Companies See Opportunities, Face Challenges

April 17, 2020: Volume 27, Number 8

With the transition to remote learning, educational technology providers are offering—and schools are signing up for—free educational resources. Exposing teachers and students to new forms of learning may pay dividends down the road, but companies also need to protect their businesses now in the economic downturn that accompanies the pandemic.

Stuart Udell, CEO of the differentiated instruction provider Achieve3000 (Lakewood, NJ), told EER the company added 1.6 million users to its platform in the weeks following making free product available and continues to add users.

Udell said Achieve3000 offers good product at a high price point and the company had strong revenue and profitability in 2019. While there are no health issues with Achieve3000, management decided to furlough some employees who did not have their usual work to do with schools closed.

Udell said the furloughed employees will be able to collect benefits available to them and that he hopes to bring them back on the payroll around August. 1. Udell described the furloughs as a prudent way to preserve cash at a low point in the year for company cash.

As to the added users, Udell said companies that can demonstrate that their products were not just downloaded but were used and were effective for student learning likely will emerge as the winners from the current situation.

Achieve3000 served more than 4 million students in 34,850 schools before COVID-19. In the face of the pandemic, Achieve3000 has made free resources available including Achieve3000 Literacy at Home Digital, which provides access to non-fiction articles at three reading levels on topics ranging from science and social studies to current events.

The company also is offering for free premium licenses with integration through Google Classroom to Actively Learn, which offers learners in grades 6-12 access to thousands of texts, including contemporary and classic literature, with collaboration and discussion tools to facilitate interactive remote instruction.

For students who do not have internet access at home, Achieve3000 has created leveled text sets including 20 printable articles with comprehension questions. Text packets add up to one month’s worth of content differentiated for students who are at-, below-, and above-grade-level readers.

In addition, Achieve3000 is working to create a home version of its foundational literacy solution for young learners, Smarty Ants for PreK-grade 3.

Houghton Mifflin Harcourt

Houghton Mifflin Harcourt (Boston) “is focused first and foremost on providing the support our customers need to help them continue to teach and learn remotely,” according to a company spokesperson “Our immediate work is rooted in how customers can use their current programs and offerings to the fullest extent to enable remote learning.”

Among its initiatives are extending digital licenses, initiating liberal permissions for delivery in different formats and extended tech support offerings and hours, including extensions through the summer.

HMH is offering use of its personalized learning platforms (Waggle, Writable and Amira) at no additional charge. The company donated 65,000 books to First Book and Save the Children to support children without access to the internet and quality books at home. Also, HMHM Books & Media granted open permission to educators and librarians to use books remotely for virtual storytelling and read-aloud activities.

HMH also is enacting measures intended to help protect its shareholders and employees, taking actions to help mitigate some of the adverse impact of COVID-19 to its profitability and cash flow in 2020. Those include:

▪ director, executive and senior leadership salary reductions, and for the majority of employees, a four-day work week with associated labor cost reductions;

▪ a freeze on spending not directly tied to near-term billings;

▪ reduced inventory purchasing;

▪ temporary closures of warehousing and distribution centers,

▪ deferral of long-term capital projects not directly contributing to billings in 2020 and

▪ borrowing $100 million of its asset-backed credit facility as a pre-emptive measure to mitigate against capital market disruptions. 

“While we continue to be confident in the strategic direction we embarked on nearly two years ago, given the many unknowns about the virus’ impact on our customers, we believe it is appropriate at this time to withdraw our prior guidance,” said HMH CEO Jack Lynch. “We are taking precautionary steps to mitigate the commercial risk posed by school closings and disrupted purchasing activity while working hard to protect the safety and well-being of our staff.”

HMH began 2020 with approximately $300 million in cash along with a $250 million asset-backed revolving credit facility, which provides extra liquidity to help mitigate near-term disruption to the business.

School Specialty

School Specialty (Greenville, WI) had a very strong start to the school year with booked revenue through March 14 up 9.9%. Then, school closures began in mid-March. Anticipating material impact from the closures on revenue, the company had discussions with its current senior secured lenders to address its capital structure. The company focused on getting a transaction that would improve its liquidity and allow it to continue as a going concern.

School Specialty also scaled back costs, has substantially all its team working remotely and implemented additional sanitation and distancing measures in its fulfillment centers, a crucial step in its business, as much of its business comes from catalog ordering. School Specialty said it will pursue further cost reductions if school spending declines significantly from current levels.

 

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