John Wiley & Sons, Inc. (NYSE: JW-A and JW-B), a global
leader in research and education, today announced results for the
first quarter ended July 31, 2020.
SUMMARY
- GAAP Results: Revenue of $431 million (+2%) and EPS of
$0.29 (+$0.23)
- Adjusted Results (at constant currency): Revenue +2% to
$431 million, EBITDA +42% to $82 million, and EPS +124% to
$0.42
- Research Publishing & Platforms (at constant
currency): Revenue +6% and Adjusted EBITDA +19%
- Shareholder Return: Wiley among select group with 27
consecutive years of annual dividend increases
MANAGEMENT COMMENTARY
“Wiley’s core strategies in open research and online education
are paying off with unprecedented gains in Research article output
and content consumption, strong online enrollment growth, and
record new adoption of digital courseware,” said Brian Napack,
President and CEO. “The Wiley team is executing well through the
pandemic as we continue to take advantage of market-driven growth
trends in Research and Education, while driving further efficiency
gains across our business.”
FIRST QUARTER PERFORMANCE
GAAP Measures
Unaudited ($millions except for EPS)
Q1 2021
Q1 2020
Change
Revenue
$431.3
$423.5
2%
Diluted EPS
$0.29
$0.06
$0.23
Non-GAAP Measures
Q1 2021
Q1 2020
Change
Constant Currency
Revenue
$431.3
$423.5
2%
Adjusted EBITDA
$81.8
$57.5
42%
Adjusted EPS
$0.42
$0.21
124%
Excluding acquisitions and currency impact, revenue declined
1% for the quarter. Wiley recorded an unfavorable FX variance
of $2.4 million in revenue, $0.05 in Adjusted EPS, and favorable FX
variance of $0.1 million in Adjusted EBITDA.
Revenue
- Research Publishing & Platforms rose 5% as reported
and 6% at constant currency with growth in open access and content
platforms driving results. Note, approximately $4 million, or 2% of
first quarter Research Publishing revenue, reflected carryover due
to COVID-related delays from the prior quarter.
- Academic & Professional Learning declined 12% as
reported and at constant currency mainly due to continued market
pressures on print books and adverse COVID-19 impacts on
Professional Learning, particularly in-person corporate training.
In Education Publishing, digital content and courseware growth
accelerated while print textbooks continued to decline
sharply.
- Education Services increased 29% as reported and at
constant currency, driven by the three-month inorganic contribution
from mthree (+$12 million) and organic growth of 4% in Online
Program Management (OPM) services.
Adjusted EBITDA
- Research Publishing & Platforms grew 19% at constant
currency, reflecting revenue growth and lower discretionary
spending.
- Academic & Professional Learning declined 23% at
constant currency, reflecting revenue performance, partly offset by
lower discretionary spending.
- Education Services grew from $0.4 million to $8 million
due to revenue growth and business optimization savings, notably
improvement in student acquisition costs. Adjusted EBITDA margin
for the quarter was 13%.
- Corporate Expenses declined 19% to $34 million mainly
due to lower employee-related costs and professional fees.
EPS
- GAAP EPS of $0.29 compared to $0.06 in prior year period
primarily reflected growth in Operating Income. Restructuring
charges of $0.03 were lower by $0.11 from prior year but offset by
a deferred tax charge of $0.12 in the current period related to a
UK statutory rate increase.
- Adjusted EPS (+124%) primarily reflected Adjusted
Operating Income growth.
Balance Sheet and Liquidity
- Net debt-to-EBITDA ratio (trailing twelve months) at
quarter-end was 2.0 as compared to 1.7 at the end of the year-ago
period.
- Available liquidity was approximately $750 million at
quarter-end, including $101 million of cash on hand and $650
million of undrawn debt facilities.
Cash Flow and Return to Shareholders
- Net Cash Used in Operating Activities was $121 million
compared to $94 million in the prior year period, primarily driven
by the timing of working capital. Note, Wiley’s consistent use of
cash in the first half of the fiscal year is driven by the timing
of collections for annual journal subscriptions, which is
concentrated in the third and fourth fiscal quarters.
- Free Cash Flow less Product Development Spending was a
use of $145 million compared to a use of $125 million in the prior
year. As a reminder, Wiley generated $173 million of Free Cash Flow
in fiscal year 2020.
- Quarterly dividend was raised for the 27th consecutive
year, declared on June 25, to $0.3425 per share on its Class A and
Class B common stock.
FISCAL YEAR 2021 OUTLOOK
Wiley cannot confidently project the forward-looking impact of
the pandemic on its operating results and is therefore not
providing a financial outlook for fiscal year 2021 at this
time.
EARNINGS CONFERENCE CALL
Scheduled for today, September 3 at 10:00 a.m. (ET). Access the
webcast on Wiley.com, at https://www.wiley.com/en-us/investors or
directly at https://edge.media-server.com/mmc/p/wimivu3k. U.S.
callers, please dial (844) 231-0103 and enter the participant code
8168499#. International callers, please dial (216) 562-0402
and enter the participant code 8168499#.
ABOUT WILEY
Wiley drives the world forward with research and education.
Through publishing, platforms and services, we help researchers,
professionals, students, universities, and corporations to achieve
their goals in an ever-changing world. And for more than 200 years,
we have delivered consistent performance to all our stakeholders.
The Company's website can be accessed at www.wiley.com.
NON-GAAP FINANCIAL MEASURES
Wiley provides non-GAAP financial measures and performance
results such as “Adjusted EPS,” “Adjusted Revenue,” “Adjusted
Operating Income,” “Adjusted EBITDA,” “Adjusted CTP,” “Free Cash
Flow less Product Development Spending,” “organic revenue,” and
results on a Constant Currency basis to assess underlying business
performance and trends. Management believes non-GAAP financial
measures, which exclude the impact of restructuring charges and
credits and certain other items, and the impact of acquisitions
provide a useful comparable basis to analyze operating results and
earnings. See the reconciliations of non-GAAP financial measures
and explanations of the uses of non-GAAP measures in the
supplementary information.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements
concerning the Company's operations, performance, and financial
condition. Reliance should not be placed on forward-looking
statements, as actual results may differ materially from those in
any forward-looking statements. Any such forward-looking statements
are based upon a number of assumptions and estimates that are
inherently subject to uncertainties and contingencies, many of
which are beyond the control of the Company and are subject to
change based on many important factors. Such factors include, but
are not limited to: (i) the level of investment in new technologies
and products; (ii) subscriber renewal rates for the Company's
journals; (iii) the financial stability and liquidity of journal
subscription agents; (iv) the consolidation of book wholesalers and
retail accounts; (v) the market position and financial stability of
key online retailers; (vi) the seasonal nature of the Company's
educational business and the impact of the used book market; (vii)
worldwide economic and political conditions; (viii) the Company's
ability to protect its copyrights and other intellectual property
worldwide (ix) the ability of the Company to successfully integrate
acquired operations and realize expected opportunities; (x) the
Company’s ability to realize operating savings over time and in
fiscal year 2021 in connection with our multi-year Business
Optimization Program; (xi) the impact of COVID-19 on our
operations, performance, and financial condition; and (xii) other
factors detailed from time to time in the Company's filings with
the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise any such forward-looking statements
to reflect subsequent events or circumstances.
JOHN WILEY & SONS,
INC.
SUPPLEMENTARY INFORMATION
(1)(2)
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except per
share data)
(unaudited)
Three Months Ended
July 31,
2020
2019
Revenue, net
$
431,326
$
423,530
Costs and expenses:
Cost of sales
144,809
143,096
Operating and administrative
expenses
237,369
250,170
Restructuring and related
charges
2,218
10,735
Amortization of intangibles
16,891
14,970
Total Costs and Expenses
401,287
418,971
Operating Income
30,039
4,559
As a % of revenue
7.0%
1.1%
Interest expense
(4,614)
(6,077)
Foreign exchange transaction (losses)
gains
(82)
2,652
Interest and other income
4,391
2,833
Income Before Taxes
29,734
3,967
Provision for income taxes
13,400
343
Effective tax rate
45.1%
8.6%
Net Income
$
16,334
$
3,624
As a % of revenue
3.8%
0.9%
Weighed Average Number of Common Shares
Outstanding
Basic
55,912
56,536
Diluted
56,193
56,905
Earnings Per Share
Basic
$
0.29
$
0.06
Diluted
$
0.29
$
0.06
Notes:
(1) The supplementary information included
in this press release for the three months ended July 31, 2020 is
preliminary and subject to change prior to the filing of our
upcoming Quarterly Report on Form 10-Q with the Securities and
Exchange Commission.
(2) All amounts are approximate due to
rounding.
JOHN WILEY & SONS,
INC.
SUPPLEMENTARY INFORMATION
(1)
RECONCILIATION OF GAAP EPS to
NON-GAAP ADJUSTED EPS - DILUTED
(unaudited)
Three Months Ended
July 31,
2020
2019
GAAP Earnings Per Share -
Diluted
$
0.29
$
0.06
Adjustments:
Restructuring and related charges
(A)
0.03
0.14
Foreign exchange (gains) losses on
intercompany transactions (A)
(0.02)
0.01
Impact of increase in U.K. statutory
rate on deferred tax balances in fiscal year 2021 (B)
0.12
-
Non-GAAP Adjusted Earnings Per
Share - Diluted
$
0.42
$
0.21
Notes:
(A)
The table below shows the net of tax
impact of our adjustments to GAAP Earnings Per Share noted
above.
Three Months Ended
July 31,
(amounts in millions)
2020
2019
Net of tax, charges related to the
Business Optimization Program
$
1.5
$
8.1
Net of tax, credits related to the
Restructuring and Reinvestment Program
$
(0.0)
$
(0.1)
Net of tax, foreign exchange transaction
(gains) losses
$
(1.0)
$
0.3
(B)
During the first quarter of fiscal 2021,
the U.K. officially enacted legislation that increased its
statutory rate from 17% to 19%. This resulted in a $6.7
million non-cash deferred tax expense from the re-measurement of
the Company’s applicable U.K. net deferred tax liabilities.
(1) See Explanation of Usage of Non-GAAP
performance measures included in this supplementary information for
additional details on the reasons why management believes
presentation of each non-GAAP performance measure provides useful
information to investors. The supplementary information included in
this press release for the three months ended July 31, 2020 is
preliminary and subject to change prior to the filing of our
upcoming Quarterly Report on Form 10-Q with the Securities and
Exchange Commission.
JOHN WILEY & SONS,
INC.
SUPPLEMENTARY INFORMATION
(1)
RECONCILIATION OF GAAP NET
INCOME to NON-GAAP EBITDA AND ADJUSTED EBITDA
(unaudited)
Three Months Ended
July 31,
2020
2019
Net Income
$
16,334
$
3,624
Interest expense
4,614
6,077
Provision for income taxes
13,400
343
Depreciation and amortization
49,507
42,219
Non-GAAP EBITDA
83,855
52,263
Restructuring and related charges
2,218
10,735
Foreign exchange transaction losses
(gains)
82
(2,652)
Interest and other income
(4,391)
(2,833)
Non-GAAP Adjusted EBITDA
$
81,764
$
57,513
Adjusted EBITDA Margin
19.0%
13.6%
Notes:
(1) See Explanation of Usage of Non-GAAP
performance measures included in this supplementary information for
additional details on the reasons why management believes
presentation of each non-GAAP performance measure provides useful
information to investors. The supplementary information included in
this press release for the three months ended July 31, 2020 is
preliminary and subject to change prior to the filing of our
upcoming Quarterly Report on Form 10-Q with the Securities and
Exchange Commission.
JOHN WILEY & SONS,
INC.
SUPPLEMENTARY INFORMATION (1) SEGMENT RESULTS (in
thousands) (unaudited) Three Months Ended July
31, % Change Favorable
(Unfavorable)
2020
2019
Reported Constant Currency Research Publishing
& Platforms: Revenue, net Research Publishing
$
230,464
$
219,927
5%
5%
Research Platforms
10,346
9,448
10%
10%
Total Revenue, net
$
240,810
$
229,375
5%
6%
Contribution to Profit
$
69,818
#
$
55,646
25%
26%
Adjustments: Restructuring (credits) charges
(197)
2,620
Non-GAAP Adjusted Contribution to Profit
$
69,621
$
58,266
19%
20%
Depreciation and amortization
19,701
17,153
Non-GAAP Adjusted EBITDA
$
89,322
$
75,419
18%
19%
Adjusted EBITDA margin
37.1%
32.9%
Academic & Professional Learning: Revenue,
net Education Publishing
$
64,084
$
65,523
-2%
-2%
Professional Learning
62,829
79,335
-21%
-20%
Total Revenue, net
126,913
144,858
-12%
-12%
Contribution to Profit
$
(380)
$
4,911
# # Adjustments: Restructuring charges
33
2,805
Non-GAAP Adjusted Contribution to Profit
$
(347)
$
7,716
# # Depreciation and amortization
18,804
16,524
Non-GAAP Adjusted EBITDA
$
18,457
$
24,240
-24%
-23%
Adjusted EBITDA margin
14.5%
16.7%
Education Services: Revenue, net Education
Services (2)
$
50,262
$
48,156
4%
4%
mthree (2)
13,341
1,141
# #
Total Revenue, net
63,603
49,297
29%
29%
Contribution to Profit
$
558
$
(7,199)
# # Adjustments: Restructuring charges
139
2,089
Non-GAAP Adjusted Contribution to Profit
$
697
$
(5,110)
# # Depreciation and amortization
7,279
5,498
Non-GAAP Adjusted EBITDA
$
7,976
$
388
# # Adjusted EBITDA margin
12.5%
0.8%
Corporate Expenses:
$
(39,957)
$
(48,799)
18%
17%
Adjustments: Restructuring charges
2,243
3,221
Non-GAAP Adjusted Corporate Expenses
$
(37,714)
$
(45,578)
17%
16%
Depreciation and amortization
3,723
3,044
Non-GAAP Adjusted EBITDA
$
(33,991)
$
(42,534)
20%
19%
Consolidated Results: Revenue, net
$
431,326
$
423,530
2%
2%
Operating Income
$
30,039
$
4,559
# # Adjustments: Restructuring charges
2,218
10,735
Non-GAAP Adjusted Operating Income
$
32,257
$
15,294
# # Depreciation and amortization
49,507
42,219
Non-GAAP Adjusted EBITDA
$
81,764
$
57,513
42%
42%
Adjusted EBITDA margin
19.0%
13.6%
(1) The supplementary information included in this press
release for the three months ended July 31, 2020 is preliminary and
subject to change prior to the filing of our upcoming Quarterly
Report on Form 10-Q with the Securities and Exchange
Commission. (2) In May 2020, we moved the IT bootcamp
business acquired as part of The Learning House acquisition from
Education Services to mthree. As a result, the prior period revenue
related to the IT bootcamp business has been included in mthree.
There were no changes to our total Education Services or our
consolidated financial results. The inorganic revenue from mthree
in the three months ended July 31, 2020 was $12.4 million.
JOHN WILEY & SONS,
INC.
SUPPLEMENTARY INFORMATION (1) CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION (in thousands)
(unaudited) July 31, April 30,
2020
2020
Assets: Current Assets Cash and cash equivalents
$
101,385
$
202,464
Accounts receivable, net
282,412
309,384
Inventories, net
45,051
43,614
Prepaid expenses and other current assets
59,155
59,465
Total Current Assets
488,003
614,927
Product Development Assets, net
52,088
53,643
Royalty Advances, net
28,682
36,710
Technology, Property and Equipment, net
295,457
298,005
Intangible Assets, net
829,231
807,405
Goodwill
1,133,610
1,116,790
Operating Lease Right-of-Use Assets
139,798
142,716
Other Non-Current Assets
102,077
98,598
Total Assets
$
3,068,946
$
3,168,794
Liabilities and Shareholders' Equity: Current
Liabilities Accounts payable
$
52,556
$
93,691
Accrued royalties
82,691
87,408
Short-term portion of long-term debt
10,938
9,375
Contract liabilities
408,954
520,214
Accrued employment costs
70,211
108,448
Accrued income taxes
181
13,728
Short-term portion of operating lease liabilities
20,647
21,810
Other accrued liabilities
69,958
72,595
Total Current Liabilities
716,136
927,269
Long-Term Debt
835,763
765,650
Accrued Pension Liability
183,284
187,969
Deferred Income Tax Liabilities
124,184
119,127
Operating Lease Liabilities
156,644
159,782
Other Long-Term Liabilities
79,190
75,373
Total Liabilities
2,095,201
2,235,170
Shareholders' Equity
973,745
933,624
Total Liabilities and Shareholders' Equity
$
3,068,946
$
3,168,794
(1) The supplementary information included in this
press release for July 31, 2020 is preliminary and subject to
change prior to the filing of our upcoming Quarterly Report on Form
10-Q with the Securities and Exchange Commission.
JOHN WILEY & SONS,
INC.
SUPPLEMENTARY INFORMATION (1) CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW (in thousands)
(unaudited) Three Months Ended July 31,
2020
2019
Operating Activities: Net income
$
16,334
$
3,624
Amortization of intangibles
16,891
14,970
Amortization of product development assets
9,148
8,714
Depreciation and amortization of technology, property, and
equipment
23,468
18,535
Other non-cash charges and credits
37,105
26,477
Net change in operating assets and liabilities
(223,729)
(166,488)
Net Cash Used In Operating Activities
(120,783)
(94,168)
Investing Activities: Additions to technology,
property, and equipment
(18,964)
(24,202)
Product development spending
(5,325)
(6,211)
Businesses acquired in purchase transactions, net of cash acquired
(136)
(73,209)
Acquisitions of publication rights and other
(3,855)
(2,270)
Net Cash Used in Investing Activities
(28,280)
(105,892)
Financing Activities: Net debt borrowings
67,356
253,848
Cash dividends
(19,261)
(19,252)
Purchase of treasury shares
-
(10,000)
Other
(4,611)
(11,263)
Net Cash Provided By Financing Activities
43,484
213,333
Effects of Exchange Rate Changes on Cash, Cash
Equivalents and Restricted Cash
4,500
(2,138)
Change in Cash, Cash Equivalents and Restricted Cash for
Period
(101,079)
11,135
Cash, Cash Equivalents and Restricted Cash -
Beginning
203,047
93,548
Cash, Cash Equivalents and Restricted Cash - Ending
$
101,968
104,683
CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT
DEVELOPMENT SPENDING Three Months
Ended July 31,
2020
2019
Net Cash Used In Operating Activities
$
(120,783)
$
(94,168)
Less: Additions to technology, property, and equipment
(18,964)
(24,202)
Less: Product development spending
(5,325)
(6,211)
Free Cash Flow less Product Development Spending
$
(145,072)
$
(124,581)
See Explanation of Usage of Non-GAAP
Measures included in this supplemental information. (1) The
supplementary information included in this press release for the
three months ended July 31, 2020 is preliminary and subject to
change prior to the filing of our upcoming Quarterly Report on Form
10-Q with the Securities and Exchange Commission.
JOHN WILEY & SONS,
INC.
Explanation of Usage of NON-GAAP Performance Measures In
this earnings release and supplemental information, management may
present the following non-GAAP performance measures:
- · Adjusted Earnings
Per Share "(Adjusted EPS)";
- · Free Cash Flow less
Product Development Spending;
- · Adjusted Operating
Income and margin;
- · Adjusted
Contribution to Profit and margin;
- · EBITDA and Adjusted
EBITDA and margin;
- · Results on a
constant currency basis.
Management uses these non-GAAP performance measures as supplemental
indicators of our operating performance and financial position as
well for internal reporting and forecasting purposes, when publicly
providing its outlook, to evaluate the Company's performance and
calculate incentive compensation. Non-GAAP performance measures do
not have standardized meanings prescribed by U.S. GAAP and
therefore may not be comparable to the calculation of similar
measures used by other companies and should not be viewed as
alternatives to measures of financial results under U.S.
GAAP. The Company presents these non-GAAP performance
measures in addition to U.S. GAAP financial results because it
believes that these non-GAAP performance measures provide useful
information to certain investors and financial analysts for
operational trends and comparisons over time. The use of these
non-GAAP performance measures may also provide a consistent basis
to evaluate operating profitability and performance trends by
excluding items that we do not consider to be controllable
activities for this purpose. For example:
- Adjusted EPS, Adjusted Revenue, Adjusted Operating Income,
Adjusted Contribution to Profit, Adjusted EBITDA and organic
revenue provide a more comparable basis to analyze operating
results and earnings and are measures commonly used by shareholders
to measure our performance.
- Free Cash Flow less Product Development Spending helps assess
our ability, over the long term, to create value for our
shareholders as it represents cash available to repay debt, pay
common stock dividends and fund share repurchases and
acquisitions.
- Results on a constant currency basis removes distortion from
the effects of foreign currency movements to provide better
comparability of our business trends from period to period. We
measure our performance before the impact of foreign currency (or
at “constant currency”), which means that we apply the same foreign
currency exchange rates for the current and equivalent prior
period.
In addition, the Company has historically provided these or similar
non-GAAP performance measures and understands that some investors
and financial analysts find this information helpful in analyzing
the Company's operating margins, and net income and comparing the
Company's financial performance to that of its peer companies and
competitors. Based on interactions with investors, we also believe
that the Company's non-GAAP performance measures are regarded as
useful to our investors as supplemental to our U.S. GAAP financial
results, and that there is no confusion regarding the adjustments
or our operating performance to our investors due to the
comprehensive nature of our disclosures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200903005297/en/
Investor: Brian Campbell 201.748.6874
brian.campbell@wiley.com Media: Katie Roberts 602.373.7233
karoberts@wiley.com
John Wiley & Sons (NYSE:JWB)
Historical Stock Chart
From Jun 2024 to Jul 2024
John Wiley & Sons (NYSE:JWB)
Historical Stock Chart
From Jul 2023 to Jul 2024