HMH (NASDAQ:HMH) reported second-quarter revenue of $171 million and adjusted EBITDA of $34 million, as stronger spares activity and digital technology orders helped offset slower product bookings and repair work. The company said its adjusted EBITDA margin rose year over year to 19.8%, supported by cost discipline, product mix and operational efficiency.
Orders totaled $205 million during the quarter, up 19% from a year earlier, producing a book-to-bill ratio of 1.2 times. Chief Executive Officer Eirik Bergsvik said results reflected the “continued resilience and quality” of the company’s business model, even as customers delayed certain project approvals and purchase orders amid planning activity and geopolitical uncertainty.
Services orders rise on digital technology demand
Bergsvik said robust orders for digital technology upgrades provide a positive indicator for future service revenue and demonstrate customer demand for upgrades. However, the company said longer-cycle digital orders displaced some shorter-cycle repair activity during the quarter.
Chief Financial Officer Thomas W. McGee said digital and automation work carries an aftermarket-style margin profile and may generate recurring revenue after the initial upgrade work. He added that the longer-term nature of those projects also enables better operational planning.
Spares revenue rose 17% year over year to $61 million, reflecting customer preparations for upcoming contracts. Product revenue, meanwhile, fell 66% year over year to $21 million, reflecting a lower opening backlog as well as delays in equipment deliveries, installation and commissioning activity in the Middle East.
Middle East delays weighed on quarterly revenue
McGee said installation, commissioning and order delays related to the Middle East situation created an approximately $10 million revenue headwind in the quarter. He characterized the affected revenue as recoverable, although the timing of new orders could extend beyond 2026 as customers address infrastructure needs.
“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,” McGee said during the question-and-answer session.
The company also cited deferred spending on repairs related to reactivations and rigs preparing to begin contracts. Bergsvik said drilling contractors have become more cautious about when they perform planned upgrade work because of geopolitical conditions, waiting as long as possible before committing spending.
Despite those near-term delays, management said customer discussions are continuing and that it views many postponed opportunities as timing shifts rather than reductions in spending intentions. McGee said HMH had already seen a strong order rate early in the third quarter and expects another quarter with book-to-bill above 1 times.
Offshore outlook points to stronger 2027 activity
Management highlighted continued momentum in the offshore floater market, including longer contract durations, awards being made further ahead of start dates, and increased backlog visibility for drilling contractors. Bergsvik said operators are increasingly committing to multi-well and multiyear campaigns, especially in deepwater and harsh-environment markets.
The company said several rigs in its installed base received contract awards during the quarter, including units with significant HMH equipment packages. It reported particular backlog growth among harsh-environment semi-submersible rigs.
HMH said it has approximately 80% visibility into projected 2027 floater rig years within its installed base, based on contracts and contract options. That compares with roughly 65% visibility at the comparable point last year when the company was forecasting 2026.
McGee said the remaining gap includes rigs that may need to be recontracted or potentially reactivated, but said recent contract announcements have narrowed uncertainty. Bergsvik added that contracted rig years during the first seven months of 2026 were 50% higher than in the same period of 2025.
The company cited Brazil, the North Sea and the broader harsh-environment market as particularly supportive regions, while also pointing to activity building in West Africa, Canada and select Asia-Pacific markets. HMH also said its land business remains stable, with demand for aftermarket services, upgrades and reliability solutions, while mining customers remain focused on productivity, safety and sustainability.
Guidance and balance sheet
HMH maintained its full-year 2026 adjusted EBITDA guidance of $157 million to $177 million. The company expects second-half revenue to be meaningfully stronger than the first half, driven by service and spares orders booked during the first half that it expects to convert to revenue as customers prepare for higher activity levels.
Free cash flow, defined by the company as operating cash flow plus purchases of property, equipment and development costs, excluding one-time IPO cash payments, was positive $22 million in the quarter. HMH ended the period with $120 million in cash and cash equivalents and approximately $195 million of total liquidity, including its revolving credit facility.
The company incurred $22.8 million of IPO expenses and $5 million of restructuring costs during the quarter. It completed its initial public offering on April 2 and said it has no long-term debt maturities until June 2028. Capital expenditures and development costs were $5.2 million, while HMH expects 2026 capital expenditures, excluding development costs, to equal about 2% of revenue.
About HMH (NASDAQ:HMH)
Houghton Mifflin Harcourt (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.
