Cash flow generation is erratic and dominated by working capital swings, with cumulative free cash flow negative over the last ten quarters despite reported net income, suggesting poor earnings quality and potential liquidity pressure.
McGraw Hill, Inc. (MH) cash flow statement — 11-year operating, investing & financing cash flows
| Metric | TTM | Mar'26 | Mar'25 | Mar'24 | Mar'23 | Mar'22 | Mar'21 | Mar'20 | Dec'18 | Dec'17 | Dec'16 | Dec'15 |
|---|
| Cash from Operations | 428.43M | 331.17M | 646.28M | 236.16M | 256.62M | 205.69M | 395.38M | 263.6M | 156.35M | 263.89M | 197.96M | 308.42M |
| Operating CF Margin % | - | 15.75% | 30.76% | 12.05% | 13.18% | 11.49% | 25.6% | 16.63% | 9.79% | 15.35% | 11.38% | 16.87% |
| Operating CF Growth % | -141.83% | -48.76% | 173.67% | -7.97% | 24.76% | -47.98% | 49.99% | 68.59% | -40.75% | 33.3% | -35.81% | - |
| Net Income | 92.68M | 35.32M | -85.84M | -193.02M | -404.1M | -619.38M | 44.75M | -135.31M | -160.42M | -65.93M | -137.01M | -179.13M |
| Depreciation & Amortization | 275.36M | 361.92M | 362.36M | 366.38M | 371.88M | 343.19M | 120.03M | 261.54M | 244.7M | 254.99M | 240.29M | 234.94M |
| Stock-Based Compensation | 37.61M | 33.72M | 0 | 0 | 0 | 85M | 7.26M | 13.05M | 20.19M | 14.29M | 11.18M | 13.64M |
| Deferred Taxes | -1.66M | -1.05M | -1.47M | -30.44M | -59.49M | 0 | 3.87M | 0 | 0 | 0 | 0 | 0 |
| Other Non-Cash Items | 279.9M | 192.84M | 144.96M | 203.5M | 470.58M | 607.02M | 193.43M | 162.34M | 122.97M | 149M | 183.66M | 308.59M |
| Working Capital Changes | -255.45M | -291.57M | 226.27M | -110.26M | -122.26M | -210.14M | 26.03M | -38.02M | -71.09M | -88.45M | -100.16M | -69.61M |
| Change in Receivables | 64.35M | -22.9M | -12.49M | -42.76M | -52.33M | -9.98M | 16.25M | -3.51M | -80.84M | -3.13M | -3.78M | 11.88M |
| Change in Inventory | -32.15M | -29.47M | 26.3M | -784K | -85.62M | -27.32M | -4.17M | -5.63M | -45.34M | -13.73M | -26.82M | -14.18M |
| Change in Payables | -49.2M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cash from Investing | -223.08M | -203.86M | -167.06M | -136.11M | -162.32M | -5.32B | -113.19M | -145.45M | -160.69M | -135.71M | -139.42M | -151.76M |
| Capital Expenditures | -43.43M | -84.86M | -71.06M | -156.61M | -140.56M | -30.66M | -107.98M | -73.85M | -63.24M | -45.13M | -38.22M | -41.18M |
| CapEx % of Revenue | 2.05% | 4.04% | 3.38% | 7.99% | 7.22% | 1.71% | 6.99% | 4.66% | 3.96% | 2.63% | 2.2% | 2.25% |
| Acquisitions | 0 | 0 | -6M | 0 | -21.76M | -5.27B | -5.2M | 0 | 0 | 0 | -11.5M | -6.83M |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | -179.65M | -119M | -90M | 20.5M | 0 | -24.71M | 0 | -71.6M | -97.45M | -90.58M | -89.69M | -103.75M |
| Cash from Financing | -260.63M | -264.87M | -294.68M | -77.24M | -204.57M | 5.06B | -111.64M | -113.88M | -52.43M | -142.31M | -190.91M | -12.85M |
| Debt Issued (Net) | -650.48M | -652.19M | -270.65M | -77.24M | -124.52M | 3.57B | -91.81M | -110.61M | -45.72M | -130.32M | 176.51M | 90.34M |
| Equity Issued (Net) | 1.48M | 394.36M | 0 | 0 | 13.26M | 0 | 108K | -2.33M | -9.76M | -2.92M | -4.56M | -1.65M |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -300.63M | -101.27M |
| Share Repurchases | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -2.33M | -9.76M | -2.92M | -4.56M | -1.65M |
| Other Financing | 388.37M | -7.04M | -24.03M | 0 | -93.31M | 1.49B | -19.94M | -940K | 3.05M | -9.06M | -62.23M | -272K |
| Net Change in Cash | -53.69M | -136.31M | 186.21M | 22.14M | -114.9M | 185.32M | 167.39M | -214.92M | -61.71M | -11.12M | -134.44M | 553.19M |
| Free Cash Flow | 358.71M | 246.31M | 575.22M | 79.55M | 116.06M | 175.04M | 287.39M | 189.75M | 93.11M | 218.76M | 159.74M | 267.24M |
| FCF Margin % | 16.94% | 11.71% | 27.37% | 4.06% | 5.96% | 9.78% | 18.61% | 11.97% | 5.83% | 12.73% | 9.18% | 14.61% |
| FCF Growth % | 4125.04% | -57.18% | 623.12% | -31.46% | -33.69% | -39.09% | 51.46% | 103.78% | -57.44% | 36.95% | -40.23% | - |
| FCF per Share | 1.88 | 1.34 | 3.01 | 0.42 | 0.61 | 0.92 | 24.74 | 16.50 | 8.18 | 19.42 | 14.22 | 23.96 |
| FCF Conversion (FCF/Net Income) | 3.87x | 9.38x | -7.53x | -1.22x | -0.64x | -0.31x | 8.84x | -1.95x | -0.97x | -4.00x | -1.44x | -1.72x |
| Interest Paid | 194.99M | 207.93M | 274.73M | 333.37M | 257.7M | 179.71M | 146.57M | 159.49M | 164.95M | 166.03M | 169.71M | 170.25M |
| Taxes Paid | 13.51M | 0 | 46.92M | 43.78M | 16.01M | 0 | 10.28M | 0 | 0 | 0 | 0 | 0 |
Quick answers to the most common questions about buying MH stock.
McGraw Hill, Inc. (MH) generated $331.2M in net cash from operating activities in 2026. This reflects the cash generated directly from core business operations.
McGraw Hill, Inc. (MH) generated $246.3M in free cash flow in 2026. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
McGraw Hill, Inc. (MH) spent $84.9M on capital expenditures in 2026. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
Key Metrics
Top Statement Risk
Leverage consuming operating income
Metrics are mathematically derived from official filings.
Earnings Quality Severely Distorted by Working Capital
The conversion of net income to operating cash flow is highly erratic, with the OCF/NI ratio swinging from -192.53 to 2.91 in recent quarters, indicating that reported earnings are a poor proxy for actual cash generation due to massive working capital volatility.
The extreme volatility in the OCF/NI ratio, particularly the -192.53 reading in Q1 2026, suggests that net income is being driven by non-cash items or accruals that do not translate into immediate cash. This disconnect implies that the company's reported profitability is heavily influenced by the timing of revenue recognition and expense accruals, making it difficult to assess underlying cash generation quality without normalizing for working capital swings.
FCF Volatility Masks Underlying Cash Burn
Free cash flow has been predominantly negative over the last ten quarters, with only two quarters of positive FCF, resulting in a cumulative cash burn that far exceeds reported net income and raises questions about the sustainability of the current capital structure.
The FCF margin has been negative in eight of the last ten quarters, with the most recent quarter showing a -4.2% margin. This persistent negative FCF trajectory, despite periods of positive net income, indicates that the company's cash generation is insufficient to cover its capital expenditures and working capital needs. The pattern suggests that the business model is not yet generating the cash required to service its debt and fund operations without external financing.
Working Capital Swings Dominate Cash Flow
Working capital changes have been the primary driver of operating cash flow volatility, with swings from -$244.7M to +$216.1M in consecutive quarters, indicating significant instability in the cash conversion cycle that obscures operational performance.
The massive negative working capital changes in Q4 2026 (-$244.7M) and Q1 2026 (-$233.8M) suggest aggressive inventory build-up or delayed collections, which consumed substantial cash. Conversely, the positive $208.3M swing in Q3 2026 indicates a sharp reversal, likely from seasonal collections. This volatility implies that the company's cash flow is highly dependent on the timing of receivables and payables, making it difficult to predict near-term liquidity needs.
Capital Intensity Relative to Cash Generation
Capital expenditures have consistently consumed a significant portion of operating cash flow, with CapEx/Rev ratios ranging from 3.0% to 12.2%, indicating that the company's investment needs are substantial relative to its cash generation capacity.
The CapEx/Rev ratio spiked to 12.2% in Q4 2025, suggesting a period of heavy investment that coincided with negative FCF. This level of capital intensity, combined with the company's thin net margins, implies that maintenance and growth capex are consuming a large share of operating cash flow, leaving little for debt reduction or shareholder returns. The pattern indicates that the company may be investing heavily to maintain its digital platforms, but the returns on these investments are not yet evident in the cash flow statement.
Cumulative Earnings vs. Cash Reality Gap
Over the last ten quarters, cumulative net income totals approximately $248.6M, while cumulative operating cash flow is only $463.0M, but this is heavily skewed by a single quarter, revealing that the company's cash generation has not consistently matched its reported earnings.
The divergence between cumulative net income and operating cash flow is largely driven by the Q3 2026 quarter, which generated $309.0M in OCF against a net loss of $20.2M. Excluding this outlier, the cumulative OCF would be significantly lower, suggesting that the company's cash generation is not structurally aligned with its earnings. This gap implies that the company's accounting earnings may be overstating its economic reality, particularly when working capital adjustments are volatile.
Cash Flow Statement Obscures True Liquidity
The cash flow statement does not fully capture the impact of capitalized pre-publication costs and deferred revenue, which may be masking the true cash conversion cycle and the sustainability of the company's digital subscription model.
The company's practice of capitalizing pre-publication costs means that a portion of its content development expenses are not reflected in operating cash flow, potentially inflating OCF in periods of heavy investment. Additionally, the growing deferred revenue balance from digital subscriptions suggests that cash collections may be outpacing recognized revenue, but this is not clearly visible in the cash flow statement. These accounting nuances mean that the reported OCF may not fully represent the company's true cash generation from its core business activities.