Textbook publisher Houghton Mifflin Harcourt filed for an IPO late last week — a sign of a nice turnaround, considering the company came out of bankruptcy just last year.
Not that bankruptcy isn’t a normal part of business anymore; for Houghton, the process allowed the company to wipe away plenty of debt and cut costs.
Houghton is an iconic company, having gotten its start in 1832. The company is now a global provider of education solutions and has a customer base of 60 million students across 150 countries. In the U.S., it is the top player in the K-12 educational market.
In terms of intellectual property, Houghton’s portfolio includes about 500,000 separate titles. But the company is not just about textbooks; Houghton also owns brands like Curious George, Carmen Sandiego, The Oregon Trail, The Little Prince, The Lord of the Rings and Life of Pi.
Houghton also has a multiplatform strategy, with its content available via the Web, e-books, games, video and mobile apps. The company has done this through a variety of strategic partnerships with companies like Apple (AAPL), Samsung (SSNLF), Knewton and Kno. In fact, the management team includes executives who have strong tech backgrounds with companies such as IBM (IBM), Microsoft (MSFT) and Oracle (ORCL).
Houghton’s financials are steady. Revenues for this year’s first six months came to $529.5 million, up about 4% year-over-year. Adjusted EBIDTA rocked nearly 28% to $64.7 million in the same period.
Looking at the long-term, there are some key drivers. One is the expected growth in the U.S. K-12 market. According to NCES, enrollment is expected to go from 55 million in 2010 to 58 million by 2021. Another factor is President Obama’s Preschool for All program, which will receive about $75 billion over the next 10 years.
But the real opportunity is in foreign markets. With emerging economies growing their middle classes, there will inevitably be rising demand for textbooks and other educational resources. Actually, Houghton is already getting aggressive with a push into the English language learning space. Based on a study from GSV, the market is expect to grow 15% per year until 2018, reaching about $80 billion.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.