Wiley (NYSE: WLY), one of the world’s largest publishers and a
global leader in scientific research and career-connected
education, today announced results for the third quarter ended
January 31, 2023.
- GAAP Results: Revenue of $491 million (-5% vs. prior
year), Operating loss of $67 million (-$113M vs. prior year), and
EPS loss of $1.29 (-$1.92 vs. prior year). Losses primarily due to
non-cash goodwill impairment in Education Services/University
Services and restructuring charges
- Adjusted Results at constant currency: Revenue of $491
million (-2% vs. prior year), Adjusted EBITDA of $98 million (-3%
vs. prior year), and Adjusted EPS of $0.85 (-9% vs. prior
year)
- Fiscal 2023 Outlook: Reduced to reflect increased
Academic headwinds and a publishing pause in a Hindawi special
issues program
- Accelerating wide-ranging simplification and optimization
efforts to drive meaningful margin improvement
MANAGEMENT COMMENTARY
“Our third quarter results and revised full year outlook are
clearly below our expectations,” said Brian Napack, President and
CEO. “While our core business and markets are strong, we’ve been
challenged this year by unpredictable market headwinds and an
unplanned publishing pause at Hindawi. Looking ahead, we are now
accelerating and expanding our work to create a more-focused Wiley
that drives consistent growth with fewer moving parts and greater
profitability.”
THIRD QUARTER PERFORMANCE
GAAP Measures
Unaudited ($millions except for
EPS)
Q3 2023
Q3 2022
Change
Revenue
$491.4
$515.9
(5%)
Operating (Loss) Income
($67.1)
$46.0
#
Diluted EPS
($1.29)
$0.63
#
Non-GAAP Measures
Q3 2023
Q3 2022
Change
Change
Constant
Currency
Revenue
$491.4
$515.9
(5%)
(2%)
Adjusted EBITDA
$97.7
$99.8
(2%)
(3%)
Adjusted EPS
$0.85
$0.95
(11%)
(9%)
# Not meaningful
Please see attached financial
tables for results for three-month and nine-month periods
Excluding acquisitions and
currency impact, revenue was down 3% for the quarter
Unfavorable FX variance of $13
million in Revenue; favorable variance of $0.6 million in Adjusted
EBITDA; unfavorable variance of $0.01 in Adjusted EPS
NEW SEGMENT REPORTING
Wiley has reorganized its Education lines of business into two
new customer-centric segments. The Academic segment
addresses the university customer group and includes Academic
Publishing and University Services. The Talent segment
addresses the corporate customer group and will be focused on
delivering training, sourcing, and upskilling solutions. These new
segments replace Academic & Professional Learning and Education
Services. The Research segment and Corporate Expense
category remain unchanged. Please see the attached financial
schedules for more detail.
Revenue
- Research was down 4% as reported, or down 2% at constant
currency and excluding acquisitions, primarily due to a pause in
the Hindawi special issues publishing program. The program was
suspended temporarily due to the presence in certain special issues
of compromised articles. As a result, Hindawi revenue declined $9
million vs. prior year, offsetting growth in other open access
publishing programs.
- Academic declined 11% as reported and 10% at constant
currency and excluding acquisitions. Academic Publishing revenue
performance primarily reflects print declines, offsetting growth in
digital courseware. University Services was down due to continued
online enrollment challenges and lower fee for service
revenue.
- Talent increased 13% as reported and 18% at constant
currency with double-digit growth in placements and corporate
training driving performance.
Adjusted EBITDA
- Research EBITDA was down 7% at constant currency driven
by revenue performance and technology investment.
- Academic EBITDA declined 20% at constant currency
primarily due to the revenue performance.
- Talent EBITDA declined 2% at constant currency due to
investments to drive scale in talent development (“Wiley Edge”) and
increased inflationary impacts on placements.
- Adjusted Corporate Expenses declined 26% at constant
currency mainly due to lower incentive compensation accrual and
reduced technology expenses.
EPS
- GAAP EPS was a loss of $1.29 primarily due to non-cash
impairment, restructuring and settlement charges in the quarter
totalling $1.86.
- Goodwill Impairment – Wiley recorded a non-cash goodwill
impairment charge of $100 million, or $1.69 per share, for its
Education Services and University Services businesses. This charge
primarily reflected continued enrollment headwinds, a rising
interest rate environment, and lower market multiples. Given
Wiley’s segment realignment, the Company is required to test
goodwill for impairment immediately before and after the
realignment.
- Restructuring and other charges – Wiley recorded
restructuring charges of $9 million or $0.12 per share, primarily
related to the closure of a tech development center in Russia.
Wiley also recorded a legal settlement of $4 million or $0.05 per
share related to consideration for a previous acquisition.
- Adjusted EPS of $0.85 was down 9% at constant currency
primarily due to lower Adjusted Operating Income, higher interest
expense and lower pension credits, partially offset by lower tax
expense.
Balance Sheet, Cash Flow, and Capital Allocation
- Net Debt-to-EBITDA ratio (trailing twelve months) at
quarter-end was 2.1 compared to 1.9 in the year-ago period, and 1.6
at year end (April 30).
- Net Cash Provided by Operating Activities (YTD) was $54
million compared to $158 million in the prior year period. This is
primarily due to working capital timing, lower cash earnings, and
restructuring payments. Wiley expects working capital timing to
largely resolve in the fourth quarter.
- Free Cash Flow less Product Development Spending (YTD)
was a use of $22 million vs. a source of $77 million in the prior
year period, primarily due to working capital timing, lower cash
earnings, and restructuring payments. Wiley expects working capital
timing issues to largely resolve in the fourth quarter.
- Share Repurchases: During the quarter, the Company
utilized $6.5 million to repurchase approximately 158 thousand
shares at an average cost per share of $41.14. Year to date, the
Company spent $24 million on approximately 540 thousand shares.
Wiley has $173 million remaining in its current authorization
program.
FOREIGN EXCHANGE ADJUSTMENT
As a result of significant currency fluctuations, Wiley noted
that Adjusted EBITDA in Research was being adversely impacted by
Research royalty expenses denominated in GBP but derived from USD
revenues in its UK subsidiary. The Company normalized for this FX
impact, resulting in a constant currency Adjusted EBITDA benefit of
$2 million this quarter. Note we have also amended our Q1 and Q2
Adjusted EBITDA (+$3 million each quarter, respectively) for
Research and Wiley overall to reflect the benefit for those
periods. In the prior fiscal year, this impact was not significant.
The Company believes this change will more adequately reflect
Wiley’s true operating performance.
FISCAL YEAR 2023 OUTLOOK
Wiley is reducing its financial outlook at constant
currency:
- Revenue: downward revision primarily due to increased
Academic market headwinds and the publishing pause in Hindawi
special issues.
- Adjusted EBITDA and Adjusted EPS: downward revision due
to lower projected revenue. Adjusted EPS further impacted by higher
interest expense.
- Free Cash Flow: downward revision due to lower projected
cash earnings and higher restructuring payments, mainly related to
the closing of Wiley’s Russia tech development center.
Metric
($millions, except EPS)
FY22 Actual*
FY23 Outlook*
Constant currency
Previous
FY23 Outlook*
Constant currency
Current
FX Impact**
FY23 Outlook^
YTD average rates
Current
Revenue
$2,083
$2,110 - $2,150
$2,065 - $2,090
($60)
$2,005 - $2,030
Adjusted EBITDA
$433
$425 - $450
$395- $410
Immaterial
$395- $410
Adjusted EPS
$4.16
$3.70 - $4.05
$3.30 - $3.55
Immaterial
$3.30 - $3.55
Free Cash Flow
$223
$210 - $235
$160 - $185
Immaterial
$160 - $185
*Based on Fiscal 2022 average
rates of 1.15 euro and 1.36 British pound
**Variance between Fiscal 2022
average rates and YTD Fiscal 2023 average rates
^Fiscal 2023 outlook at average
YTD rates: 1.04 euro and 1.20 British pound
Scheduled for today, March 9 at 10:00 am (ET). Access webcast at
investors.wiley.com, or directly at
https://events.q4inc.com/attendee/486910551. US callers, please
dial (888) 210-3346 and enter code 2521217#. International callers,
please dial (646) 960-0253 and enter the code 2521217#.
ABOUT WILEY
Wiley is one of the world’s largest publishers and a global
leader in scientific research and career-connected education.
Founded in 1807, Wiley enables discovery, powers education, and
shapes workforces. Through its industry-leading content, digital
platforms, and knowledge networks, the company delivers 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,” “EBITDA,” “Adjusted EBITDA,”
“Adjusted Contribution to Profit,” “Adjusted Income before Taxes,”
“Adjusted Income Tax Provision,” “Adjusted Effective Tax Rate,”
“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. We have not provided our
2023 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.
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 by Wiley 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 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 2023 in connection with our
multi-year Business Optimization Program and Fiscal Year 2023
Restructuring 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.
CATEGORY: ALL CORPORATE NEWS
CATEGORY: EARNINGS RELEASES
JOHN WILEY & SONS,
INC.
SUPPLEMENTARY INFORMATION
(1)(2)
CONDENSED CONSOLIDATED
STATEMENTS OF NET (LOSS) INCOME
(Dollars in thousands, except
per share information)
(unaudited)
Three Months Ended
Nine Months Ended
January 31,
January 31,
2023
2022
2023
2022
Revenue, net
$
491,368
$
515,884
$
1,493,773
$
1,537,275
Costs and expenses: Cost of sales
174,051
172,916
518,384
513,654
Operating and administrative expenses
255,798
275,475
791,578
800,254
Impairment of goodwill (3)
99,800
-
99,800
-
Restructuring and related charges (credits)
8,807
448
45,204
(1,161
)
Amortization of intangible assets
19,968
21,056
65,389
63,683
Total costs and expenses
558,424
469,895
1,520,355
1,376,430
Operating (loss) income
(67,056
)
45,989
(26,582
)
160,845
As a % of revenue
-13.6
%
8.9
%
-1.8
%
10.5
%
Interest expense
(11,521
)
(5,103
)
(27,185
)
(14,739
)
Foreign exchange transaction gains (losses)
421
(488
)
283
(1,488
)
Gain on sale of certain assets
-
-
-
3,694
Other income, net
705
2,821
976
9,524
(Loss) income before taxes
(77,451
)
43,219
(52,508
)
157,836
(Benefit) provision for income taxes
(5,982
)
7,853
(1,397
)
52,673
Effective tax rate
7.7
%
18.2
%
2.7
%
33.4
%
Net (loss) income
$
(71,469
)
$
35,366
$
(51,111
)
$
105,163
As a % of revenue
-14.5
%
6.9
%
-3.4
%
6.8
%
(Loss) earnings per share Basic
$
(1.29
)
$
0.63
$
(0.92
)
$
1.89
Diluted
$
(1.29
)
$
0.63
$
(0.92
)
$
1.86
Weighted average number of common shares outstanding
Basic
55,514
55,701
55,625
55,789
Diluted (4)
55,514
56,389
55,625
56,481
Notes:
(1) The supplementary information
included in this press release for the three and nine months ended
January 31, 2023 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
the third quarter of fiscal year 2023 we have reorganized our
Education lines of business into two new customer-centric segments.
Our new segment reporting structure consists of three reportable
segments which includes Research (no changes), Academic, and
Talent, as well as a Corporate expense category (no change). As a
result of this realignment, we were required to test goodwill for
impairment immediately before and after the realignment. Prior to
the realignment, we concluded that the fair value of the Education
Services reporting unit was below its carrying value, which
resulted in a pre-tax non-cash goodwill impairment of $31.0
million. After the realignment, we concluded that the fair value of
the University Services reporting unit within the Academic segment
was below its carrying value which resulted in an additional
pre-tax non-cash goodwill impairment of $68.8 million.
(4) In calculating diluted net
loss per common share for the three and nine months ended January
31, 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 anti-dilutive. 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 EPS
to Non-GAAP Adjusted EPS
Three Months Ended
Nine Months Ended
January 31,
January 31,
2023
2022
2023
2022
US GAAP (Loss) Earnings Per Share - Diluted
$
(1.29
)
$
0.63
$
(0.92
)
$
1.86
Adjustments: Impairment of goodwill
1.69
-
1.69
-
Legal settlement (3)
0.05
-
0.05
-
Restructuring and related charges (credits)
0.12
0.01
0.60
(0.02
)
Foreign exchange (gains) losses on intercompany transactions
(0.03
)
0.01
0.01
-
Amortization of acquired intangible assets (4)
0.29
0.30
0.96
0.93
Gain on sale of certain assets (5)
-
-
-
(0.05
)
Income tax adjustments (6)
-
-
-
0.37
EPS impact of using weighted-average dilutive shares for adjusted
EPS calculation (7)
0.02
-
0.01
-
Non-GAAP Adjusted Earnings Per Share - Diluted
$
0.85
$
0.95
$
2.40
$
3.09
Reconciliation of US GAAP
(Loss) Income Before Taxes to Non-GAAP Adjusted Income Before
Taxes
Three Months Ended
Nine Months Ended
(amounts in thousands)
January 31,
January 31,
2023
2022
2023
2022
US GAAP (Loss) Income Before Taxes
$
(77,451
)
$
43,219
$
(52,508
)
$
157,836
Pretax Impact of Adjustments: Impairment of goodwill
99,800
-
99,800
-
Legal settlement (3)
3,671
-
3,671
-
Restructuring and related charges (credits)
8,807
448
45,204
(1,161
)
Foreign exchange (gains) losses on intercompany transactions
(2,414
)
722
906
494
Amortization of acquired intangible assets (4)
21,042
22,189
68,611
67,081
Gain on sale of certain assets (5)
-
-
-
(3,694
)
Non-GAAP Adjusted Income Before Taxes
$
53,455
$
66,578
$
165,684
$
220,556
Reconciliation of US GAAP
Income Tax (Benefit) Provision 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 (Benefit) Provision
$
(5,982
)
$
7,853
$
(1,397
)
$
52,673
Income Tax Impact of Adjustments (8) Impairment of goodwill
4,857
-
4,857
-
Legal settlement (3)
716
-
716
-
Restructuring and related charges (credits)
2,221
114
11,159
(118
)
Foreign exchange (gains) losses on intercompany transactions
(596
)
239
274
258
Amortization of acquired intangible assets (4)
4,591
4,834
14,811
15,097
Gain on sale of certain assets (5)
-
-
-
(922
)
Income Tax Adjustments: Impact of increase in UK statutory rate on
deferred tax balances (6)
-
-
-
(20,726
)
Non-GAAP Adjusted Income Tax Provision
$
5,807
$
13,040
$
30,420
$
46,262
US GAAP Effective Tax Rate
7.7
%
18.2
%
2.7
%
33.4
%
Non-GAAP Adjusted Effective Tax Rate
10.9
%
19.6
%
18.4
%
21.0
%
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 and nine months ended
January 31, 2023 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 the three months ended January
31, 2023, we settled a litigation matter related to consideration
for a previous acquisition for $3.7 million.
(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) Income. 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) Income.
(5)
The gain on sale of certain
assets is due to the sale of our world languages product portfolio
which was included in our Academic segment, and resulted in a
pretax gain of approximately $3.7 million during the nine months
ended January 31, 2022.
(6)
In the three months ended July
31, 2021, the UK enacted legislation that increased its statutory
rate from 19% to 25% effective April 1, 2023. This resulted in a
$20.7 million non-cash deferred tax expense from the re-measurement
of the Company’s applicable UK net deferred tax liabilities during
the three months ended July 31, 2021. These adjustments impacted
deferred taxes.
(7)
Represents the impact of using
diluted weighted-average number of common shares outstanding (56.1
million shares and 56.3 million shares for the three and nine
months ended January 31, 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.
(8)
For the three months ended
January 31, 2023, the tax impact was $4.0 million from current
taxes and $7.8 million from deferred taxes. For the nine months
ended January 31, 2023, the tax impact was $5.5 million from
current taxes and $26.3 million from deferred taxes. For the three
and nine months ended January 31, 2022, substantially all of the
tax impact was from deferred taxes.
JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION
(1) RECONCILIATION OF US GAAP NET (LOSS) INCOME TO NON-GAAP
EBITDA AND ADJUSTED EBITDA (unaudited)
Three Months Ended
Nine Months Ended
January 31,
January 31,
2023
2022
2023
2022
Net (Loss) Income
$
(71,469
)
$
35,366
$
(51,111
)
$
105,163
Interest expense
11,521
5,103
27,185
14,739
(Benefit) provision for income taxes
(5,982
)
7,853
(1,397
)
52,673
Depreciation and amortization
52,442
53,363
163,142
162,484
Non-GAAP EBITDA
(13,488
)
101,685
137,819
335,059
Impairment of goodwill
99,800
-
99,800
-
Legal settlement
3,671
-
3,671
-
Restructuring and related charges (credits)
8,807
448
45,204
(1,161
)
Foreign exchange transaction (gains) losses
(421
)
488
(283
)
1,488
Gain on sale of certain assets
-
-
-
(3,694
)
Other income, net
(705
)
(2,821
)
(976
)
(9,524
)
Non-GAAP Adjusted EBITDA
$
97,664
$
99,800
$
285,235
$
322,168
Adjusted EBITDA Margin
19.9
%
19.3
%
19.1
%
21.0
%
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 and nine months ended
January 31, 2023 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)
(2) (3)
SEGMENT RESULTS
(in thousands)
(unaudited)
% Change
Three Months Ended January
31,
Favorable
(Unfavorable)
2023
2022 (3)
Reported
Constant
Currency
Research: Revenue, net Research Publishing (4)
$
213,720
$
224,553
-5%
-3%
Research Solutions (4)
39,880
38,788
3%
6%
Total Revenue, net
$
253,600
$
263,341
-4%
-1%
Contribution to Profit
$
56,860
$
62,165
-9%
-10%
Adjustments: Restructuring charges
317
-
#
#
Non-GAAP Adjusted Contribution to Profit
$
57,177
$
62,165
-8%
-9%
Depreciation and amortization
23,123
23,914
3%
1%
Non-GAAP Adjusted EBITDA
$
80,300
$
86,079
-7%
-7%
Adjusted EBITDA margin
31.7
%
32.7
%
Academic: Revenue, net Academic Publishing
$
128,564
$
143,583
-10%
-8%
University Services
48,951
55,435
-12%
-11%
Total Revenue, net
$
177,515
$
199,018
-11%
-9%
Contribution to Profit
$
(80,663
)
$
31,711
#
#
Adjustments: Restructuring charges
1,851
261
#
#
Impairment of goodwill
99,800
-
#
#
Non-GAAP Adjusted Contribution to Profit
$
20,988
$
31,972
-34%
-34%
Depreciation and amortization
19,922
19,693
-1%
-2%
Non-GAAP Adjusted EBITDA
$
40,910
$
51,665
-21%
-20%
Adjusted EBITDA margin
23.0
%
26.0
%
Talent: Total Revenue, net
$
60,253
$
53,525
13%
18%
Contribution to Profit
$
5,243
$
5,717
-8%
-7%
Adjustments: Restructuring charges (credits)
72
(41
)
#
#
Non-GAAP Adjusted Contribution to Profit
$
5,315
$
5,676
-6%
-5%
Depreciation and amortization
5,458
5,605
3%
-1%
Non-GAAP Adjusted EBITDA
$
10,773
$
11,281
-5%
-2%
Adjusted EBITDA margin
17.9
%
21.1
%
Corporate Expenses:
$
(48,496
)
$
(53,604
)
10%
7%
Adjustments: Restructuring charges
6,567
228
#
#
Legal settlement (5)
3,671
-
#
#
Non-GAAP Adjusted Contribution to Profit
$
(38,258
)
$
(53,376
)
28%
26%
Depreciation and amortization
3,939
4,151
5%
0%
Non-GAAP Adjusted EBITDA
$
(34,319
)
$
(49,225
)
30%
28%
Consolidated Results: Revenue, net
$
491,368
$
515,884
-5%
-2%
Operating (Loss) Income
$
(67,056
)
$
45,989
#
#
Adjustments: Restructuring charges
8,807
448
#
#
Impairment of goodwill
99,800
-
#
#
Legal settlement (5)
3,671
-
#
#
Non-GAAP Adjusted Operating Income
$
45,222
$
46,437
-3%
-6%
Depreciation and amortization
52,442
53,363
2%
-1%
Non-GAAP Adjusted EBITDA
$
97,664
$
99,800
-2%
-3%
Adjusted EBITDA margin
19.9
%
19.3
%
Notes:
(1) The supplementary information
included in this press release for the three and nine months ended
January 31, 2023 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) During the three months ended
January 31, 2023, we have reorganized our Education lines of
business into two new customer-centric segments. The Academic
segment addresses the university customer group and includes
Academic Publishing and University Services. The Talent segment
addresses the corporate customer group and will be focused on
delivering training, sourcing, and upskilling solutions. Our new
segment reporting structure consists of three reportable segments
which includes Research (no changes), Academic, and Talent, as well
as a Corporate expense category (no change), which includes certain
costs that are not allocated to the reportable segments. Prior
period segment results have been revised to the new segment
presentation. There were no changes to our consolidated financial
results.
(4) As previously announced in
May 2022, our revenue by product type previously referred to as
Research Platforms was changed to Research Solutions. Research
Solutions includes infrastructure and publishing services that help
societies and corporations thrive in a complex knowledge ecosystem.
In addition to Platforms (Atypon), certain product offerings such
as corporate sales which included the recent acquisitions of Madgex
Holdings Limited (Madgex), and Bio-Rad Laboratories Inc.’s
Informatics products (Informatics) that were previously included in
Research Publishing moved to Research Solutions to align with our
strategic focus. Research Solutions also includes product offerings
related to certain recent acquisitions such as J&J, and EJP.
Prior period results have been revised to the new presentation.
There were no changes to the total Research segment or our
consolidated financial results. The revenue was $24.3 million for
the three months ended January 31, 2022, $68.4 million for the nine
months ended January 30, 2022, $93.3 million for the year ended
April 30, 2022, and $80.3 million for the year ended April 30,
2021.
(5) In the three months ended
January 31, 2023, we settled a litigation matter related to
consideration for a previous acquisition for $3.7 million.
(6) On January 1, 2020, Wiley
acquired mthree, a talent placement provider that addresses the IT
skills gap by finding, training, and placing job-ready technology
talent in roles with leading corporations worldwide. Its results of
operations are included in our Talent segment. In late May 2022,
Wiley renamed the mthree talent development solution to Wiley Edge
and discontinued use of the mthree trademark during the three
months ended July 31, 2022. As a result of these actions, we
determined that a revision of the useful life was warranted, and
the intangible asset was fully amortized over its remaining useful
life resulting in accelerated amortization expense of $4.6 million
in the three months ended July 31, 2022.
#
Variance greater than 100%
JOHN WILEY & SONS, INC.
SUPPLEMENTARY INFORMATION (1)
(2) (3)
SEGMENT RESULTS
(in thousands)
(unaudited)
% Change
Nine Months Ended January
31,
Favorable
(Unfavorable)
2023
2022 (3)
Reported
Constant
Currency
Research: Revenue, net Research Publishing (4)
$
685,884
$
706,690
-3%
1%
Research Solutions (4)
113,988
106,561
7%
11%
Total Revenue, net
$
799,872
$
813,251
-2%
2%
Contribution to Profit
$
199,162
$
218,004
-9%
-8%
Adjustments: Restructuring charges
1,577
238
#
#
Non-GAAP Adjusted Contribution to Profit
$
200,739
$
218,242
-8%
-7%
Depreciation and amortization
70,308
71,140
1%
-2%
Non-GAAP Adjusted EBITDA
$
271,047
$
289,382
-6%
-5%
Adjusted EBITDA margin
33.9
%
35.6
%
Academic: Revenue, net Academic Publishing
$
354,728
$
400,740
-11%
-9%
University Services
152,892
169,002
-10%
-9%
Total Revenue, net
$
507,620
$
569,742
-11%
-9%
Contribution to Profit
$
(78,399
)
$
69,175
#
#
Adjustments: Restructuring charges (credits)
10,091
(347
)
#
#
Impairment of goodwill
99,800
-
#
#
Non-GAAP Adjusted Contribution to Profit
$
31,492
$
68,828
-54%
-52%
Depreciation and amortization
61,547
61,622
0%
-1%
Non-GAAP Adjusted EBITDA
$
93,039
$
130,450
-29%
-27%
Adjusted EBITDA margin
18.3
%
22.9
%
Talent: Total Revenue, net
$
186,281
$
154,282
21%
28%
Contribution to Profit
$
17,888
$
16,370
9%
13%
Adjustments: Restructuring charges
2,400
245
#
#
Accelerated amortization of an intangible asset (6)
4,594
-
#
#
Non-GAAP Adjusted Contribution to Profit
$
24,882
$
16,615
50%
53%
Depreciation and amortization
14,688
17,304
15%
9%
Non-GAAP Adjusted EBITDA
$
39,570
$
33,919
17%
21%
Adjusted EBITDA margin
21.2
%
22.0
%
Corporate Expenses:
$
(165,233
)
$
(142,704
)
-16%
-20%
Adjustments: Restructuring charges (credits)
31,136
(1,297
)
#
#
Legal settlement (5)
3,671
-
#
#
Non-GAAP Adjusted Contribution to Profit
$
(130,426
)
$
(144,001
)
9%
5%
Depreciation and amortization
12,005
12,418
3%
0%
Non-GAAP Adjusted EBITDA
$
(118,421
)
$
(131,583
)
10%
6%
Consolidated Results: Revenue, net
$
1,493,773
$
1,537,275
-3%
1%
Operating (Loss) Income
$
(26,582
)
$
160,845
#
#
Adjustments: Restructuring charges (credits)
45,204
(1,161
)
#
#
Impairment of goodwill
99,800
-
#
#
Legal settlement (5)
3,671
-
#
#
Accelerated amortization of an intangible asset (6)
4,594
-
#
#
Non-GAAP Adjusted Operating Income
$
126,687
$
159,684
-21%
-22%
Depreciation and amortization
158,548
162,484
2%
0%
Non-GAAP Adjusted EBITDA
$
285,235
$
322,168
-11%
-11%
Adjusted EBITDA margin
19.1
%
21.0
%
#
Variance greater than 100%
JOHN WILEY & SONS,
INC.
SUPPLEMENTARY INFORMATION
(1)
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
(in thousands)
(unaudited)
January 31,
April 30,
2023
2022
Assets: Current assets Cash and cash equivalents
$
126,449
$
100,397
Accounts receivable, net
283,654
331,960
Inventories, net
33,167
36,585
Prepaid expenses and other current assets
87,896
81,924
Total current assets
531,166
550,866
Technology, property and equipment, net
248,298
271,572
Intangible assets, net
868,267
931,429
Goodwill
1,203,254
1,302,142
Operating lease right-of-use assets
94,672
111,719
Other non-current assets
204,598
193,967
Total assets
$
3,150,255
$
3,361,695
Liabilities and shareholders' equity: Current
liabilities Accounts payable
$
32,384
$
77,438
Accrued royalties
154,227
101,596
Short-term portion of long-term debt
5,000
18,750
Contract liabilities
369,250
538,126
Accrued employment costs
81,106
117,121
Short-term portion of operating lease liabilities
20,055
20,576
Other accrued liabilities
98,947
95,812
Total current liabilities
760,969
969,419
Long-term debt
940,576
768,277
Accrued pension liability
78,283
78,622
Deferred income tax liabilities
144,602
180,065
Operating lease liabilities
119,803
132,541
Other long-term liabilities
79,122
90,502
Total liabilities
2,123,355
2,219,426
Shareholders' equity
1,026,900
1,142,269
Total liabilities and shareholders' equity
$
3,150,255
$
3,361,695
Notes:
(1) The supplementary information
included in this press release for January 31, 2023 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 FLOWS
(in thousands)
(unaudited)
Nine Months Ended
January 31,
2023
2022
Operating activities: Net (loss) income
$
(51,111
)
$
105,163
Impairment of goodwill
99,800
-
Amortization of intangible assets
65,389
63,683
Amortization of product development assets
25,175
26,662
Depreciation and amortization of technology, property, and
equipment
72,578
72,139
Other noncash charges
71,660
69,347
Net change in operating assets and liabilities
(229,773
)
(178,510
)
Net cash provided by operating activities
53,718
158,484
Investing activities: Additions to technology,
property, and equipment
(57,616
)
(60,668
)
Product development spending
(17,763
)
(20,388
)
Businesses acquired in purchase transactions, net of cash acquired
(5,792
)
(70,620
)
Proceeds related to the sale of certain assets
40
3,375
Acquisitions of publication rights and other
1,059
(3,750
)
Net cash used in investing activities
(80,072
)
(152,051
)
Financing activities: Net debt borrowings
162,303
105,334
Cash dividends
(58,067
)
(57,900
)
Purchases of treasury shares
(24,000
)
(24,867
)
Other
(24,952
)
(9,468
)
Net cash provided by financing activities
55,284
13,099
Effects of exchange rate changes on cash, cash
equivalents and restricted cash
(2,670
)
(3,875
)
Change in cash, cash equivalents and restricted cash for
period
26,260
15,657
Cash, cash equivalents and restricted cash -
beginning
100,727
94,359
Cash, cash equivalents and restricted cash - ending
$
126,987
$
110,016
CALCULATION OF NON-GAAP FREE
CASH FLOW LESS PRODUCT DEVELOPMENT SPENDING (2)
Nine Months Ended
January 31,
2023
2022
Net cash provided by operating activities
$
53,718
$
158,484
Less: Additions to technology, property, and equipment
(57,616
)
(60,668
)
Less: Product development spending
(17,763
)
(20,388
)
Free cash flow less product development spending
$
(21,661
)
$
77,428
Notes:
(1) The supplementary information
included in this press release for the nine months ended January
31, 2023 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) 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 Contribution to Profit and
margin;
- 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 Contribution to Profit. We present both Adjusted
Contribution to Profit 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 Contribution to Profit, 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 2023 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/20230309005332/en/
Brian Campbell Investor Relations brian.campbell@wiley.com
201.748.6874
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