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to David Bratton, Senior Vice President, Finance. Please go ahead.

[David Bratton, SVP of Finance at HMH Holding]

Good morning, everyone, and thank you for joining us for HMH's second quarter results. Joining me today are Eirik Bergsvik, our Chief Executive Officer, and Tom McGee, our Chief Financial Officer. Before we begin, we would like to remind you that this conference call may include forward-looking statements. These statements, which are subject to various risks, uncertainties, and assumptions, could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in this morning's press release, as well as our filings with the SEC, which can be found at our website at investor.hmh.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. Management statements may include non-GAAP financial measures. For reconciliations of these measures, please refer to our earnings release and our SEC filings.

[David Bratton, SVP of Finance at HMH Holding]

Following our prepared remarks, we will open the call for your questions. I'll now turn the call over to Eirik.

[Eirik Bergsvik, CEO at HMH Holding]

Thank you, David, and good morning, everyone. Overall, our second quarter results reflect the continued resilience and quality of our business model. Orders for the quarter were $205 million, representing a book-to-bill ratio of 1.2 times in the quarter. Total revenue for the quarter was $171 million, and adjusted EBITDA was $34 million. Importantly, adjusted EBITDA margins grew year-over-year to 20%, driven by disciplined cost execution, favorable mix, and a continued focus on operational efficiency. Looking at revenue composition, spares revenue increased 70% year-over-year to $61 million, largely on track to our expectations, reflecting increased fulfillment activity as customers prepare for upcoming contracts. Service revenue in the quarter was $89 million, with repair activities slower than planned, offset by strong and digital technology volume. Importantly, service order intake was strong, increasing 50% year-over-year, driven by robust digital technology upgrade orders.

[Eirik Bergsvik, CEO at HMH Holding]

This is a positive sign for future service revenue and underscores healthy upgrade demand from our customers. Product revenue of $21 million reflected the timing of product order bookings, in which we saw several customers delay project approvals and purchase orders amid ongoing planning activity as in geopolitical uncertainty. Now, turning to the broader market environment. The positive momentum we discussed in the first quarter has continued through the second quarter, particularly in floater segment. Contract award activity remained healthy across several key offshore basins, with operators continuing to sanction projects, advance development programs, and secure drilling capacity for future campaigns. Importantly, we see a growing number of awards being made well ahead of required start dates, providing increased visibility into 2027 for both drilling contractors and the broader offshore supply chain. Contract durations have also continued to extend.

[Eirik Bergsvik, CEO at HMH Holding]

Compared with recent years, operators are increasingly committing to multi-well and multi-year campaigns, particularly in deepwater and harsh environment markets. At the same time, lead times between contract award and contract commencement have expanded, reflecting greater confidence in future activity levels and a desire among operators to secure high-quality assets well in advance. These are all constructive indicators for the long-term health of the offshore industry. What is particularly encouraging is that we increasingly see today's contracting activities supported by strong long-term market fundamentals rather than short-term commodity cycles. Industry project inventories have declined significantly over the past decade while global energy demand continues to grow. As a result, you would expect operators to begin rebuilding development pipelines and sanction additional offshore projects to sustain future production levels. This is already translating into increased offshore investment.

[Eirik Bergsvik, CEO at HMH Holding]

Industry forecast indicates that global deepwater capital expenditures are expected to increase materially over the coming years, with 2027 spending projected to be meaningfully higher than 2025 and 2026 levels. At the same time, offshore projects continue to compete effectively for capital, with deepwater projects economics remaining significantly below the peak break-even levels seen during the last major offshore cycle. These factors continue to support investment in offshore developments across multiple regions and customers. Looking specifically at the floater market, utilization remains at healthy levels today and is expected to strengthen further as demand growth outpaces available supply. Industry forecasts suggest marketed floater utilization could move close to 90% in 2027, with harsh environment assets remaining among the strongest performing segments globally. We continue to see supportive day rates and increasing backlog visibility for premium submersibles and drill ships. For HMH, these developments are particularly encouraging.

[Eirik Bergsvik, CEO at HMH Holding]

Several key rigs within our installed base secured contracts award during the quarter, including a number of units equipped with significant HMH packages. We continue to see backlog growth across key rigs with our installed base, especially within the harsh environment semi-submersible fleet. This trend has steadily improved since the fourth quarter of last year and continues to strengthen throughout the second quarter, further improving long-term visibility for our aftermarket equipment and digital upgrades and automation opportunities. Importantly, many of the recent awards involving HMH equipment rigs are long-term in nature and have been secured further ahead of commencement than we have seen in recent years. This not only increases revenue visibility for drilling contractors, but also creates a favorable environment for customers to invest in equipment upgrades, automation solutions, and digital technology throughout the life of the contract.

[Eirik Bergsvik, CEO at HMH Holding]

We believe this positions HMH exceptionally well to benefit from the next stage of the offshore upcycle. In terms of timing for HMH, these investments are one of the larger contributors to our year. While certain customer factors may influence the pace and timing of investment decisions from our customers, we believe these factors are temporary and do not alter the long-term demand outlook for the critical equipment and services we provide. Regionally, Brazil remains one of the strongest offshore markets globally. Petrobras continues advancing major development programs while additional exploration and appraisal activity across South America supports continued demand for high-specification drilling assets. In the North Sea and broader harsh environment market, operators continue advancing field developments and sanctioning new projects. Recent contract awards, development approvals, and tender activity point towards sustained demand for harsh environments semi-submersible well into the latter part of the decade.

[Eirik Bergsvik, CEO at HMH Holding]

Given HMH's strong installed position across this fleet segment, we view these developments as particularly positive for our long-term outlook. Looking further ahead, activity continues to build across West Africa, Canada, and select Asia Pacific markets. New discoveries, project approvals, and upcoming development programs are supporting incremental drilling demand and reinforce our confidence that offshore investment levels will remain constructive for years to come. Turning briefly to our land business, market conditions remain relatively stable while activity in North America continues to reflect operator capital discipline. International markets remain supported by energy security initiatives and ongoing production investments. We continue to see healthy demand for aftermarket services, equipment upgrades, and reliability solution across our installed base. In mining, customer focus remains centered on productivity, safety, and sustainability. Long-term demand fundamentals for critical minerals remain attractive, driven by electrification, grid expansion, and broader infrastructure investment trends.

[Eirik Bergsvik, CEO at HMH Holding]

We continue to see opportunities to leverage HMH's engineering expertise and technology capabilities to support customers seeking improved operational performance and equipment reliability. Overall, we continue to view the market environment as increasingly constructive. Longer duration awards, growing offshore investments, improving utilization, increasing lead times, and rising backlog across our installed base support our confidence in continued market strength throughout 2027 and beyond. With our leading technology portfolio and broad installed base, we believe HMH is well-positioned to capitalize on these trends. To provide more detail on our financial results and outlook, I will now turn the call over to Tom.

[Thomas W. McGee, CFO at HMH Holding]

Thank you, Eirik. I'll begin with the total company results and then discuss our outlook for the year. Orders for the quarter were $205 million, up 19% year-over-year, driven by continued strength in our digital technology offerings in our service product line, partially offset by lower product bookings. Sequentially, orders were down 6%, reflecting the timing of product awards and repair activity. Despite the quarter-to-quarter variability, orders exceeded revenue, resulting in a 1.2 times book-to-bill ratio. While we expected a degree of volatility in first half order intake, customer decision-making was somewhat slower than anticipated. The softness was concentrated in product orders and repairs, where several customers delayed project approvals and purchase orders amid ongoing planning activities and geopolitical uncertainty.

[Thomas W. McGee, CFO at HMH Holding]

While these delays in contract spending ahead of reactivations impact orders and corresponding revenue in the short term, we believe the underlying demand environment remains intact, customer discussions continue to progress, and we believe many of these opportunities represent timing shifts rather than changes in customer spending intentions. As a result, we remain optimistic about order activity improving as the year progresses. Revenue for the quarter was $171 million, substantially flat quarter-over-quarter as the increase in service volumes were offset by lower spares and equipment revenue. Adjusted EBITDA in the quarter was $34 million, an increase of 3% year-over-year with higher spares activity offsetting lower product volume. Quarter-over-quarter, EBITDA increased 13%, driven by service volumes. In the quarter, we had non-recurring impacts of IPO expenses of $22.8 million and $5 million of restructuring.

[Thomas W. McGee, CFO at HMH Holding]

The adjusted EBITDA margin was 19.8% in the quarter, further demonstrating our underlying margin resilience supported by disciplined cost execution, favorable product mix, and continued focus on operational efficiency. Excluding the non-recurring impact of the IPO expenses, our tax rate for the second quarter was 25%. Turning to cash flow, free cash flow defined as cash flow from operating activities, plus purchase of property, equipment, and development costs, and excluding the impact of one-time cash payments associated with the IPO, was positive at $22 million in the quarter. Now I'll walk you through the product line results in more detail. In aftermarket services, revenue was $89 million in the quarter, down 4% year-over-year due to lower repair activity, partially offset by stronger digital technology volume and increased 24% quarter-over-quarter, driven by increased demand for repairs, digital technology, and other services.

[Thomas W. McGee, CFO at HMH Holding]

Margins in the segment remain supported by service mix, execution focus, and selective cost actions implemented over the past several quarters. Aftermarket services order intake was $118 million in the quarter, up 50% year-over-year and up 19% quarter-over-quarter, driven by strong digital technology volume. Aftermarket services, excluding digital technology, were slower than expected, in which longer cycle digital technology orders replaced shorter cycle repair activity in the quarter. Spares revenue was $61 million in the quarter, up 17% year-over-year due to increased demand from customers as they prepare for upcoming contracts and down 8% quarter-over-quarter. Spares order intake was $65 million, up 1% year-over-year and up 2% quarter-over-quarter, driven by global offshore market dynamics.

[Thomas W. McGee, CFO at HMH Holding]

Product revenue in the quarter was $21 million, down 66% year-over-year and down 38% quarter-over-quarter, reflecting the lower backlog at the start of the quarter and partially due to delay in equipment deliveries and installation and commissioning work in the Middle East. Order and delivery delays in the Middle East adversely impacted revenue in the quarter. Moving to our capital structure. We ended the quarter with $120 million in cash and cash equivalents. Total liquidity, including the revolving credit facility of approximately $195 million. We have no long-term debt maturity until June 2028. Capital expenditures and development costs during the quarter were $5.2 million, primarily supporting aftermarket capabilities, service reliability, and ongoing product development initiatives. We continue to operate an asset-light business model and manage capital intensity carefully while preserving flexibility to support growth as activity levels recover.

[Thomas W. McGee, CFO at HMH Holding]

As discussed on our first quarter earnings call, we completed our IPO on April 2nd. The IPO has significantly strengthened our capital structure and positioned us well to support long-term growth and deliver value to our shareholders. Basic earnings per share is calculated by dividing the net income attributable to HMH by the weighted average number of Class A shares during the same period. For the periods following the IPO, Class B shares are excluded from the computation of basic and diluted earnings per share. We have 12,042,625 Class A shares and 31,891,652 of Class B shares. We refer you to our Form 10-Q for further details. On the M&A front, we are advancing several strategic opportunities. We are highly encouraged by both the quality of assets under review and the broader opportunity set available in the market.

[Thomas W. McGee, CFO at HMH Holding]

Consistent with our disciplined capital allocation strategy, we believe these opportunities will enhance our capabilities, expand our market presence, and create meaningful long-term value for shareholders. Looking ahead, we already see another strong order rate so far in the third quarter, and we expect another quarter of book-to-bill above one times. Looking at the full year of 2026, we continue to expect second half revenue to be meaningfully stronger than the first half, driven by strong service and spares orders bookings during the first half of the year that will translate into higher revenue as customers prepare for higher activity levels. Looking further ahead to 2027, we already have approximately 80% visibility into our projected 2027 floater rig years with HMH install base based on contracts and contract options, a meaningful improvement from the roughly 65% visibility we had at the comparable point last year when forecasting 2026.

[Thomas W. McGee, CFO at HMH Holding]

This increased visibility reinforces our confidence in the outlook and supports our expectation of increased activity in 2027. For 2026 guidance, based on our current backlog, order activity, and margin visibility, our full year guidance remains unchanged with full year adjusted EBITDA to be in the range of $157 million-$177 million, with performance improving in the second half. Investments in CapEx, excluding development costs, are expected to be 2% of revenue for 2026. With that, I will turn the call back over to Eirik for closing remarks before Q&A.

[Eirik Bergsvik, CEO at HMH Holding]

Thank you, Tom. As we conclude, I want to emphasize that while our second quarter revenue reflected choppiness in product orders and repair intake, the underlying fundamentals of our business remain strong. We delivered year-over-year expansion in adjusted EBITDA margins, maintained disciplined cost execution, and continued to generate healthy commercial activity across our markets. Importantly, order momentum for digital technology upgrades remained robust during the quarter, reinforcing our confidence in the demand environment and providing further support for future revenue growth. This performance reflects both the strength of our customer relationships and the value customers place on our technology and service offerings. The offshore drilling market continues to evolve favorably. Floater contracting activity is improving, customers securing longer duration awards, and many of the rigs winning work today are equipped with HMH technologies.

[Eirik Bergsvik, CEO at HMH Holding]

At the same time, operators remain focused on enhancing operational performance through equipment upgrades, automation, digital solutions, and next generation technologies. All areas where HMH is uniquely positioned to create value. Looking ahead, we remain confident in anticipated market acceleration through the second half of the year and into 2027, and in HMH's ability to capitalize on opportunities in front of us. Finally, I want to thank our employees around the world for their dedication and outstanding execution this quarter. Their commitment to our customers and our strategy continues to strengthen the foundation of HMH and position the company for success in the years ahead. Thank you for your continued support of HMH. We look forward to updating you on our progress next quarter. With that, I'll turn the call back to the operators for questions.

[Operator]

Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Derek Podhaizer with Piper Sandler. Please go ahead.

[Derek Podhaizer, Senior Research Analyst at Piper Sandler]

Hey, good morning, guys.

[Eirik Bergsvik, CEO at HMH Holding]

Hey.

[Derek Podhaizer, Senior Research Analyst at Piper Sandler]

I wanted to start with the comment, Tom, you made in your remarks about the visibility that you have for your 2027 floater rig years. You said 80%, up from 65% this time last year. Obviously, a great improvement there. Maybe just help us understand closing that 20% gap, and even if you could talk about the upside and downside scenarios for meeting those 2027 rig year estimates.

[Thomas W. McGee, CFO at HMH Holding]

Yeah. There's a lot of noise, obviously, still in some of the tail end of that, whether you've got rigs that may be rolling off contract and need to be recontracted, potential for reactivation. I'd say, again, if you look at the rig activity forecast and you reforecast it from six months ago to today, you'd be at the same levels, in terms of forecast, more certainty around it. There is both upside and downside. I'd say you're starting to narrow the gap on the downside just by seeing the contract announcements that we've had. We don't go rig by rig, but it's just trying to give comfort that what we see today is exactly what we expected to see. We expect to see further strengthening throughout the year.

[Thomas W. McGee, CFO at HMH Holding]

Again, kind of comparing it to past cycles, we're ahead of where we'd be when looking at the forecast.

[Eirik Bergsvik, CEO at HMH Holding]

Derek, let me add to that. Let me add that for the first seven months in 2026, contracted rig years was 50% higher than the same period in 2025. That also gave an indication that 2027 is up.

[Derek Podhaizer, Senior Research Analyst at Piper Sandler]

Right. Okay. No, that makes sense. That's helpful. Obviously, it sounds like you're expecting an order inflection here in the back half of the year. Obviously, revenue came in a little bit light. You're expecting an inflection second half into 2027. Sounds like your customers had some delays just given the current geopolitical events. Maybe could you talk to us about your conversations with your customers, what they're waiting for, any specific clearing event? Is it just they need a resolution in the Middle East to kind of get back to things?

[Eirik Bergsvik, CEO at HMH Holding]

Maybe just a little bit more color around the guidepost that we should be looking out for to then see that inflection in the back half.

[Thomas W. McGee, CFO at HMH Holding]

Yeah. Let me separate that into two. I'm glad you asked about the Middle East. I think when you look at the Middle East, this was not true in the previous quarter. In this quarter, you had specific installation commissioning delays and order delays related to the situation that's obviously persisted longer than we thought. That in of itself was about a $10 million revenue headwind in the quarter. That is sort of a discrete item, although it does affect some purchasing elsewhere. What you did see, as Eirik alluded to, is an acceleration of digital. You had significantly higher digital orders than we saw. We saw customers making those longer term decisions the way we would expect them to, and even a little bit ahead of what we'd expect them to.

[Thomas W. McGee, CFO at HMH Holding]

Where you've got a little bit of delay is on some of the spend on repair in advance, either of reactivations or knowing a rig's going on contract and just waiting a little bit longer to spend the money. By the way, on the reactivations, that's not respecting on a reactivation, one, without saying the name. You've got 50 POs on reactivation that you're updating on a weekly or monthly basis. It's been kind of like that. Historically, you've seen some of that spend occur ahead of contract. You're not seeing that. Even when they have contracts, you're seeing a little bit of a delay in terms of when that picks up.

[Eirik Bergsvik, CEO at HMH Holding]

Yeah. I think you mentioned it yourself, geopolitical situation that actually drives the drillers to be a little bit more cautious about when they actually do the work on the upgrade they are planning to do. They wait as long as they can.

[Derek Podhaizer, Senior Research Analyst at Piper Sandler]

Great. Thank you, Eirik and Tom. I'll turn it back.

[Eirik Bergsvik, CEO at HMH Holding]

Thank you.

[Operator]

Your next question comes from Jason Kim with JP Morgan. Please go ahead.

[Eirik Bergsvik, CEO at HMH Holding]

Hey, Jason.

[Jason Kim, Analyst at JPMorgan]

Good morning, Eirik and Tom.

[Eirik Bergsvik, CEO at HMH Holding]

Morning.

[Jason Kim, Analyst at JPMorgan]

Thanks for taking my question this morning. Tom, you just mentioned customers are making some of these longer-term digital decisions even a bit ahead of your expectations, while some shorter-cycle repair spend is being deferred. As that digital and automation mix grows within the services segment, how should we think about its contribution to margins and the stickiness of that revenue over the life of these longer contracts?

[Thomas W. McGee, CFO at HMH Holding]

Yeah. It's kind of a two-parter. A lot of what that allows us to do is actually plan. It's actually nice that it's happened because it allows for better operational planning. Margin profile is similar. I think it's an aftermarket margin profile, what you'd expect. There is a little bit, and there's more on the back end of that, we believe. Some of that is just spend around the upgrade itself, and then some of it is an annuity beyond that. It's a little bit of a mix.

[Jason Kim, Analyst at JPMorgan]

Got it. That's helpful. As a follow-up to that, on the roughly $10 million Middle Eastern headwind you've flagged, as those installation and commissioning activities resume, do you view that as largely recoverable revenue that shifts into the back half in 2027, or are you already seeing those delayed activities begin to unlock?

[Thomas W. McGee, CFO at HMH Holding]

I'd split that into two. First of all, yes, it's all recoverable. Every bit of that, we think will be recovered. In terms of the installation and commissioning, yes, I think you see that as soon as the situation resolves itself. There's equipment, both our equipment and equipment that's needed for some of the installation and commissioning that's literally stuck on ships right now, as you would expect. On the new orders, I think we see, without getting too specific on the customers, an acceleration of discussions, but just like, "I need to wait on this. I have to rebuild infrastructure." You have the order delays could extend further than this year, would be my belief.

[Jason Kim, Analyst at JPMorgan]

Wonderful. I'll turn it back.

[Operator]

Your next question comes from Stephen Gengaro with Stifel. Please go ahead.

[Stephen Gengaro, Analyst at Stifel]

Good morning, everybody.

[Thomas W. McGee, CFO at HMH Holding]

Morning.

[Eirik Bergsvik, CEO at HMH Holding]

Morning, Stephen.

[Thomas W. McGee, CFO at HMH Holding]

Stephen, you're breaking up a little bit. Sorry, you're breaking up a little bit.

[Stephen Gengaro, Analyst at Stifel]

You want me to dial back in?

[Thomas W. McGee, CFO at HMH Holding]

I think that'd be helpful. We're having trouble hearing you. I apologize. We'll wait. We're patient. Yeah, he's coming back. We don't know if he's coming back on or not. Let's give him a minute. He was trying to call back in. Guys, I think I'll turn it back over to Eirik. We'll catch up with Stephen offline. Eirik, you want to go ahead and wrap?

[Eirik Bergsvik, CEO at HMH Holding]

Yeah. Okay. Thank you for your support and participation on today's call, we're looking forward to updating you on the third quarter results when that comes. Thank you all.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect.

Participants

Executives

• David Bratton, SVP of Finance
• Eirik Bergsvik, CEO
• Thomas W. McGee, CFO

Analysts

• Derek Podhaizer, Senior Research Analyst at Piper Sandler
• Jason Kim, Analyst at JPMorgan
• Stephen Gengaro, Analyst at Stifel