Wiley Reports Second Quarter Fiscal 2020 Results
December 4, 2019 – John Wiley & Sons, Inc. (NYSE:
JW-A and JW-B), a global research and education company, today announced results for the second quarter ended October 31, 2019.
Highlights
|
•
|
GAAP Results: Revenue of $466 million (+4%) and EPS of $0.79 (+4%)
|
|
•
|
Adjusted Results (at constant currency): Revenue +5%, EBITDA +3%, and EPS -1%
|
|
•
|
Strong growth in Research and Education Services segments
|
|
•
|
Academic & Professional Learning decline reflecting market pressures in book publishing
|
|
•
|
Efficiency improvements and cost savings through business optimization
|
“We continue to make good progress on our strategic initiatives, building upon our competitive advantages and extending into adjacent opportunities,” said
Brian Napack, Wiley’s President and CEO. “Our Research and Education Services businesses delivered another quarter of strong growth and
improved profitability, driven by noteworthy gains in research publishing volume and enrollment growth in Education Services. In Academic & Professional Learning, we faced further market-driven declines for traditional books. We
continue to build toward profitable growth in this segment by shifting to innovative learning tools and services for high-demand careers.”
|
GAAP Measures
Unaudited ($millions except for EPS)
|
Q2 2020
|
Q2 2019
|
Change
|
|||||||||
|
Revenue
|
$
|
466.2
|
$
|
448.6
|
+4
|
%
|
||||||
|
Diluted EPS
|
$
|
0.79
|
$
|
0.76
|
+4
|
%
|
||||||
|
Non-GAAP Measures
|
Q2 2020
|
Q2 2019
|
Change
Constant Currency
|
|||||||||
|
Revenue
|
$
|
466.2
|
$
|
448.6
|
+5
|
%
|
||||||
|
Adjusted EBITDA
|
$
|
110.0
|
$
|
107.1
|
+3
|
%
|
||||||
|
Adjusted EPS
|
$
|
0.85
|
$
|
0.89
|
(1
|
%)
|
||||||
Notes:
|
•
|
Excluding acquisitions and currency impact, revenue decreased 1% for the quarter.
|
|
•
|
Wiley recorded foreign currency variances in the quarter of $6 million unfavorable in revenue, $0.8 million unfavorable in EBITDA, and $0.03
unfavorable in EPS.
|
Second Quarter Revenue
|
•
|
Research Publishing & Platforms increased
2% as reported and 4% at constant currency, primarily driven by growth in open access publishing volume.
|
|
•
|
Academic & Professional Learning declined
6% as reported and 5% at constant currency, with a decline in book publishing offsetting growth in test preparation. Excluding the zyBooks and Knewton acquisitions, organic revenue declined 10% as reported and 9% at constant currency.
|
|
•
|
Education Services increased 80% (reported
and constant currency), driven by organic growth of 10% and the addition of Learning House (acquired November 2018).
|
Second Quarter Earnings
|
•
|
GAAP Operating Income of $63 million rose 10%,
driven by revenue growth and efficiency gains in Research and Education Services, reduced Corporate Expenses, and lower restructuring charges. Adjusted Operating Income was flat compared to prior year due to investments in growth and
optimization initiatives.
|
|
•
|
Adjusted EBITDA rose 3% to $110 million.
|
|
o
|
Research Publishing & Platforms Adjusted
EBITDA at constant currency rose 6% due to revenue growth and efficiency gains.
|
|
o
|
Academic & Professional Learning Adjusted
EBITDA at constant currency declined 19%, reflecting the revenue decline and investment in growth initiatives.
|
|
o
|
Education Services Adjusted EBITDA increased
$5.1 million to $7.6 million due to organic revenue growth and favorable timing of expenses.
|
|
o
|
Corporate Expenses declined 18% to $32 million due to cost savings and certain non-recurring items.
|
|
•
|
GAAP EPS increase reflected lower
restructuring charges and a lower effective tax rate, partially offset by higher foreign exchange transaction losses and interest expense. Adjusted EPS decline was primarily due to investments in growth and optimization initiatives.
|
Second Quarter Returns to Shareholders
|
•
|
Repurchased 334,336 shares for a total of $15 million at an average cost per share of $44.87
|
|
•
|
Paid cash dividends totaling $19 million ($0.34 per share)
|
|
GAAP Measures
Unaudited ($millions except for EPS)
|
1H 2020
|
1H 2019
|
Change
|
|||||||||
|
Revenue
|
$
|
889.7
|
$
|
859.5
|
+4
|
%
|
||||||
|
Diluted EPS
|
$
|
0.85
|
$
|
1.21
|
(30
|
%)
|
||||||
|
Net Cash Used in Operating Activities
|
$
|
(99.5
|
)
|
$
|
(116.6
|
)
|
+15
|
%
|
||||
|
Non-GAAP Measures
|
1H 2020
|
1H 2019
|
Change
Constant Currency
|
|||||||||
|
Revenue
|
$
|
889.7
|
$
|
859.5
|
+5
|
%
|
||||||
|
Adjusted EBITDA
|
$
|
167.5
|
$
|
177.3
|
(5
|
%)
|
||||||
|
Adjusted EPS
|
$
|
1.06
|
$
|
1.31
|
(18
|
%)
|
||||||
|
Free Cash Flow Less Product Development Spending
|
$
|
(155.7
|
)
|
$
|
(163.5
|
)
|
+5
|
%
|
||||
Notes:
|
•
|
Excluding acquisitions and currency impact, revenue was flat for the six months.
|
|
•
|
Wiley recorded foreign currency variances in the quarter of $12 million unfavorable in revenue, $0.7 million favorable in EBITDA, and $0.02
unfavorable in EPS.
|
First Half Commentary
|
•
|
Revenue increased on growth in Research
Publishing & Platforms (+2% as reported, +4% constant currency) and Education Services (+75% as reported, or +10% organically), partially offset by declines in Academic & Professional Learning (-7% as reported, or -8% organically).
|
|
•
|
GAAP EPS declined by $0.36 to $0.85 due in
part to a $0.15 impact from higher restructuring charges. Adjusted EPS declined 19% and Adjusted EBITDA declined 6% due to investment in growth and optimization initiatives.
|
|
•
|
Net Cash Used in Operating Activities was
$100 million compared to a net use of $117 million in the prior year period, primarily driven by the timing of cash collections. Free Cash Flow less Product Development Spending was a use of $156 million compared to a use of $163 million
in the prior year period. Capital expenditures rose $9 million to $56 million due to increased investment in technology-enabled products and services. Generally, cash flow is a use of cash in the first half of Wiley’s fiscal year,
principally due to the timing of collections for annual research journal subscriptions, which are heavily weighted toward the second half of the year.
|
FISCAL YEAR 2020 OUTLOOK
The Company is reaffirming its financial outlook for the year.
|
ITEM (IN MILLIONS, EXCEPT EPS)
|
FY20 OUTLOOK*
|
|||
|
Revenue
|
$
|
1,855-$1,885
|
||
|
Adjusted EBITDA
|
$
|
357-$372
|
||
|
Adjusted EPS
|
$
|
2.35-$2.45
|
||
|
Free Cash Flow
|
$
|
210-$230
|
||
*Outlook is at constant currency (reflecting FY19 average exchange rates and excluding the impact of foreign exchange movements on results
through the second quarter).
EARNINGS CONFERENCE CALL
Scheduled for today, December 4 at 10:00 a.m. (ET). Access the webcast on Wiley.com, at https://www.wiley.com/en-us/investors. U.S. callers, please dial (844) 231-0103 and enter the participant code 2179423#.
International callers, please dial (216) 562-0402 and enter the participant code 2179423#.
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 of 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 Fiscal Year 2020 Outlook, 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
2020 in connection with our multi-year Business Optimization Program and (xi) 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
|
Six Months Ended
|
|||||||||||||||
|
October 31,
|
October 31,
|
|||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
|||||||||||||
|
Revenue, net
|
$
|
466,205
|
$
|
448,622
|
$
|
889,735
|
$
|
859,523
|
||||||||
|
Costs and expenses:
|
||||||||||||||||
|
Cost of sales
|
143,413
|
132,577
|
286,509
|
260,315
|
||||||||||||
|
Operating and administrative expenses
|
240,380
|
236,207
|
490,550
|
476,633
|
||||||||||||
|
Restructuring and related charges
|
4,001
|
9,996
|
14,736
|
3,910
|
||||||||||||
|
Amortization of intangibles
|
15,020
|
12,367
|
29,990
|
25,050
|
||||||||||||
|
Total Costs and Expenses
|
402,814
|
391,147
|
821,785
|
765,908
|
||||||||||||
|
Operating Income
|
63,391
|
57,475
|
67,950
|
93,615
|
||||||||||||
|
As a % of revenue
|
13.6
|
%
|
12.8
|
%
|
7.6
|
%
|
10.9
|
%
|
||||||||
|
Interest expense
|
(6,787
|
)
|
(3,608
|
)
|
(12,864
|
)
|
(6,404
|
)
|
||||||||
|
Foreign exchange transaction losses
|
(2,668
|
)
|
(54
|
)
|
(16
|
)
|
(1,783
|
)
|
||||||||
|
Interest and other income
|
2,537
|
2,509
|
5,370
|
4,975
|
||||||||||||
|
Income Before Taxes
|
56,473
|
56,322
|
60,440
|
90,403
|
||||||||||||
|
Provision for income taxes
|
11,783
|
12,538
|
12,126
|
20,324
|
||||||||||||
|
Effective tax rate
|
20.9
|
%
|
22.3
|
%
|
20.1
|
%
|
22.5
|
%
|
||||||||
|
Net Income
|
$
|
44,690
|
$
|
43,784
|
$
|
48,314
|
$
|
70,079
|
||||||||
|
As a % of revenue
|
9.6
|
%
|
9.8
|
%
|
5.4
|
%
|
8.2
|
%
|
||||||||
|
Weighted-Average Shares - Diluted
|
56,664
|
57,870
|
56,791
|
57,955
|
||||||||||||
|
Earnings per share - Diluted
|
$
|
0.79
|
$
|
0.76
|
$
|
0.85
|
$
|
1.21
|
||||||||
|
Notes:
|
||||||||||||||||
|
(1) The supplementary information included in this press release for the three and six months ended October 31, 2019 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.
In the six months ended October 31, 2019, we completed the acquisition of Zyante Inc. ("Zybooks"), certain assets of Knewton, Inc. (“Knewton”), which
are included in our Academic & Professional Learning segment results and three immaterial acquisitions, of which two are included in our Research Publishing & Platforms segment and one included in our Academic & Professional
Learning segment which was completed during the three months ended October 31, 2019.
|
||||||||||||||||
|
(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
|
Six Months Ended
|
|||||||||||||||
|
October 31,
|
October 31,
|
|||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
|||||||||||||
|
GAAP Earnings Per Share - Diluted
|
$
|
0.79
|
$
|
0.76
|
$
|
0.85
|
$
|
1.21
|
||||||||
|
Adjustments:
|
||||||||||||||||
|
Restructuring and related charges (A)
|
0.06
|
0.13
|
0.20
|
0.05
|
||||||||||||
|
Foreign exchange losses (gains) on intercompany transactions (A)
|
-
|
-
|
0.01
|
0.05
|
||||||||||||
|
Non-GAAP Adjusted Earnings Per Share - Diluted
|
$
|
0.85
|
$
|
0.89
|
$
|
1.06
|
$
|
1.31
|
||||||||
|
Notes:
|
||||||||||||||||
|
(A) The table below shows the net of tax impact of our multi-year Business Optimization Program, Restructuring and Reinvestment Program and foreign
exchange losses (gains) on intercompany transactions.
|
||||||||||||||||
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
|
October 31,
|
October 31,
|
|||||||||||||||
|
(amounts in millions)
|
2019
|
2018
|
2019
|
2018
|
||||||||||||
|
Net of tax charges related to the Business Optimization Program
|
$
|
2.8
|
$
|
-
|
$
|
11.1
|
$
|
-
|
||||||||
|
Net of tax charges related to the Restructuring and Reinvestment Program
|
$
|
0.3
|
$
|
7.6
|
$
|
0.2
|
$
|
3.0
|
||||||||
|
Net of tax foreign exchange transaction losses (gains)
|
$
|
0.5
|
$
|
0.0
|
$
|
0.7
|
$
|
3.1
|
||||||||
|
(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 six months ended October 31, 2019 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
|
Six Months Ended
|
|||||||||||||||
|
October 31,
|
October 31,
|
|||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
|||||||||||||
|
Net Income
|
$
|
44,690
|
$
|
43,784
|
$
|
48,314
|
$
|
70,079
|
||||||||
|
Interest expense
|
6,787
|
3,608
|
12,864
|
6,404
|
||||||||||||
|
Provision for income taxes
|
11,783
|
12,538
|
12,126
|
20,324
|
||||||||||||
|
Depreciation and amortization
|
42,638
|
39,652
|
84,857
|
79,823
|
||||||||||||
|
Non-GAAP EBITDA
|
105,898
|
99,582
|
158,161
|
176,630
|
||||||||||||
|
Restructuring and related charges
|
4,001
|
9,996
|
14,736
|
3,910
|
||||||||||||
|
Foreign exchange transaction losses
|
2,668
|
54
|
16
|
1,783
|
||||||||||||
|
Interest and other income
|
(2,537
|
)
|
(2,509
|
)
|
(5,370
|
)
|
(4,975
|
)
|
||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
110,030
|
$
|
107,123
|
$
|
167,543
|
$
|
177,348
|
||||||||
|
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 six months ended October 31, 2019 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)
|
|||||||||||||||||
|
SEGMENT RESULTS
|
|||||||||||||||||
|
(in thousands)
|
|||||||||||||||||
|
(unaudited)
|
|||||||||||||||||
|
Three Months Ended October 31,
|
% Change
Favorable (Unfavorable)
|
||||||||||||||||
|
2019
|
2018 (2) |
Reported
|
Constant
Currency
|
||||||||||||||
|
Research Publishing & Platforms:
|
|||||||||||||||||
|
Revenue, net
|
|||||||||||||||||
|
Research Publishing
|
$
|
225,085
|
$
|
219,710
|
2
|
%
|
4
|
%
|
|||||||||
|
Research Platforms
|
9,624
|
9,365
|
3
|
%
|
3
|
%
|
|||||||||||
|
Total Revenue, net
|
$
|
234,709
|
$
|
229,075
|
2
|
%
|
4
|
%
|
|||||||||
|
Contribution to Profit
|
$
|
63,291
|
$
|
59,210
|
7
|
%
|
7
|
%
|
|||||||||
|
Adjustments:
|
|||||||||||||||||
|
Restructuring charges
|
726
|
2,282
|
|||||||||||||||
|
Non-GAAP Adjusted Contribution to Profit
|
$
|
64,017
|
$
|
61,492
|
4
|
%
|
4
|
%
|
|||||||||
|
Depreciation and amortization
|
17,037
|
15,422
|
|||||||||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
81,054
|
$
|
76,914
|
5
|
%
|
6
|
%
|
|||||||||
|
Academic & Professional Learning:
|
|||||||||||||||||
|
Revenue, net
|
|||||||||||||||||
|
Education Publishing
|
$
|
101,741
|
$
|
107,474
|
-5
|
%
|
-4
|
%
|
|||||||||
|
Professional Learning
|
75,984
|
82,196
|
-8
|
%
|
-6
|
%
|
|||||||||||
|
Total Revenue, net
|
177,725
|
189,670
|
-6
|
%
|
-5
|
%
|
|||||||||||
|
Contribution to Profit
|
$
|
35,050
|
$
|
47,078
|
-26
|
%
|
-24
|
%
|
|||||||||
|
Adjustments:
|
|||||||||||||||||
|
Restructuring charges
|
800
|
2,194
|
|||||||||||||||
|
Non-GAAP Adjusted Contribution to Profit
|
$
|
35,850
|
$
|
49,272
|
-27
|
%
|
-26
|
%
|
|||||||||
|
Depreciation and amortization
|
17,349
|
17,473
|
|||||||||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
53,199
|
$
|
66,745
|
-20
|
%
|
-19
|
%
|
|||||||||
|
Education Services:
|
|||||||||||||||||
|
Total Revenue, net
|
$
|
53,771
|
$
|
29,877
|
80
|
%
|
80
|
%
|
|||||||||
|
Contribution to Profit
|
$
|
2,583
|
$
|
(867
|
)
|
#
|
#
|
||||||||||
|
Adjustments:
|
|||||||||||||||||
|
Restructuring (credits) charges
|
(475
|
)
|
310
|
||||||||||||||
|
Non-GAAP Adjusted Contribution to Profit
|
$
|
2,108
|
$
|
(557
|
)
|
#
|
#
|
||||||||||
|
Depreciation and amortization
|
5,522
|
3,045
|
|||||||||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
7,630
|
$
|
2,488
|
#
|
#
|
|||||||||||
|
Corporate Expenses:
|
$
|
(37,533
|
)
|
$
|
(47,946
|
)
|
22
|
%
|
21
|
%
|
|||||||
|
Adjustments:
|
|||||||||||||||||
|
Restructuring charges
|
2,950
|
5,210
|
|||||||||||||||
|
Non-GAAP Adjusted Corporate Expenses
|
$
|
(34,583
|
)
|
$
|
(42,736
|
)
|
19
|
%
|
18
|
%
|
|||||||
|
Depreciation and amortization
|
2,730
|
3,712
|
|||||||||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
(31,853
|
)
|
$
|
(39,024
|
)
|
18
|
%
|
18
|
%
|
|||||||
|
Consolidated Results:
|
|||||||||||||||||
|
Revenue, net
|
$
|
466,205
|
$
|
448,622
|
4
|
%
|
5
|
%
|
|||||||||
|
Operating Income
|
$
|
63,391
|
$
|
57,475
|
10
|
%
|
11
|
%
|
|||||||||
|
Adjustments:
|
|||||||||||||||||
|
Restructuring charges
|
4,001
|
9,996
|
|||||||||||||||
|
Non-GAAP Adjusted Operating Income
|
$
|
67,392
|
$
|
67,471
|
0
|
%
|
0
|
%
|
|||||||||
|
Depreciation and amortization
|
42,638
|
39,652
|
|||||||||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
110,030
|
$
|
107,123
|
3
|
%
|
3
|
%
|
|||||||||
|
As a % of revenue
|
23.6
|
%
|
23.9
|
%
|
|||||||||||||
|
(1) The supplementary information included in this press release for the three months ended October 31, 2019 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 have changed our segment reporting structure to align with our strategic focus areas: (1) Research Publishing &
Platforms, which continues to include the Research and Atypon businesses, (2) Academic & Professional Learning, which is the former “Publishing” segment combined with our corporate training businesses – previously noted as Professional
Assessment and Corporate Learning and (3) Education Services, which includes our Online Program Management and related businesses. Prior period segment results have been revised to the new segment presentation. There were no changes to our
consolidated financial results.
|
|||||||||||||||||
|
# Not meaningful
|
|
||||||||||||||||
|
JOHN WILEY & SONS, INC.
|
|||||||||||||||||
|
SUPPLEMENTARY INFORMATION (1)
|
|||||||||||||||||
|
SEGMENT RESULTS
|
|||||||||||||||||
|
(in thousands)
|
|||||||||||||||||
|
(unaudited)
|
|||||||||||||||||
|
% Change
|
|||||||||||||||||
|
Six Months Ended October 31,
|
Favorable (Unfavorable)
|
||||||||||||||||
|
2019
|
2018 (2)
|
Reported
|
Constant
Currency
|
||||||||||||||
|
Research Publishing & Platforms:
|
|||||||||||||||||
|
Revenue, net
|
|||||||||||||||||
|
Research Publishing
|
$
|
445,012
|
$
|
436,424
|
2
|
%
|
4
|
%
|
|||||||||
|
Research Platforms
|
19,072
|
17,968
|
6
|
%
|
6
|
%
|
|||||||||||
|
Total Revenue, net
|
$
|
464,084
|
$
|
454,392
|
2
|
%
|
4
|
%
|
|||||||||
|
Contribution to Profit
|
$
|
118,937
|
$
|
116,527
|
2
|
%
|
2
|
%
|
|||||||||
|
Adjustments:
|
|||||||||||||||||
|
Restructuring charges
|
3,346
|
1,302
|
|||||||||||||||
|
Non-GAAP Adjusted Contribution to Profit
|
$
|
122,283
|
$
|
117,829
|
4
|
%
|
4
|
%
|
|||||||||
|
Depreciation and amortization
|
34,190
|
30,787
|
|||||||||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
156,473
|
$
|
148,616
|
5
|
%
|
6
|
%
|
|||||||||
|
Academic & Professional Learning:
|
|||||||||||||||||
|
Revenue, net
|
|||||||||||||||||
|
Education Publishing
|
$
|
167,264
|
$
|
181,508
|
-8
|
%
|
-7
|
%
|
|||||||||
|
Professional Learning
|
155,319
|
164,586
|
-6
|
%
|
-4
|
%
|
|||||||||||
|
Total Revenue, net
|
$
|
322,583
|
$
|
346,094
|
-7
|
%
|
-5
|
%
|
|||||||||
|
Contribution to Profit
|
$
|
39,961
|
$
|
68,845
|
-42
|
%
|
-41
|
%
|
|||||||||
|
Adjustments:
|
|||||||||||||||||
|
Restructuring charges
|
3,605
|
1,477
|
|||||||||||||||
|
Non-GAAP Adjusted Contribution to Profit
|
$
|
43,566
|
$
|
70,322
|
-38
|
%
|
-37
|
%
|
|||||||||
|
Depreciation and amortization
|
33,873
|
35,050
|
|||||||||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
77,439
|
$
|
105,372
|
-27
|
%
|
-26
|
%
|
|||||||||
|
Education Services:
|
|||||||||||||||||
|
Total Revenue, net
|
$
|
103,068
|
$
|
59,037
|
75
|
%
|
75
|
%
|
|||||||||
|
Contribution to Profit
|
$
|
(4,616
|
)
|
$
|
(5,886
|
)
|
22
|
%
|
21
|
%
|
|||||||
|
Adjustments:
|
|||||||||||||||||
|
Restructuring charges
|
1,614
|
102
|
|||||||||||||||
|
Non-GAAP Adjusted Contribution to Profit
|
$
|
(3,002
|
)
|
$
|
(5,784
|
)
|
48
|
%
|
48
|
%
|
|||||||
|
Depreciation and amortization
|
11,020
|
6,512
|
|||||||||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
8,018
|
$
|
728
|
#
|
#
|
|||||||||||
|
Corporate Expenses:
|
$
|
(86,332
|
)
|
$
|
(85,871
|
)
|
-1
|
%
|
-1
|
%
|
|||||||
|
Adjustments:
|
|||||||||||||||||
|
Restructuring charges
|
6,171
|
1,029
|
|||||||||||||||
|
Non-GAAP Adjusted Corporate Expenses
|
$
|
(80,161
|
)
|
$
|
(84,842
|
)
|
6
|
%
|
5
|
%
|
|||||||
|
Depreciation and amortization
|
5,774
|
7,474
|
|||||||||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
(74,387
|
)
|
$
|
(77,368
|
)
|
4
|
%
|
3
|
%
|
|||||||
|
Consolidated Results:
|
|||||||||||||||||
|
Revenue, net
|
$
|
889,735
|
$
|
859,523
|
4
|
%
|
5
|
%
|
|||||||||
|
Operating Income
|
$
|
67,950
|
$
|
93,615
|
-27
|
%
|
-28
|
%
|
|||||||||
|
Adjustments:
|
|||||||||||||||||
|
Restructuring charges
|
14,736
|
3,910
|
|||||||||||||||
|
Non-GAAP Adjusted Operating Income
|
$
|
82,686
|
$
|
97,525
|
-15
|
%
|
-16
|
%
|
|||||||||
|
Depreciation and amortization
|
84,857
|
79,823
|
|||||||||||||||
|
Non-GAAP Adjusted EBITDA
|
$
|
167,543
|
$
|
177,348
|
-6
|
%
|
-5
|
%
|
|||||||||
|
Notes:
|
|||||||||||||||||
|
(1) The supplementary information included in this press release for the six months ended October 31, 2019 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 have changed our segment reporting structure to align with our strategic focus areas: (1) Research Publishing
& Platforms, which continues to include the Research and Atypon businesses, (2) Academic & Professional Learning, which is the former “Publishing” segment combined with our corporate training businesses – previously noted as
Professional Assessment and Corporate Learning and (3) Education Services, which includes our Online Program Management and related businesses. Prior period segment results have been revised to the new segment presentation. There were no
changes to our consolidated financial results.
|
|||||||||||||||||
|
# Not meaningful
|
|
||||||||||||||||
|
JOHN WILEY & SONS, INC.
|
||||||||
|
SUPPLEMENTARY INFORMATION (1)
|
||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
||||||||
|
(in thousands)
|
||||||||
|
(unaudited)
|
||||||||
|
October 31,
|
April 30,
|
|||||||
|
2019
|
2019
|
|||||||
|
Assets:
|
||||||||
|
Current Assets
|
||||||||
|
Cash and cash equivalents
|
$
|
107,744
|
$
|
92,890
|
||||
|
Accounts receivable, net
|
235,466
|
294,867
|
||||||
|
Inventories, net
|
45,032
|
35,582
|
||||||
|
Prepaid expenses and other current assets
|
58,926
|
67,441
|
||||||
|
Total Current Assets
|
447,168
|
490,780
|
||||||
|
Product Development Assets, net
|
57,394
|
62,470
|
||||||
|
Royalty Advances, net
|
16,473
|
36,185
|
||||||
|
Technology, Property and Equipment, net
|
294,761
|
289,021
|
||||||
|
Intangible Assets, net
|
880,613
|
865,572
|
||||||
|
Goodwill
|
1,143,197
|
1,095,666
|
||||||
|
Operating Lease Right-of-Use Assets (2)
|
145,886
|
-
|
||||||
|
Other Non-Current Assets
|
97,279
|
97,308
|
||||||
|
Total Assets
|
$
|
3,082,771
|
$
|
2,937,002
|
||||
|
Liabilities and Shareholders' Equity:
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts payable
|
$
|
74,425
|
$
|
90,980
|
||||
|
Accrued royalties
|
91,438
|
78,062
|
||||||
|
Short-term portion of long-term debt
|
6,250
|
-
|
||||||
|
Contract liabilities
|
248,653
|
507,365
|
||||||
|
Accrued employment costs
|
74,727
|
97,230
|
||||||
|
Accrued income taxes
|
3,294
|
21,025
|
||||||
|
Short-term portion of operating lease liabilities (2)
|
18,409
|
-
|
||||||
|
Other accrued liabilities
|
68,446
|
75,900
|
||||||
|
Total Current Liabilities
|
585,642
|
870,562
|
||||||
|
Long-Term Debt
|
788,360
|
478,790
|
||||||
|
Accrued Pension Liability
|
152,707
|
166,331
|
||||||
|
Deferred Income Tax Liabilities
|
137,295
|
143,775
|
||||||
|
Operating Lease Liabilities (2)
|
164,622
|
-
|
||||||
|
Other Long-Term Liabilities
|
75,149
|
96,197
|
||||||
|
Total Liabilities
|
1,903,775
|
1,755,655
|
||||||
|
Shareholders' Equity
|
1,178,996
|
1,181,347
|
||||||
|
Total Liabilities and Shareholders' Equity
|
$
|
3,082,771
|
$
|
2,937,002
|
||||
|
(1) The supplementary information included in this press release for October 31, 2019 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) We adopted ASU 2016-02, "Leases (Topic 842)” on May 1, 2019 using the required modified retrospective approach, whereby we used the
effective date as the date of initial application and therefore previously reported financial information was not updated.
|
||||||||
|
JOHN WILEY & SONS, INC.
|
|||||||||
|
SUPPLEMENTARY INFORMATION (1)
|
|||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
|
|||||||||
|
(in thousands)
|
|||||||||
|
(unaudited)
|
|||||||||
|
Six Months Ended
|
|||||||||
|
October 31,
|
|||||||||
|
2019
|
2018 (2)
|
||||||||
|
Operating Activities:
|
|||||||||
|
Net income
|
$
|
48,314
|
$
|
70,079
|
|||||
|
Amortization of intangibles
|
29,990
|
25,050
|
|||||||
|
Amortization of product development assets
|
17,616
|
18,928
|
|||||||
|
Depreciation and amortization of technology, property, and equipment
|
37,251
|
35,845
|
|||||||
|
Other non-cash charges and credits
|
59,302
|
43,009
|
|||||||
|
Net change in operating assets and liabilities
|
(291,994
|
)
|
(309,472
|
)
|
|||||
|
Net Cash Used In Operating Activities
|
(99,521
|
)
|
(116,561
|
)
|
|||||
|
Investing Activities:
|
|||||||||
|
Additions to technology, property, and equipment
|
(44,531
|
)
|
(34,560
|
)
|
|||||
|
Product development spending
|
(11,686
|
)
|
(12,351
|
)
|
|||||
|
Businesses acquired in purchase transactions, net of cash acquired
|
(74,169
|
)
|
-
|
||||||
|
Acquisitions of publication rights and other
|
(4,045
|
)
|
(2,795
|
)
|
|||||
|
Net Cash Used in Investing Activities
|
(134,431
|
)
|
(49,706
|
)
|
|||||
|
Financing Activities:
|
|||||||||
|
Net debt borrowings
|
317,471
|
179,275
|
|||||||
|
Cash dividends
|
(38,486
|
)
|
(38,033
|
)
|
|||||
|
Purchase of treasury shares
|
(25,000
|
)
|
(24,994
|
)
|
|||||
|
Other
|
(4,718
|
)
|
4,217
|
||||||
|
Net Cash Provided By Financing Activities
|
249,267
|
120,465
|
|||||||
|
Effects of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
|
(461
|
)
|
(8,368
|
)
|
|||||
|
Change in Cash, Cash Equivalents and Restricted Cash for Period
|
14,854
|
(54,170
|
)
|
||||||
|
Cash, Cash Equivalents and Restricted Cash - Beginning
|
93,548
|
170,257
|
|||||||
|
Cash, Cash Equivalents and Restricted Cash - Ending
|
$
|
108,402
|
$
|
116,087
|
|||||
|
CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT DEVELOPMENT SPENDING
|
|||||||||
|
Six Months Ended
|
|||||||||
|
October 31,
|
|||||||||
|
2019
|
2018
|
||||||||
|
Net Cash Used In Operating Activities
|
$
|
(99,521
|
)
|
$
|
(116,561
|
)
|
|||
|
Less: Additions to technology, property, and equipment
|
|
(44,531
|
)
|
(34,560
|
)
|
||||
|
Less: Product development spending
|
|
(11,686
|
)
|
(12,351
|
)
|
||||
|
Free Cash Flow less Product Development Spending
|
$
|
(155,738
|
)
|
$
|
(163,472
|
)
|
|||
|
See Explanation of Usage of Non-GAAP Measures included in this supplemental information.
|
|||||||||
|
(1) The supplementary information included in this press release for the six months ended October 31, 2019 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) The Condensed Consolidated Statement of Cash Flows for the six months ended October 31, 2018, includes a reclassification of $4.5 million
between Operating Activities within the net change in operating assets and liabilities and Investing Activities related to costs to fulfill a contract and product development spending. In addition, for the six months ended October 31,
2018, amortization expense related to costs to fulfill a contract of $1.2 million was reclassified from amortization of product development assets to other non-cash charges and credits within Operating Activities.
|
|||||||||
|
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
Contribution to Profit ("CTP") and margin;
|
|
● EBITDA
and Adjusted EBITDA;
|
|
● Organic
revenue;
|
|
● 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 to evaluate and calculate incentive compensation. 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 Company presents these non-GAAP performance measures in addition to 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 across accounting periods. The use of these non-GAAP performance measures provides 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 Profit, Adjusted Contribution to Profit, Adjusted EBITDA and organic revenue provide a 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 dividends and fund share repurchases and new
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.
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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 our non-GAAP performance measures are regarded as useful to our investors as supplemental to our 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.
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