Wolters Kluwer First-Quarter 2024 Trading Update
Wolters Kluwer First-Quarter 2024
Trading Update
Alphen aan den Rijn, May 1, 2024 – Wolters Kluwer, a
global leader in professional information, software solutions and
services, today releases its first-quarter 2024 trading
update.
Highlights
- Full-year 2024 guidance reiterated.
- First-quarter revenues up 6% in constant currencies and
up 6% organically.
- Recurring revenues (82%) up 7% organically; non-recurring
revenues up 1% organically.
- Expert solutions revenues (59%) up 8% organically.
- Cloud software revenues (18%) up 16% organically.
- First-quarter adjusted operating profit margin
increased.
- First-quarter adjusted free cash flow increased in
constant currencies.
- Net debt-to-EBITDA was 1.4x as of March 31,
2024.
- 2024 share buyback: €353 million of intended share
buyback of €1 billion completed in the year through April 29,
2024.
Nancy McKinstry, CEO and Chair of the Executive Board,
commented: “We’ve had a good start to the year, with 6%
organic growth and improvements in the margin and free cash flow.
We continued to invest in scaling our expert solutions, rolling out
several new products, and expanding into adjacent markets. And, we
are increasing our investment in deploying artificial intelligence
to bring benefits to customers. I am pleased to reiterate our
full-year guidance.”
First-quarter 2024 developments
First-quarter revenues increased 5% in reporting currencies,
reflecting organic growth of 6% (1Q 2023: 6%), slightly offset by
the impact of currency due to the weaker U.S. dollar compared to a
year ago (average EUR/USD rate was €/$1.09 in 1Q 2024 versus
€/$1.07 in 1Q 2023).
Recurring revenues (82% of revenues), which include
subscriptions and other repeating revenue streams, sustained 7%
organic growth (1Q 2023: 7%). Non-recurring revenues (18% of
revenues) increased 1% organically, slowing slightly compared to a
year ago (1Q 2023: 2%). Within non-recurring revenues,
transactional revenues posted 3% organic growth (1Q 2023: 1%
decline), as Financial & Corporate Compliance transactional
trends started to stabilize and Legal & Regulatory
transactional revenues (ELM Solutions) remained strong. Organic
growth in software license and implementation fees and other
non-recurring revenues slowed to 1% (1Q 2023: 2%). The adjusted
operating profit margin increased in the first quarter compared to
first quarter 2023.
Health revenues increased 7% in constant
currencies and 7% organically (1Q 2023: 5%). Clinical Solutions
delivered 9% organic growth (1Q 2023: 6%), reflecting good renewal
rates in clinical decision support and clinical drug information.
Our referential drug data and patient engagement solutions
(formerly Lexicomp and Emmi) were brought under the UpToDate brand.
Health Learning, Research & Practice recorded 5% organic growth
(1Q 2023: 3%), benefitting from new journal launches, including
NEJM AI, a title focused on AI in Medicine.
Tax & Accounting revenues increased 6% in
constant currencies, with organic growth of 8% (pro forma
1Q 2023: 9%) partly offset by the transfer of our Chinese
legal research solution Bold (2023 revenues: €21 million) to
the Legal & Regulatory division. North American organic growth
slowed to 8% as expected (pro forma 1Q 2023: 11%) partly due to the
challenging comparable created by last year’s tax guide publication
schedule. Europe recorded a strong start to the year despite the
absence of last year’s one-time benefits in Germany and Spain. Asia
Pacific & Rest of World grew 2% organically (1Q 2023: 7%) as
print books turned down.
Financial & Corporate Compliance revenues
grew 4% in constant currencies and 4% organically (pro forma
1Q 2023: 2%). Recurring revenues increased 6% organically (pro
forma 1Q 2023: 5%). Transactional and other non-recurring revenues
began to stabilize (1% organic increase in 1Q 2024 compared to pro
forma decline of 4% in 1Q 2023) but remain difficult to predict.
Legal Services grew 4% organically (pro forma 1Q 2023: 2%),
supported by sustained organic growth in service subscriptions
alongside stable transactional revenues. Financial Services
revenues grew 3% organically (pro forma 1Q 2023: 1%), supported by
4% organic growth in recurring revenues and a slight upturn in
transactional revenues compared to decline a year ago.
Legal & Regulatory
revenues grew 8% in constant currencies and 5%
organically (pro forma 1Q 2023: 4%), reflecting the transfer into
the division of the Bold legal research solution from the Tax &
Accounting division. Legal & Regulatory Information Solutions
grew 4% organically (1Q 2023: 4%), with sustained growth in digital
products more than offsetting decline in print. Legal &
Regulatory Software revenues grew 6% organically (pro forma 1Q
2023: 5%), buoyed by sustained double-digit growth in volume-driven
transactional revenues at ELM Solutions related to the on-boarding
of new customers.
Corporate Performance & ESG revenues grew
7% in constant currencies and 7% organically (pro forma
1Q 2023: 10%). Recurring revenues sustained double-digit
organic growth, while non-recurring revenues declined in the
quarter. Our EHS/ORM1 unit (Enablon) delivered 8% organic growth
(1Q 2023: 22%), driven by double-digit growth in recurring cloud
subscriptions partly offset by decline in non-recurring software
license fees against a challenging comparable. The CCH Tagetik
Corporate Performance Management (CPM) platform delivered 13%
organic growth (1Q 2023: 16%), driven by Europe and Asia Pacific
& ROW. Our corporate tax, internal audit (TeamMate), and
Finance, Risk & Reporting (OneSumX) units all recorded low
single-digit organic growth in the quarter.
Cash flow and net debt
First quarter cash conversion declined compared to first quarter
2023, as expected, due to a working capital outflow in the quarter
compared to an inflow in first quarter 2023. Adjusted free cash
flow increased in constant currencies, mainly due to favorable
timing of financing cost and tax paid in the quarter. A total of
€252 million in cash was deployed towards share repurchases
during the quarter. Net acquisition spending was negligible.
Net debt was €2,499 million as of March 31, 2024, compared to
€2,612 million at December 31, 2023. Net-debt-to-EBITDA, based on
rolling twelve-months EBITDA, was 1.4x at the end of March 2024,
compared to 1.5x at year-end 2023.
In March, 2024, we issued a new €600 million Eurobond with a
5-year term and 3.250% annual coupon.
Shares outstanding, share buybacks, and
dividends
As of March 31, 2024, the number of issued ordinary shares
outstanding (excluding 9.3 million shares held in treasury) was
239.2 million.
In the year to date (through April 29), we have repurchased 2.5
million ordinary shares for a total consideration of €353 million
(average share price €141.86). This includes a block trade of €48.0
million executed on February 22, 2024, to offset the dilution
caused by our incentive share issuance.
For the period starting May 2, 2024, up to and including
December 27, 2024, we have engaged third parties to execute
approximately €647 million in share buybacks on our behalf,
within the limits of relevant laws and regulations (in particular
Regulation (EU) 596/2014) and Wolters Kluwer’s Articles of
Association. For the period after November 10, 2024, this mandate
is subject to authorization by the AGM on May 8, 2024. Share
repurchases will be used for capital reduction purposes through
share cancelation. The share repurchase program may be suspended,
discontinued, or modified at any time.
At the Annual General Meeting to be held on May 8, 2024,
shareholders will be asked to approve a total dividend of €2.08
over financial year 2023, an increase of 15% compared to the 2022
dividend. If approved, the final dividend of €1.36 per share will
be paid to shareholders on June 4, 2024 (ADRs: June 11, 2024). The
interim dividend for 2024 will be set at 40% of the 2023 total
dividend.
Sustainability developments
Across the group, the focus in early 2024 has been on
reinforcing a range of initiatives that foster diversity,
engagement, and belonging, including career development programs
and employee networks. Our global real estate team began executing
on plans to deliver a reduction in square meters of office space in
2024, while at the same time improving the quality of workspaces
for employees. These plans will help us reach our SBTi2-validated
targets.
Full-year 2024 outlook
Our group-level guidance for 2024, shown in the table below, is
unchanged. We continue to expect sustained good organic growth in
2024, in line with the prior year, and a further modest increase in
the adjusted operating profit margin. Due to phasing of investment
expenses, margin improvement is expected to be modest in the first
half.
Full-Year 2024 Outlook |
|
Performance indicators |
2024 Guidance |
2023 Actual |
Adjusted operating profit margin* |
26.4%-26.8% |
26.4% |
Adjusted free
cash flow** |
€1,150-€1,200 million |
€1,164 million |
ROIC* |
17%-18% |
16.8% |
Diluted adjusted EPS growth** |
Mid- to high single-digit |
12% |
*Guidance for adjusted operating profit margin and ROIC is in
reporting currency and assumes an average EUR/USD rate in 2024 of
€/$1.09. **Guidance for adjusted free cash flow and diluted
adjusted EPS is in constant currencies (€/$ 1.08). Guidance
reflects share repurchases of €1 billion in 2024. |
|
In 2023, Wolters Kluwer generated over 60% of its revenues and
adjusted operating profit in North America. As a rule of thumb,
based on our 2023 currency profile, each 1 U.S. cent move in the
average €/$ exchange rate for the year causes an opposite change of
approximately 3 euro cents in diluted adjusted EPS3.
We include restructuring costs in adjusted operating profit. We
expect 2024 restructuring costs to be in the range of €10-€15
million (FY 2023: €15 million). We expect adjusted net financing
costs4 in constant currencies to increase to approximately €60
million. We expect the benchmark tax rate on adjusted pre-tax
profits to increase and to be in the range of 23.0%-24.0% (FY 2023:
22.9%).
Capital expenditures are expected to remain at the upper end of
our guidance range of 5.0%-6.0% of total revenues (FY 2023: 5.8%).
We expect the full-year 2024 cash conversion ratio to be around 95%
(FY 2023: 100%) due to lower net working capital inflows.
Our guidance assumes no additional significant change to the
scope of operations. We may make further acquisitions or disposals
which can be dilutive to margins, earnings, and ROIC in the near
term.
2024 outlook by division
Our guidance for 2024 organic revenue growth by division is
summarized below. We expect the increase in full-year 2024 adjusted
operating profit margin to be driven primarily by our Health, Legal
& Regulatory, and Corporate Performance & ESG divisions.
The Tax & Accounting margin is expected to decline slightly due
to increased product investment.
Health: we expect full-year 2024 organic growth
to be in line with prior year (FY 2023: 6%).
Tax & Accounting: we expect full-year 2024
organic growth to be slightly below prior year (FY 2023: 8%), due
to slower growth in non-recurring outsourced professional services
and the absence of one-off favorable events in Europe.
Financial & Corporate Compliance: we expect
full-year 2024 organic growth to be in line with or better than
prior year (FY 2023: 2%) as transactional revenues are expected to
stabilize.
Legal & Regulatory: we expect full-year
2024 organic growth to be in line with prior year (FY 2023:
4%).
Corporate Performance & ESG: we expect
full-year 2024 organic growth to be better than in the prior year
(FY 2023: 9%) as Finance, Risk & Reporting revenues
stabilize.
About Wolters Kluwer
Wolters Kluwer (EURONEXT: WKL) is a global leader in
information, software solutions and services for professionals in
healthcare; tax and accounting; financial and corporate compliance;
legal and regulatory; corporate performance and ESG. We help our
customers make critical decisions every day by providing expert
solutions that combine deep domain knowledge with technology and
services.
Wolters Kluwer reported 2023 annual revenues of €5.6 billion.
The group serves customers in over 180 countries, maintains
operations in over 40 countries, and employs approximately 21,400
people worldwide. The company is headquartered in Alphen aan den
Rijn, the Netherlands.
Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and
are included in the AEX and Euronext 100 indices. Wolters Kluwer
has a sponsored Level 1 American Depositary Receipt (ADR) program.
The ADRs are traded on the over-the-counter market in the U.S.
(WTKWY).
For more information, visit www.wolterskluwer.com, follow us on
LinkedIn, Facebook, YouTube, and Instagram.
Financial Calendar
May 8, 2024 |
Annual General
Meeting of Shareholders |
May 10, 2024 |
Ex-dividend date:
2023 final dividend |
May 13, 2024 |
Record date: 2023
final dividend |
June 4, 2024 |
Payment date:
2023 final dividend, ordinary shares |
June 11,
2024 |
Payment date:
2023 final dividend ADRs |
July 31,
2024 |
Half-Year 2024
Results |
August 27,
2024 |
Ex-dividend date:
2024 interim dividend |
August 28,
2024 |
Record date: 2024
interim dividend |
September 19,
2024 |
Payment date:
2024 interim dividend |
September 26,
2024 |
Payment date:
2024 interim dividend ADRs |
October 30,
2024 |
Nine-Month 2024
Trading Update |
February 26,
2025 |
Full-Year 2024
Results |
March 12,
2025 |
Publication of
2024 Annual Report |
Media |
Investors/Analysts |
Dave Guarino |
Meg Geldens |
Global
Communications |
Investor
Relations |
t +1 646 954
8215 |
t +31
(0)172-641-407 |
press@wolterskluwer.com |
ir@wolterskluwer.com |
Forward-looking Statements and Other Important Legal
Information
This report contains forward-looking statements. These
statements may be identified by words such as “expect”, “should”,
“could”, “shall” and similar expressions. Wolters Kluwer cautions
that such forward-looking statements are qualified by certain risks
and uncertainties that could cause actual results and events to
differ materially from what is contemplated by the forward-looking
statements. Factors which could cause actual results to differ from
these forward-looking statements may include, without limitation,
general economic conditions; conditions in the markets in which
Wolters Kluwer is engaged; conditions created by pandemics;
behavior of customers, suppliers, and competitors; technological
developments; the implementation and execution of new ICT systems
or outsourcing; and legal, tax, and regulatory rules affecting
Wolters Kluwer’s businesses, as well as risks related to mergers,
acquisitions, and divestments. In addition, financial risks such as
currency movements, interest rate fluctuations, liquidity, and
credit risks could influence future results. The foregoing list of
factors should not be construed as exhaustive. Wolters Kluwer
disclaims any intention or obligation to publicly update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
Elements of this press release contain or may contain inside
information about Wolters Kluwer within the meaning of Article 7(1)
of the Market Abuse Regulation (596/2014/EU). Trademarks referenced
are owned by Wolters Kluwer N.V. and its subsidiaries and may be
registered in various countries.
1 EHS/ORM = environmental, health & safety and operational
risk management.2 SBTi = Science Based Targets initiative.3 This
rule of thumb excludes the impact of exchange rate movements on
intercompany balances, which is accounted for in adjusted net
financing costs in reported currencies and determined based on
period-end spot rates and balances.4 Adjusted net financing costs
include lease interest charges. Guidance for adjusted net financing
costs in constant currencies excludes the impact of exchange rate
movements on currency hedging and intercompany balances.
- 2024.05.01 Wolters Kluwer First-Quarter 2024 Trading
Update
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