Wiley (NYSE: WLY), a trusted leader in research and learning,
today reported results for the first quarter ended July 31,
2024.
HIGHLIGHTS
- Strong year-over-year financial performance driven by solid
growth in Research Publishing, AI-related demand for Learning
content, and continued execution of the Value Creation Plan
- Third and final divestiture closed and remainder of $130
million cost savings program actioned
- Second GenAI content rights project executed with large tech
company
FIRST QUARTER PERFORMANCE
- GAAP Results (including Held for Sale or Sold
businesses): Revenue of $404 million (-10%), Operating Income of
$29 million (+$45 million), and EPS loss of ($0.03) (+$1.64).
- Adjusted Results at Constant Currency (excluding Held
for Sale or Sold businesses, restructuring costs and other adjusted
items): Revenue of $390 million (+6%), Adjusted EBITDA of $73
million (+22%), and Adjusted EPS of $0.47 (+74%).
MANAGEMENT COMMENTARY
“The Wiley leadership team and I are pleased with how we started
the year, as measured by both our performance indicators and
financial results,” said Matthew Kissner, Wiley President and CEO.
“Research delivered solid growth driven by robust demand to publish
in our journals and execution of our publishing and go-to-market
strategies. Learning delivered strong growth as it sees continued
demand for its authoritative content in training GenAI models and
core growth in Academic. Finally, we closed our third and final
divestiture and actioned the remainder of our $130 million cost
savings program, positioning us for further performance and profit
improvement.”
Research
- Revenue of $265 million was up 3% as reported and at
constant currency, mainly due to growth in open access and
institutional licensing models in Research Publishing.
- Adjusted EBITDA of $78 million was up 1% as reported and
at constant currency due to revenue performance largely offset by
the timing of employee benefit costs related to higher incentive
compensation and investments in technology. Adjusted EBITDA margin
for the quarter was 29.3% compared to 29.8% in the prior year
period.
Learning
- Revenue of $124 million was up 14% as reported and at
constant currency driven by a $16 million Q1 contribution from an
executed $21 million content rights project for training GenAI
models and continued growth in Academic courseware, offsetting
moderate declines in Professional. Excluding the GenAI project, Q1
Learning revenue declined 1%.
- Adjusted EBITDA of $34 million was up 60% as reported
and at constant currency mainly due to the GenAI content rights
project. Adjusted EBITDA margin for the quarter was 27.2% compared
to 19.4% in the prior year period.
Corporate Expense Category
- Adjusted Corporate Expenses of $39 million on an
Adjusted EBITDA basis was 2% higher at reported and at constant
currency, primarily due to higher tech expenses.
Businesses Held for Sale or Sold (HFS)
Our Held for Sale or Sold segment reflects the performance of
those businesses for the periods owned. Wiley University Services
was completed on January 1, 2024. The sale of Wiley Edge, with the
exception of its India operation, was completed on May 31, 2024.
The sale of Wiley Edge's India operation was completed on August
31, 2024. The sale of CrossKnowledge was also completed on August
31, 2024.
EPS
- GAAP EPS loss was ($0.03) compared to ($1.67) in the
prior year period. The quarterly loss was primarily due to a
non-cash income tax adjustment as a consequence of the US valuation
allowance related to our divested businesses (see accompanying EPS
reconciliation table for more information), as well as
restructuring charges and foregone net income from Businesses Sold
or Held for Sale. The year over year variance is primarily due to
favorability compared to prior year impairments, restructuring
charges, and losses on the sale of businesses, partially offset by
the current quarter tax adjustment.
- Adjusted EPS of $0.47 was up 74% at constant currency
due to higher Adjusted Operating Income and accrued interest income
from divestitures.
Balance Sheet, Cash Flow, and Capital Allocation
- Net Debt-to-EBITDA Ratio (Trailing Twelve Months) at
quarter end was 2.0 compared to 1.9 in the year-ago period.
- Net Cash Used in Operating Activities was $89 million
compared to $82 million in the prior year period with higher annual
incentive compensation payments for prior year performance
offsetting higher cash earnings. Note, Wiley’s regular use of cash
in the first half of the fiscal year is driven by the timing of
cash collections for annual journal subscriptions, which are
concentrated in Q3 and Q4.
- Free Cash Flow less Product Development Spending was a
use of $107 million compared to a use of $106 million in the prior
year, with higher annual incentive compensation payments for prior
year performance offsetting higher cash earnings and lower capex.
Capex of $18 million was below prior year by $6 million due to
timing. Note, Wiley does not provide an adjusted Free Cash Flow
metric; results include held for sale or sold businesses.
- Returns to Shareholders: Wiley allocated $32 million
toward dividends and share repurchases, up from $29 million in the
prior year, with $13 million used to acquire 295 thousand shares at
an average cost per share of $42.34. In June 2024, Wiley raised its
dividend for the 31st consecutive year.
FISCAL YEAR 2025 GROWTH OUTLOOK
Wiley is reaffirming its Fiscal 2025 growth outlook. Wiley’s
revenue outlook is driven by favorable demand trends and
strong performance indicators. Wiley’s earnings outlook is
driven by expected revenue growth and cost savings, while
reflecting reinvestments to scale and optimize Research, modernize
infrastructure and expand GenAI content licensing and capabilities.
Wiley’s cash flow outlook is driven by lower restructuring
payments and favorable working capital partially offset by higher
capex and a year-over-year swing in incentive compensation
payments. The Company expects capex of $130 million compared to $93
million in Fiscal 2024 driven by the acceleration of its Research
Publishing platform work and infrastructure modernization.
Metric
Fiscal 2024 Results
Fiscal 2025 Outlook
($millions, except EPS)
Ex-Divestitures
Ex-Divestitures
Adj. Revenue*
$1,617
$1,650 to $1,690
Research
$1,043
Low to mid-single digit
growth
Learning
$574
Low-single digit growth
Adj. EBITDA*
$369
$385 to $410
Adj. EPS*
$2.78
$3.25 to $3.60
Free Cash Flow
$114
Approx. $125
*Excludes held for sale or sold
businesses
The Company remains on track with its Fiscal 2026 targets.
EARNINGS CONFERENCE CALL
Scheduled for today, September 5 at 10:00 am (ET). Access
webcast at Investor Relations at investors.wiley.com, or directly
at https://events.q4inc.com/attendee/543994488. U.S. callers,
please dial (888) 210-3346 and enter the participant code
2521217#. International callers, please dial (646) 960-0253
and enter the participant code 2521217#.
ABOUT WILEY
Wiley (NYSE: WLY) is one of the world’s largest publishers and a
trusted leader in research and learning. Our industry-leading
content, services, platforms, and knowledge networks are tailored
to meet the evolving needs of our customers and partners, including
researchers, students, instructors, professionals, institutions,
and corporations. We enable knowledge-seekers to transform today’s
biggest obstacles into tomorrow’s brightest opportunities. For more
than two centuries, Wiley has been delivering on its timeless
mission to unlock human potential. Visit us at Wiley.com. Follow us
on Facebook, Twitter, LinkedIn and Instagram.
NON-GAAP FINANCIAL MEASURES
Wiley provides non-GAAP financial measures and performance
results such as “Adjusted EPS,” “Adjusted Operating Income,”
“Adjusted EBITDA,” “Adjusted Income before Taxes,” “Adjusted Income
Tax Provision,” “Adjusted Effective Income Tax Rate,” “Free Cash
Flow less Product Development Spending,” “organic revenue,”
“Adjusted 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 divestitures and 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. We
have not provided our 2025 outlook for the most directly comparable
U.S. GAAP financial measures, as they are not available without
unreasonable effort due to the high variability, complexity, and
low visibility with respect to certain items, including
restructuring charges and credits, gains and losses on foreign
currency, and other gains and losses. These items are uncertain,
depend on various factors, and could be material to our
consolidated results computed in accordance with U.S. GAAP.
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
ability to realize operating savings over time and in fiscal year
2025 in connection with our multiyear Global Restructuring Program
and planned and completed dispositions; (xi) the possibility that
the divestitures will not be pursued, failure to obtain necessary
regulatory approvals or required financing or to satisfy any of the
other conditions to planned dispositions; (xii) cyber risk and the
failure to maintain the integrity of our operational or security
systems or infrastructure, or those of third parties with which we
do business; (xiii) as a result of acquisitions, we have and may
record a significant amount of goodwill and other identifiable
intangible assets and we may never realize the full carrying value
of these assets; (xiv) our ability to leverage artificial
intelligence technologies in our products and services, including
generative artificial intelligence, large language models, machine
learning, and other artificial intelligence tools; and (xv) other
factors detailed from time to time in our filings with the SEC. The
Company undertakes no obligation to update or revise any such
forward-looking statements to reflect subsequent events or
circumstances.
CATEGORY: EARNINGS RELEASES
JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION
(1)(2) CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS
(Dollars in thousands, except per share information)
(unaudited) Three Months Ended July 31,
2024
2023
Revenue, net
$
403,809
$
451,013
Costs and expenses: Cost of sales
109,220
157,101
Operating and administrative expenses
248,819
255,801
Impairment of goodwill (3)
-
26,695
Restructuring and related charges
3,870
12,123
Amortization of intangible assets
12,927
15,648
Total costs and expenses
374,836
467,368
Operating income (loss)
28,973
(16,355
)
As a % of revenue
7.2
%
-3.6
%
Interest expense
(12,787
)
(11,334
)
Foreign exchange transaction gains (losses)
234
(1,620
)
Gains (losses) on sale of businesses and impairment charges related
to assets held-for-sale (3)
5,801
(75,929
)
Other income (expense), net
782
(1,485
)
Income (loss) before taxes
23,003
(106,723
)
Provision (benefit) for income taxes
24,439
(14,459
)
Effective tax rate
106.2
%
13.5
%
Net loss
$
(1,436
)
$
(92,264
)
As a % of revenue
-0.4
%
-20.5
%
Loss per share Basic
$
(0.03
)
$
(1.67
)
Diluted (4)
$
(0.03
)
$
(1.67
)
Weighted average number of common shares outstanding
Basic
54,377
55,270
Diluted (4)
54,377
55,270
Notes: (1) The supplementary information
included in this press release for the three months ended July 31,
2024 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. (3) As previously announced in fiscal year 2024,
we executed a plan to divest non-core businesses, including
University Services, Wiley Edge, and CrossKnowledge. These three
businesses met the held-for-sale criteria starting in the first
quarter of fiscal year 2024. We measured each disposal group at the
lower of carrying value or fair value less costs to sell prior to
its disposition.On May 31, 2024, we completed the sale of Wiley
Edge, with the exception of its India operations. The sale of Wiley
Edge's India operation closed on August 31, 2024. The pretax loss
was $19.6 million. In connection with the held-for-sale
classification, we recognized cumulative impairment charges of
$19.4 million in the year ended April 30, 2024.On January 1, 2024
we completed the sale of University Services. In the three months
ended July 31, 2024, there was a reduction in the pretax loss on
the sale of University Services previously in our Held for Sale or
Sold segment due to third-party customer consents and working
capital adjustments of $1.5 million that occurred in the first
quarter of fiscal year 2025. In the three months ended July 31,
2024, there was a reduction in the pretax loss on the sale of our
Tuition Manager business previously in our Held for Sale or Sold
segment due to a selling price adjustment for cash received after
the closing.As of July 31, 2024, Wiley Edge's India operation and
CrossKnowledge continue to be reported as held-for-sale and we
measured each business at the lower of carrying value or fair value
less costs to sell. We recorded pretax impairment charges in the
three months ended July 31, 2024 and 2023 related to
CrossKnowledge. On August 2, 2024 we entered into an agreement to
sell our CrossKnowledge business, which closed on August 31,
2024.In fiscal year 2024, we reorganized our segments and recorded
pretax noncash goodwill impairments of $26.7 million which included
$11.4 million related to University Services and $15.3 million
related to CrossKnowledge.
Three Months EndedJuly 31,
2024
2023
Wiley Edge
$
(168
)
$
-
University Services
1,489
(40,659
)
Tuition Manager
120
(2,068
)
CrossKnowledge
4,360
(33,202
)
Gains (losses) on sale of businesses and impairment charges related
to assets held-for-sale
$
5,801
$
(75,929
)
(4) In calculating diluted net loss per common share for the
three months ended July 31, 2024 and 2023, our diluted weighted
average number of common shares outstanding excludes the effect of
unvested restricted stock units and other stock awards as the
effect was antidilutive. This occurs when a US GAAP net loss is
reported and the effect of using dilutive shares is antidilutive.
JOHN WILEY & SONS, INC. SUPPLEMENTARY
INFORMATION (1) (2) RECONCILIATION OF US GAAP MEASURES to
NON-GAAP MEASURES (unaudited) Reconciliation
of US GAAP Loss per Share to Non-GAAP Adjusted EPS Three
Months Ended July 31,
2024
2023
US GAAP Loss Per Share - Diluted
$
(0.03
)
$
(1.67
)
Adjustments: Impairment of goodwill
-
0.43
Restructuring and related charges
0.06
0.16
Foreign exchange gains on intercompany transactions, including the
write off of certain cumulative translation adjustments (3)
(0.05
)
-
Amortization of acquired intangible assets (4)
0.20
0.23
(Gains) losses on sale of businesses and impairment charges related
to assets held-for-sale (5)
(0.09
)
1.17
Held for Sale or Sold segment Adjusted Net Loss (Income) (5)
0.04
(0.07
)
Income tax adjustments
0.33
-
EPS impact of using weighted-average dilutive shares for adjusted
EPS calculation (6)
0.01
0.02
Non-GAAP Adjusted Earnings Per Share - Diluted
$
0.47
$
0.27
Reconciliation of US GAAP Income (Loss) Before Taxes to
Non-GAAP Adjusted Income Before Taxes Three Months Ended
(amounts in thousands)
July 31,
2024
2023
US GAAP Income (Loss) Before Taxes
$
23,003
$
(106,723
)
Pretax Impact of Adjustments: Impairment of goodwill
-
26,695
Restructuring and related charges
3,870
12,123
Foreign exchange gains on intercompany transactions, including the
write off of certain cumulative translation adjustments (3)
(2,591
)
(6
)
Amortization of acquired intangible assets (4)
12,969
16,668
(Gains) losses on sale of businesses and impairment charges related
to assets held-for-sale (5)
(5,801
)
75,929
Held for Sale or Sold segment Adjusted Loss (Income) Before Taxes
(5)
2,519
(5,034
)
Non-GAAP Adjusted Income Before Taxes
$
33,969
$
19,652
Reconciliation of US GAAP Income Tax Provision (Benefit)
to Non-GAAP Adjusted Income Tax Provision, including our US GAAP
Effective Tax Rate and our Non-GAAP Adjusted Effective Tax Rate
US GAAP Income Tax Provision (Benefit)
$
24,439
$
(14,459
)
Income Tax Impact of Adjustments (7) Impairment of goodwill
-
2,697
Restructuring and related charges
749
2,936
Foreign exchange gains on intercompany transactions, including the
write off of certain cumulative translation adjustments (3)
(390
)
(34
)
Amortization of acquired intangible assets (4)
1,809
3,873
(Gains) losses on sale of businesses and impairment charges related
to assets held-for-sale (5)
(925
)
10,660
Held for Sale or Sold segment Adjusted Tax Benefit (Provision) (5)
372
(996
)
Income Tax Adjustments Impact of valuation allowance on the US GAAP
effective tax rate (8)
(18,030
)
-
Non-GAAP Adjusted Income Tax Provision
$
8,024
$
4,677
US GAAP Effective Tax Rate
106.2
%
13.5
%
Non-GAAP Adjusted Effective Tax Rate
23.6
%
23.8
%
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, 2024 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. (3) In fiscal year 2023 due to the closure of our
operations in Russia, the Russia entity was deemed substantially
liquidated. In the three months ended July 31, 2024 and 2023, we
wrote off an additional $0.5 million and $0.9 million,
respectively, of cumulative translation adjustments in earnings.
This amount is reflected in Foreign exchange transaction gains
(losses) on our Condensed Consolidated Statements of Net Loss.
(4) Reflects the amortization of intangible assets
established on the opening balance sheet for an acquired business.
This includes the amortization of intangible assets such as
developed technology, customer relationships, tradenames, etc.,
which is reflected in the "Amortization of intangible assets" line
in the Condensed Consolidated Statements of Net Loss. It also
includes the amortization of acquired product development assets,
which is reflected in Cost of sales in the Condensed Consolidated
Statements of Net Loss. (5) On May 31, 2024, we completed
the sale of Wiley Edge, which resulted in a pretax loss of $19.6
million (net of tax loss of $20.4 million). Prior to the
disposition, in fiscal year 2024 we had recorded a held-for-sale
impairment of $19.4 million for Wiley Edge. This resulted in an
additional loss of $0.2 million in the three months ended July 31,
2024. In the three months ended July 31, 2024, there was a
reduction in the pretax loss on the sale of University Services of
approximately $1.5 million, which resulted in a total pretax loss
of $105.6 million (net of tax loss of $79.4 million). In the three
months ended July 31, 2024, there was a reduction in the pretax
loss on the sale of our Tuition Manager business of approximately
$0.1 million, which resulted in a total net pretax loss of $1.4
million (net of tax loss of $1.0 million).CrossKnowledge continues
to be reported as held-for-sale, and we measured the business at
the lower of carrying value or fair value less costs to sell. In
the three months ended July 31, 2024, we reduced the held-for-sale
pretax impairment by $4.4 million related to CrossKnowledge.In the
three months ended July 31, 2023, the loss on sale of a business is
due to the sale of our Tuition Manager business previously in our
Held for Sale or Sold segment, which resulted in a pretax loss of
approximately $2.0 million (net of tax loss of $1.6 million). In
fiscal year 2024 while University Services, Wiley Edge, and
CrossKnowledge continued to be reported as held-for-sale, we
measured each business at the lower of carrying value or fair value
less cost to sell. We recorded a pretax impairment of $40.6 million
for University Services and $33.3 million for CrossKnowledge in the
three months ended July 31, 2023.In addition, our Adjusted EPS
excludes the Adjusted Net Income of our Held for Sale or Sold
segment. (6) Represents the impact of using diluted
weighted-average number of common shares outstanding (55.0 million
and 55.8 million for the three months ended July 31, 2024 and 2023,
respectively) included in the Non-GAAP Adjusted EPS calculation in
order to apply the dilutive impact on adjusted net income due to
the effect of unvested restricted stock units and other stock
awards. This impact occurs when a US GAAP net loss is reported and
the effect of using dilutive shares is antidilutive. (7) For
the three months ended July 31, 2024 and 2023, substantially all of
the tax impact was from deferred taxes. (8) In the three
months ended July 31, 2024, there was an $18.0 million impact on
the US GAAP effective tax rate due to the valuation allowance on
deferred tax assets in the US.
JOHN WILEY & SONS,
INC. SUPPLEMENTARY INFORMATION (1) RECONCILIATION OF
US GAAP NET LOSS TO NON-GAAP EBITDA AND ADJUSTED EBITDA
(unaudited) Three Months Ended July 31,
2024
2023
Net Loss
$
(1,436
)
$
(92,264
)
Interest expense
12,787
11,334
Provision (benefit) for income taxes
24,439
(14,459
)
Depreciation and amortization
37,253
43,728
Non-GAAP EBITDA
73,043
(51,661
)
Impairment of goodwill
-
26,695
Restructuring and related charges
3,870
12,123
Foreign exchange (gains) losses, including the write off of certain
cumulative translation adjustments
(234
)
1,620
(Gains) losses on sale of businesses and impairment charges related
to assets held-for-sale
(5,801
)
75,929
Other (income) expense, net
(782
)
1,485
Held for Sale or Sold segment Adjusted EBITDA (2)
2,519
(6,521
)
Non-GAAP Adjusted EBITDA
$
72,615
$
59,670
Adjusted EBITDA Margin
18.6
%
16.3
%
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, 2024 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) Our Non-GAAP Adjusted EBITDA
excludes the Held for Sale or Sold segment Non-GAAP Adjusted
EBITDA.
JOHN WILEY & SONS, INC. SUPPLEMENTARY
INFORMATION (1) (2) (3) SEGMENT RESULTS (in
thousands) (unaudited) % Change
Three Months Ended July 31, Favorable (Unfavorable)
2024
2023
Reported Constant Currency Research:
Revenue, net Research Publishing
$
230,951
$
223,000
4
%
4
%
Research Solutions
34,358
34,804
-1
%
-1
%
Total Revenue, net
$
265,309
$
257,804
3
%
3
%
Non-GAAP Adjusted Operating Income
$
55,216
$
53,527
3
%
3
%
Depreciation and amortization
22,559
23,212
3
%
3
%
Non-GAAP Adjusted EBITDA
$
77,775
$
76,739
1
%
1
%
Adjusted EBITDA margin
29.3
%
29.8
%
Learning:
Revenue, net Academic
$
59,964
$
48,292
24
%
24
%
Professional
64,350
61,028
5
%
5
%
Total Revenue, net
$
124,314
$
109,320
14
%
14
%
Non-GAAP Adjusted Operating Income
$
22,500
$
7,626
#
#
Depreciation and amortization
11,294
13,552
17
%
17
%
Non-GAAP Adjusted EBITDA
$
33,794
$
21,178
60
%
60
%
Adjusted EBITDA margin
27.2
%
19.4
%
Held for Sale or Sold:
Total Revenue, net
$
14,186
$
83,889
-83
%
-83
%
Non-GAAP Adjusted Operating (Loss) Income
$
(2,519
)
$
3,084
#
#
Depreciation and amortization
-
3,437
#
#
Non-GAAP Adjusted EBITDA
$
(2,519
)
$
6,521
#
#
Adjusted EBITDA margin
-17.8
%
7.8
%
Non-GAAP Adjusted Corporate
Expenses
$
(42,354
)
$
(41,774
)
-1
%
-1
%
Depreciation and amortization
3,400
3,527
4
%
3
%
Non-GAAP Adjusted EBITDA
$
(38,954
)
$
(38,247
)
-2
%
-2
%
Consolidated Results:
Revenue, net
$
403,809
$
451,013
-10
%
-10
%
Less: Held for Sale or Sold Segment (3)
(14,186
)
(83,889
)
-83
%
-83
%
Adjusted Revenue, net
$
389,623
$
367,124
6
%
6
%
Operating Income (Loss)
$
28,973
$
(16,355
)
#
#
Adjustments: Restructuring charges
3,870
12,123
68
%
68
%
Impairment of goodwill
-
26,695
#
#
Held for Sale or Sold Segment Adjusted Operating Loss (Income) (3)
2,519
(3,084
)
#
#
Non-GAAP Adjusted Operating Income
$
35,362
$
19,379
82
%
83
%
Adjusted Operating Income margin
9.1
%
5.3
%
Depreciation and amortization
37,253
43,728
15
%
15
%
Less: Held for Sale or Sold Segment depreciation and amortization
(3)
-
(3,437
)
#
#
Non-GAAP Adjusted EBITDA
$
72,615
$
59,670
22
%
22
%
Adjusted EBITDA margin
18.6
%
16.3
%
Notes: (1) The supplementary
information included in this press release for the three months
ended July 31, 2024 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. (3) Our
Adjusted Revenue, Adjusted Operating Income and Adjusted EBITDA
excludes the impact of our Held for Sale or Sold segment Revenue,
Adjusted Operating Income or Loss and Adjusted EBITDA results.
# Variance greater than 100%
JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION
(1) CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION (in thousands) (unaudited)
July 31, April 30,
2024
2024
Assets: Current assets Cash and cash equivalents
$
82,545
$
83,249
Accounts receivable, net
192,153
224,198
Inventories, net
25,846
26,219
Prepaid expenses and other current assets
87,004
85,954
Current assets held-for-sale (2)
5,282
34,422
Total current assets
392,830
454,042
Technology, property and equipment, net
185,104
192,438
Intangible assets, net
609,224
615,694
Goodwill
1,099,817
1,091,368
Operating lease right-of-use assets
72,424
69,074
Other non-current assets
292,635
283,719
Non-current assets held-for-sale (2)
24
19,160
Total assets
$
2,652,058
$
2,725,495
Liabilities and shareholders' equity: Current
liabilities Accounts payable
$
38,641
$
55,659
Accrued royalties
105,063
97,173
Short-term portion of long-term debt
8,750
7,500
Contract liabilities
367,307
483,778
Accrued employment costs
49,039
96,980
Short-term portion of operating lease liabilities
17,647
18,294
Other accrued liabilities
78,241
76,266
Current liabilities held-for-sale (2)
24,103
37,632
Total current liabilities
688,791
873,282
Long-term debt
909,850
767,096
Accrued pension liability
67,850
70,832
Deferred income tax liabilities
97,362
97,186
Operating lease liabilities
91,587
94,386
Other long-term liabilities
76,980
71,760
Long-term liabilities held-for-sale (2)
5,965
11,237
Total liabilities
1,938,385
1,985,779
Shareholders' equity
713,673
739,716
Total liabilities and shareholders' equity
$
2,652,058
$
2,725,495
Notes: (1) The supplementary information included in
this press release for July 31, 2024 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) As
previously announced, we are divesting non-core businesses,
including Wiley Edge's India operations and CrossKnowledge. These
businesses met the held-for-sale criteria and were measured at the
lower of carrying value or fair value less costs to sell. We
recorded a pretax impairment of $51.0 million in the three months
ended July 31, 2024 related to CrossKnowledge which is recorded as
a contra asset account within Current assets held-for-sale and
Non-current assets held-for-sale.
JOHN WILEY & SONS,
INC. SUPPLEMENTARY INFORMATION (1) CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
(unaudited) Three Months Ended July 31,
2024
2023
Operating activities: Net loss
$
(1,436
)
$
(92,264
)
Impairment of goodwill
-
26,695
(Gains) losses on sale of businesses and impairment charges related
to assets held-for-sale
(5,801
)
75,929
Amortization of intangible assets
12,927
15,648
Amortization of product development assets
4,476
6,687
Depreciation and amortization of technology, property, and
equipment
19,850
21,393
Other noncash charges
20,067
8,753
Net change in operating assets and liabilities
(138,795
)
(145,176
)
Net cash used in operating activities
(88,712
)
(82,335
)
Investing activities: Additions to technology,
property, and equipment
(14,502
)
(20,086
)
Product development spending
(3,351
)
(3,747
)
Businesses acquired in purchase transactions, net of cash acquired
(915
)
(1,500
)
Net cash (transferred) proceeds related to the sale of businesses
(6,387
)
457
Acquisitions of publication rights and other
1,348
(866
)
Net cash used in investing activities
(23,807
)
(25,742
)
Financing activities: Net debt borrowings
143,749
145,473
Cash dividends
(19,184
)
(19,382
)
Purchases of treasury shares
(12,500
)
(10,000
)
Other
(10,476
)
(10,277
)
Net cash provided by financing activities
101,589
105,814
Effects of exchange rate changes on cash, cash
equivalents and restricted cash
798
2,257
Change in cash, cash equivalents and restricted cash for
period
(10,132
)
(6
)
Cash, cash equivalents and restricted cash -
beginning
99,543
107,262
Cash, cash equivalents and restricted cash - ending (2)
$
89,411
$
107,256
CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT
DEVELOPMENT SPENDING (3) Three Months Ended
July 31,
2024
2023
Net cash used in operating activities
$
(88,712
)
$
(82,335
)
Less: Additions to technology, property, and equipment
(14,502
)
(20,086
)
Less: Product development spending
(3,351
)
(3,747
)
Free cash flow less product development spending
$
(106,565
)
$
(106,168
)
Notes: (1) The supplementary information included in
this press release for the three months ended July 31, 2024 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) Cash, cash equivalents and
restricted cash as of July 31, 2024 includes held-for-sale cash,
cash equivalents and restricted cash of $6.8 million. (3)
See Explanation of Usage of Non-GAAP Performance Measures included
in this supplemental information.
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 Revenue;
- Adjusted Operating Income and margin;
- Adjusted Income Before Taxes;
- Adjusted Income Tax Provision;
- Adjusted Effective Tax Rate;
- EBITDA, Adjusted EBITDA and margin;
- Organic revenue; and
- 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 as for internal reporting and forecasting
purposes, when publicly providing our outlook, to evaluate our
performance and calculate incentive compensation. We present
these non-GAAP performance measures in addition to US GAAP
financial results because we believe 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.
The performance metric used by our chief operating decision maker
to evaluate performance of our reportable segments is Adjusted
Operating Income. We present both Adjusted Operating Income and
Adjusted EBITDA for each of our reportable segments as we believe
Adjusted EBITDA provides additional useful information to certain
investors and financial analysts for operational trends and
comparisons over time. It removes the impact of depreciation and
amortization expense, as well as presents a consistent basis to
evaluate operating profitability and compare our financial
performance to that of our peer companies and competitors.
For example:
- Adjusted EPS, Adjusted Revenue, Adjusted Operating Income,
Adjusted Income Before Taxes, Adjusted Income Tax Provision,
Adjusted Effective Tax Rate, Adjusted EBITDA, and organic revenue
(excluding acquisitions) 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 remove distortion from the
effects of foreign currency movements to provide better
comparability of our business trends from period to period. We
measure our performance excluding 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, we have historically provided these or similar
non-GAAP performance measures and understand that some investors
and financial analysts find this information helpful in analyzing
our operating margins and net income, and in comparing our
financial performance to that of our peer companies and
competitors. Based on interactions with investors, we also believe
that our non-GAAP performance measures are regarded as useful to
our investors as supplemental to our US 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. We have not provided our 2025
outlook for the most directly comparable US GAAP financial
measures, as they are not available without unreasonable effort due
to the high variability, complexity, and low visibility with
respect to certain items, including restructuring charges and
credits, gains and losses on foreign currency, and other gains and
losses. These items are uncertain, depend on various factors, and
could be material to our consolidated results computed in
accordance with US GAAP. Non-GAAP performance measures do
not have standardized meanings prescribed by US 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 US GAAP. The adjusted metrics
have limitations as analytical tools, and should not be considered
in isolation from, or as a substitute for, US GAAP information. It
does not purport to represent any similarly titled US GAAP
information and is not an indicator of our performance under US
GAAP. Non-GAAP financial metrics that we present may not be
comparable with similarly titled measures used by others. Investors
are cautioned against placing undue reliance on these non-GAAP
measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240905678059/en/
Investor Brian Campbell brian.campbell@wiley.com
201.748.6874
Media Andrea Sherman asherman@wiley.com (203)
536-7564
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