Discounted Cash Flow (DCF) Analysis Unlevered

Houghton Mifflin Harcourt Company (HMHC)

$21.03

0.00 (0.00%)

All numbers are in Millions, Currency in USD

Stock DCF: 9.79 | 21.03 | overvalue

Operating Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	1,407.51	1,322.42	1,390.67	1,031.29	1,050.80	985.56	924.37	866.98	813.15	762.67
Revenue (%)
EBITDA	167.70	207.59	127.79	-184.40	461.94	123.95	116.25	109.04	102.27	95.92
EBITDA (%)
EBIT	-110.82	-42.88	-160.85	-426.28	251.26	-79.05	-74.15	-69.54	-65.22	-61.17
EBIT (%)
Depreciation	278.52	250.47	288.64	241.89	210.68	203	190.40	178.58	167.49	157.09
Depreciation (%)

Balance Sheet Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Total Cash	235.43	303.20	296.35	281.20	463.13	260.79	244.60	229.41	215.17	201.81
Total Cash (%)
Account Receivables	201.08	203.57	184.42	152.83	135.50	139.27	130.62	122.51	114.91	107.77
Account Receivables (%)
Inventories	154.64	184.21	213.06	166.96	117.47	133.26	124.99	117.23	109.95	103.12
Inventories (%)
Accounts Payable	61.50	76.31	52.13	49.10	37.45	43.79	41.07	38.52	36.13	33.88
Accounts Payable (%)
Capital Expenditure	-60.29	-53.74	-37.56	-50.94	-39.09	-38.85	-36.44	-34.17	-32.05	-30.06
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 21.03
Beta	1.136
Diluted Shares Outstanding	131.65
Cost of Debt
Tax Rate	56.60
After-tax Cost of Debt	3.36%
Risk-Free Rate
Market Risk Premium
Cost of Equity	9.799
Total Debt	452.54
Total Equity	2,768.65
Total Capital	3,221.19
Debt Weighting	14.05
Equity Weighting	85.95
Wacc

Build Up Free Cash

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	1,407.51	1,322.42	1,390.67	1,031.29	1,050.80	985.56	924.37	866.98	813.15	762.67
EBITDA	167.70	207.59	127.79	-184.40	461.94	123.95	116.25	109.04	102.27	95.92
EBIT	-110.82	-42.88	-160.85	-426.28	251.26	-79.05	-74.15	-69.54	-65.22	-61.17
Tax Rate	32.83%	28.59%	-2.00%	2.52%	56.60%	23.71%	23.71%	23.71%	23.71%	23.71%
EBIAT	-74.44	-30.62	-164.08	-415.54	109.06	-60.31	-56.57	-53.06	-49.76	-46.67
Depreciation	278.52	250.47	288.64	241.89	210.68	203	190.40	178.58	167.49	157.09
Accounts Receivable	-	-2.49	19.15	31.59	17.34	-3.78	8.65	8.11	7.61	7.13
Inventories	-	-29.57	-28.85	46.10	49.49	-15.79	8.27	7.76	7.28	6.83
Accounts Payable	-	14.81	-24.18	-3.02	-11.66	6.34	-2.72	-2.55	-2.39	-2.24
Capital Expenditure	-60.29	-53.74	-37.56	-50.94	-39.09	-38.85	-36.44	-34.17	-32.05	-30.06
UFCF	143.79	148.86	53.12	-149.93	335.83	90.61	111.60	104.67	98.17	92.07
WACC
PV UFCF						83.21	94.12	81.07	69.83	60.15
SUM PV UFCF										388.37

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	8.89
Free cash flow (t + 1)	93.92
Terminal Value	1,363.08
Present Value of Terminal Value	890.39

Intrinsic Value

Enterprise Value	1,278.77
Net Debt	-10.59
Equity Value	1,289.36
Shares Outstanding	131.65
Equity Value Per Share	9.79