Ladies and gentlemen, thank you for standing by, and welcome to the HMH third quarter earnings conference call. [Operator Instructions. It is now my pleasure to introduce Senior Vice President of Investor Relations, Brian Shipman.

Thank you, and good morning, everyone. Before we begin, I would like to point out that the slides referred to on today's call can be found on the Investor Relations section of our website at hmhco.com. A replay of today's call will be available until November 14, 2020, and the webcast will be available on our website for 1 year. Our 10-Q was also filed earlier this morning, along with our third quarter 2020 earnings press release. Before we discuss our results, I encourage you to review the cautionary statement on Slide 2 for our customary disclosures. Further information can be found in our regular SEC filings. In addition, please refer to the appendix in our slide presentation for a reconciliation of our non-GAAP measures to the most directly comparable GAAP measures which is also posted to the HMH Investor Relations website. This morning, Jack Lynch, HMH's President and Chief Executive Officer, and Joe Abbott, HMH's Chief Financial Officer, will provide a company update as well as an overview of the company's third quarter 2020 results. After our prepared remarks, we will open the call to questions. During the Q&A, please limit yourself to one question plus one follow-up. You may get back into the queue if you have additional questions. Now I'll turn the call over to Jack.

Thank you, Brian, and good morning, everyone. Today, I'd like to update you on progress we've made in positioning HMH for long-term growth, including during the third quarter with the pandemic having cemented the central role of technology in K-12. First, I want to spend a few minutes on our October 1st announcement in which we detailed a strategic restructuring to align our cost structure to our digital-first connected strategy. As we discussed at length on our last earnings call, this decision was the culmination of the value innovation analysis we undertook over the last 2 years. We shared this framework with you at our investor update in October 2019, and we have continued to operationalize it over the course of 2020 as the pandemic has accelerated the shift in education to digital learning technologies. The actions we announced will enable us to create a more focused company with increased recurring digital subscription revenue that produces higher-margin and higher free cash flow into the future. Today, we've also announced an extension to that effort. We have decided to explore a potential sale for HMH Books & Media to further advance our learning technology strategy. This is a business we have grown with and invested in over many years. And it has continually demonstrated resilience, particularly this year through the challenges of the pandemic and during the third quarter. As we continue to focus on developing and scaling our digital solutions for teachers and students, we believe this is the right time to evaluate a potential sale for HMH books and media, with the aim of maximizing shareholder value and focusing the organization for the future. We will share updates with you in the future as appropriate. As for Q3, we continue to make strategic progress in a challenging market environment. We delivered strong performance in key adoption despite the pressures of the pandemic. We also generated strong adjusted EBITDA margin, which reflect the result of the decisive cost actions we've taken this year. All told, HMH continues to have a very strong liquidity position and balance sheet, which will enable us to finish the year and enter 2021 from a position of financial strength. We have restored our guidance for 2020 and expect to deliver billings for the full year between $1.05 billion and $1.1 billion. And we expect our free cash flow to be between a usage of $5 million and $15 million for the full year. We are pleased with how our organization has navigated the global pandemic. And to breakeven at the free cash flow level in this market environment, is evidence of the decisive actions we've taken this year to mitigate the pandemic's impact on our business. Looking ahead, based on everything we know at this time, we expect to be free cash flow positive in 2021. We are pleased that during the quarter, we continued to grow both SaaS billings and usage of our Ed Platform. SaaS billings grew 147%, the second straight quarter of accelerating growth. Ed Platform usage also increased by a very strong 388% as our installed base of customers continue to transition to increased usage of our digital offering. This is the second quarter in a row of roughly 400% increase in usage of our installed customer base. In addition, registered users on the Ed Platform grew from 13.8 million users in 2019 to 20.1 million users in 2020. These are key indicators of continued progress and momentum on our digital-first connected strategy, which is a direct result of our incredible team's focus on intercepting the increasing growth in digital demand. As for the connected part of digital-first connected, our growing number of districts nationwide continue to opt to connect to our HMH digital products and solutions. Across core, intervention, supplemental and professional learning. This is evidence that our connected strategy is working in the marketplace, leveraging our core footprint to cross-sell extensions with one salesforce. These achievements validate the progress we've made in sharpening our focus on learning technology, providing innovative connected solutions for our customers that deliver more impact and successful outcome. It's why with this momentum and at this pivotal inflection point in education, we believe now is the right time for us to evaluate a potential sale for HMH Books & Media to further accelerate our drive to digital and become a preeminent K-12 learning technology pure play. We see unique and significant opportunities for growth and value creation in establishing HMH as a K-12 company focused on learning technology with a business producing higher margins and free cash flow. HMH is well positioned to make this transition through learning technology, not only because of our talented team, but because of the progress we've made on our strategy over the last 3.5 years to enhance and extend our core, deliver integrated solutions and achieve operational excellence. This strategy has been our road map to 2020, and I'm incredibly proud of our team for what we've accomplished. We've built one integrated platform for all our products and services to support all subjects, all students and all teachers anywhere, whether instruction is provided in person, in hybrid or remote environment. We've also begun to transition to a subscription-based business model that generates recurring revenue from our customers and is a powerful value proposition to our shareholders. And we've established an entirely new operating model and a new way of working. This is a very strong foundation for HMH that benefits both our customers and our shareholders. With that, I'd like to hand it over to Joe for the operating and financial review.

Thanks, Jack, and good morning, everyone. I want to begin by sharing with you more about the progress we've made in realigning our organization through our ongoing value innovation analysis. As you'll recall, we introduced the value innovation framework at our investor update in October 2019 as one method we use to drive our strategic priorities. We've continued to operationalize it through the course of 2020, as the COVID-19 pandemic has accelerated the shift in education to digital learning technologies. Value innovation involves a 4-action framework of raise, create, reduce and eliminate. These are the 4 lenses through which we've continued to analyze our business model over the last year to determine strategically which elements of our cost structure need to be better aligned to the factors our customers value most. In essence, reducing our costs while creating exceptional value. Our strategic restructuring enables us to do just that, further simplify our business model, while creating and enhancing value to customers, teachers, students and shareholders. Let me share with you a few practical examples. In the strategic restructuring we announced on October 1, we reduced the size of our workforce by 22%, including positions eliminated as part of our previously announced voluntary retirement incentive program, and net of newly created positions to support our digital-first operation. In total, we expect to reduce our expenditures by approximately $65 million to $70 million per year relative to the last 12 months ended September 30, 2020, which was already a significantly reduced cost base after the temporary cost mitigation actions we took earlier this year. This estimate of the relative reduction has been updated from our press release announcing the restructuring after third quarter expenses came in much lower than we previously expected. To achieve these cost reductions, we eliminated activities and roles that were print centric across the business in areas such as marketing, product development and fulfillment. And we focused instead on building roles and activities to support our digital-first connected strategy. By simplifying our efforts on a more limited set of connected products and services, we were able to rationalize sales administrative activities previously required to support the more complex print and digital blended offering. We reduced our planned investment in enhancing our legacy technology stack and headquarters support spend in areas like IT, finance and HR in order to free investment capacity to create a digital-first infrastructure. All of these reductions and eliminations allowed us to raise and create the factors that we believe will help us more effectively deliver customer value and execute our strategy. For example, we increased the number of sales resources to cover the connected sales opportunity. Customer demand has increasingly shifted to products and solutions that are connected on one platform. Meeting this need is a key lever for our growth. We've also increased the number of inside sales representatives and transitioned our professional services team to virtual first, building on the success we've had this year in selling and delivering in a virtual environment. We've continued to build our customer success capability across the company. Focusing on customer experience and customer outcomes and increasing the size of our customer success team, scaling critical capabilities to align to the rapid growth trajectory of recurring subscription revenue. To help us continue to drive that scale, this year we have begun to establish several of the key elements of our subscription-based business. Digital-first pricing, key metrics, and best practices to help us build and retain our recurring revenue. Finally, we've begun the planning for our next-generation digital and connected operational model. This includes the technology and processes to create a frictionless experience for our customers and also the back office enabling technology to support digital billings growth for years into the future. The actions we've taken through our value innovation approach have dramatically reduced our cost structure, both in terms of fixed and variable costs. In 2019, we estimated our adjusted fixed costs were $619 million. And closer to $700 million if you go all the way back to 2016 before we began implementing our strategy. Through the value innovation efforts, in 2021 we estimate we will have lowered our fixed costs to between $500 million to $505 million, driven by the actions you've heard about from Jack and me today. Also, by next year, we anticipate adjusted variable costs will represent 36% of our billings, which is down 2 percentage points from 2019. The transition to virtual delivery of services, and reduction in costs associated with the print elements of our programs, both through redesign and reduced volume, is contributing to this expected reduction. HMH has a stronger capacity to generate sustained and positive free cash flow as a result of the steps we've taken to align our cost structure to our digital-first connected strategy. We estimate our 2021 free cash flow breakeven billings level to be in a range of $1.02 to $1.07 billion, which is a step-change improvement from just 2 years ago in which we used cash while generating $1.3 billion of billings. The earnings power of the model we have achieved is very strong. As you know, we typically expect that every dollar of incremental billings flow through to free cash flow at a rate of approximately 60% to 65%. Let's move now to an overview of our financial results for the quarter. Our total company billings for Q3 were $506 million. Back to school drove normal quarterly seasonality, but the pandemic and leaner adoption opportunities continued to impact the market. Despite the lower year-over-year billings, however, we had strong free cash flow generation of $237 million in the quarter. Our education segment delivered billings of $451 million in Q3. This was driven by core solutions billings of $254 million with mid-cycle adoption opportunities lower relative to the 2019 peak as we expected. Still, we performed well in the Texas literature adoption this year with a leading 34% share. We have seen a decline in open territory and international core spending due to the pandemic with many districts opting to extend their current contracts or postpone purchasing due to budget uncertainties. Extensions billings for the quarter were $196 million, with solid performance in supplemental and intervention, where billings growth in our SaaS offerings was a major contributor. That performance was offset by pandemic related billings declines in Heineman, which had performed very strongly in last year's Texas reading adoption, also creating a difficult comparable for this year and in professional services. For HMH Books & Media, billings in Q3 were $55 million, with growth driven primarily by a $7 million increase in licensing revenue, which includes revenue from our animated Carmen Sandiego series on Netflix. Rounding out the rest of our key financials for the quarter and year-to-date, our net sales were $387 million in the third quarter and $828 million for the first 9 months, largely driven by the same factors that drove billings. Net loss for the third quarter was $13 million. Adjusted EBITDA for the third quarter declined to $97 million, but notably, our adjusted EBITDA margin was essentially unchanged compared to the third quarter a year ago despite the decline in net sales this year. Given the significant operating leverage in our business, this is a remarkable result that was driven by the cost reduction and containment actions we've taken over the last 9 months. We generated $237 million of free cash flow in the third quarter and had a year-to-date cash usage of $11 million or nearly breakeven, both impressive feats given the headwinds faced in 2020. From a capital, liquidity and balance sheet perspective, we continue to be in a very strong position. As you know, we implemented a furlough earlier this year as a temporary and precautionary measure to preserve liquidity in the face of an uncertain environment due to COVID-19. We lifted that furlough effective July 30th, indicating our comfort of our liquidity. And as you can see in our results, our business demonstrated its resiliency by generating positive free cash flow of $237 million in the third quarter and bringing us to nearly breakeven cash flow on a year-to-date basis. Our revolver remains undrawn. And as of September 30, 2020, HMH's cash balance was $272 million. As you've heard in detail, our value innovation approach has dramatically reduced our cost structure and increased our free cash flow generation potential. So taken together, a healthy financial position that puts us on solid footing for 2021 and beyond. Today, we've also provided our outlook for the remainder of this year and our preliminary outlook for next year. We expect billings for the full year between $1.05 billion and $1.1 billion, and we expect our free cash flow to be a usage of between $5 million to $15 million for the full year of 2020. And based on what we know today, and following from our value innovation work this year, we expect positive free cash flow for 2021. This outlook reflects the decisive actions we've taken this year to execute our digital-first connected strategy that enables us to deliver value even amidst continued uncertainty in the market. Looking ahead, we remain confident that HMH will emerge even stronger after these trying times. Before I close out my prepared remarks, let me summarize the key takeaways about HMH's financials. First, we've taken significant steps to strengthen our business model and reduce our cost structure. These have included the actions we announced in October as well as the mitigating steps we took in response to COVID-19. We've markedly improved HMH's free cash flow generation potential, and our company remains financially strong with ample liquidity that will set us up for success in 2021. Finally, before handing the call back to Jack, I want to briefly comment on another item we announced this morning. As explained in our Form 10-Q, the nomination agreement with our largest shareholder, Anchorage, will come to an end today. In connection with that, Anchorage has requested that we register their shares for resale pursuant to an investor rights agreement that was put in place back in 2012 when the shares were first issued. Those shares had previously been registered for resale, but the prior registration statement was not renewed when it expired in 2018. Anchorage has been a valued investor and partner to HMH for over a decade, and we are pleased that Dan Allen is going to remain on our Board, even though he will no longer be serving as Anchorage's designee, demonstrating the confidence he has in HMH's strategy and management's ability to execute that strategy. With that, I'll hand it back over to Jack.

Thanks, Joe. I want to thank everyone for joining the call today. We've made important progress this quarter and feel confident that the steps we're taking are placing us in position to capitalize on the market growth in digital learning. HMH has accelerated our digital-first connected strategy. We've aligned our cost structure to this strategy and are rapidly growing our SaaS sales and digital platform usage. We're also sharpening our focus on learning technology, including through a potential sale of HMH Books & Media, to maximize shareholder value and focus our organization for the future. As you heard Joe discuss in detail, we're in a very strong financial position. We feel comfortable with the billings range we expect this year given the unprecedented environment we're operating in. And based on what we know today, we expect to be free cash flow positive in 2021. This will all build on the strong foundation we've established through our strategy to enable us to be even better positioned to support our employees, our customers and our shareholders. With that, we'll take your questions.

[Operator Instructions]. Our first question comes from the line of George Tong with Goldman Sachs.

This is Zach Lopez on for George. With the fall back-to-school season behind us, how did instructional material compare versus your own expectation? Where did they beat or miss? Were there any surprises? And if you could break that down by open territories and adoption states, that would be great.

Yes. In terms of our expectations, obviously, our expectations with the onset of the pandemic in March were adjusted. And we expected that the demand for instructional materials would slacken as a result of funding concerns that K-12 schools had. And you could see that in open territory. Open territory was down at the end of the second quarter and remained down year-over-year in terms of overall spending. I will say that the adoptions held up very well. And as you can see, we performed very well in the largest adoption in Texas with leading 34% share. So overall, I think we did well vis-a-vis the expectations we set for ourselves in the first quarter of 2020.

Got it. Thank you. And just one quick follow-up. If you could just talk about the traction with cross-selling supplemental materials, both digital and physical, that would be great.

Yes. Great question. And that obviously is central to our strategy of connecting core to extensions. We are very pleased with the progress we've made in connecting our core products to supplemental intervention and services. I just referenced the Texas literature adoption. We had over 90% attach rate of a program called Writable, which is in our extensions category, to our core into literature program and 100% attach of services to the core program. And then you can see on the slide that we had with all of the wins, connected wins, which were just illustrative of a broader set of wins of using one sales organization to sell not only core instructional materials, butt along with that, supplemental intervention and services. And for us, that is a unique competitive advantage given our presence in both core and in extensions. And when we tie them together, we're essentially helping a teacher to address the needs of each and every student regardless of where they are in achievement spectrum. So we're really pleased with the progress we made this year on that strategy.

[Operator Instructions]. Our next question comes from the line of Jake Williams with Wells Fargo.

Can you remind us what the run rate SaaS billings is exiting 3Q? I know it's up almost 150%. But just curious what kind of a dollar value is there.

Yes. The trailing 12 months, you'll see in our slide there for the third, at the end of the third quarter, was at $110 million.

Okay. And in that $110 million, what's the breakdown between kind of digital versions of the basal products, or digital versions of the textbooks versus extension?

Yes. Very little of our what we would call rather than basal, our core solutions, is part of that. In fact, most of the products that you'll see represented there are extensions. And that is the intervention product line, the supplemental product line. We also have some Heinemann billings in that $110 million. And so we have a predominantly extensions based mix there with that $110 million, a little bit of core is now part of that following from our HMH Anywhere sales.

Got it. And a quick follow-up, if I may. The 3Q billings was pretty close to what we were expecting. Revenue was a little bit lower. Could this have been to do with a timing shift where given the pandemic and delays at some districts, maybe signed the purchase agreements in 3Q, but the actual revenue will be recognized in 4Q? Or is that something that may be delayed to 2021?

No, this is a pretty consistent pattern that you see when we're selling multiyear contracts, Jake, is that if our billings mix skews towards multiyear contracts with customers. And that's usually a core solutions phenomenon. No real difference this year. You'll see that difference between billings and net sales or revenue. And that has everything to do with the revenue recognition rules that we have there. And you'll see the change in deferred revenue is really the delta between net sales and billings.

Thank you. Your next question comes from the line of Jason Bazinet with Citi.

I just had a quick question. If you guys end up going ahead with the sale of the consumer book business, is there tax leakage associated with that sale? Or do you think there wouldn't be based on--

No, we wouldn't anticipate a significant impact from tax leakage, Jason.

Thank you. I'm showing no further questions at this time. I will now turn the call back to President and CEO, Jack Lynch, for any further remarks.

Thanks, everyone, for your time and attention today, and we look forward to connecting with you again next year. Thank you. Have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.