Wiley (NYSE: WLY and WLYB), one of the world’s largest
publishers and a global leader in research and learning, today
reported results for the third quarter ended January 31, 2024.
- GAAP Results: Revenue of $461 million (-6%), Operating
loss of $46 million (+$21 million), and EPS loss of $2.08 (-$0.79).
GAAP revenue decrease due to completed divestiture and declines in
other held for sale businesses. GAAP results impacted by charges
related to held for sale or sold assets, including goodwill and
held for sale impairments of $82 million and $26 million,
respectively, as well as a loss on a completed divestiture of $26
million. The Company also recorded restructuring charges of $15
million.
- Adjusted Results at Constant Currency (excluding Held for
Sale or Sold segment results): Adjusted Revenue of $403 million
(+1%), Adjusted EBITDA of $92 million (+1%), and Adjusted EPS of
$0.59 (-27%).
- Full Year Outlook:
- Adjusted Revenue trending toward mid-to-high end of $1,580 to
$1,630 million range
- Adjusted EBITDA raised to $335 to $355 million
- Adjusted EPS raised to $2.45 to $2.65
MANAGEMENT COMMENTARY
“As we finish out the year, we’re increasingly confident in our
underlying momentum and recovery in Research and continued
outperformance in Learning,” said Matthew Kissner, Interim
President and CEO. “We’ve moved decisively on our improvement and
optimization plans and expect a strong fourth quarter as Research
continues to recover, Learning continues to outperform, and in-year
cost savings accelerate. Our disciplined execution and positive
momentum are allowing us to raise our earnings guidance this year
and set us up well for material performance and profit improvement
in Fiscal 2025 and 2026.”
FINANCIAL PERFORMANCE
See accompanying financial tables for the third quarter
and year-to-date 2024. For GAAP purposes, Wiley’s reporting
structure consists of three segments: (1) Research, (2) Learning,
and (3) Held for Sale or Sold.
Research
- Revenue of $256 million was up 1% as reported, or
consistent with prior year at constant currency, due to modest
growth in Research Publishing (+0.4% or +2% ex-Hindawi) driven by
open access, offsetting a modest decline in Research
Solutions.
- Adjusted EBITDA of $79 million was down 1% as reported
and 2% at constant currency driven by higher editorial and
marketing costs and the Hindawi profit impact, offsetting revenue
performance. Adjusted EBITDA margin for the quarter was 30.9%.
Learning
- Revenue of $146 million was up 2% as reported and at
constant currency due to 5% growth in Academic (driven by digital
courseware, digital content, and licensing) offsetting a 3% decline
in Professional.
- Adjusted EBITDA of $51 million was up 16% as reported or
15% at constant currency due to revenue growth and restructuring
savings. Adjusted EBITDA margin for the quarter was 35.1%.
Businesses Held for Sale or Sold (HFS)
- Revenue of $58 million was down 38% on a reported basis or 39%
at constant currency primarily due to the sale of University
Services and declines in Wiley Edge. Adjusted EBITDA of $4 million
was down 45% in the prior year due to revenue performance in held
for sale assets and the completion of the sale of University
Services.
- During the quarter, Wiley announced the sale of Wiley Edge and
the close of University Services. For details related to the Edge
announcement, please see 8K – Wiley Edge. For details related to
the University Services close, please see 8K – University
Services.
Corporate Expense Category
- Adjusted Corporate Expenses of $39 million on an
Adjusted EBITDA basis was up 13% over prior year at constant
currency, driven by a lower incentive compensation accrual in the
prior year.
EPS
- GAAP EPS loss of $2.08 compared to a loss of $1.29 in
the prior year period. The Company recorded impairment charges
related to held for sale or sold assets, including goodwill
impairment of $82 million and loss on the sale of a business and
related impairment totaling $52 million. Also impacting GAAP EPS
was a restructuring charge of $15 million.
- Adjusted EPS excluding businesses held for sale or sold
of $0.59 was down 27% due to lower Adjusted Operating Income,
higher tax expense, and higher interest expense.
Balance Sheet, Cash Flow, and Capital Allocation
- Net Debt-to-EBITDA Ratio (Trailing Twelve Months) at
quarter end was 1.9 compared to 2.1 in the year-ago period.
- Net Cash Provided by Operating Activities (Year-to-Date)
was $24 million compared to $54 million in the prior year period
due to timing delays in closing journal subscription renewals,
higher restructuring payments, and higher interest payments.
- Free Cash Flow less Product Development Spending
(Year-to-Date) was a use of $45 million compared to a use of $22
million in the prior year period due to lower cash provided by
operating activities, partially offset by lower Capex. Capex of $70
million was below prior year by $5 million. For the year, the
Company expects Free Cash Flow of approximately $100 million. Note,
Wiley does not provide an adjusted Free Cash Flow metric; results
include held for sale or sold businesses.
- Returns to Shareholders (Year-to-Date): Wiley allocated
$87 million toward dividends and share repurchases, moderately
higher than prior year, with $29 million used to acquire 872,000
shares at an average cost per share of $33.24. This compares to
540,000 shares repurchased in the prior year period.
FISCAL YEAR 2024 OUTLOOK
Given leading indicators, outperformance in Learning augmented
by an anticipated Q4 content rights deal for training AI models,
and accelerated in-year cost savings, Wiley sees revenue trending
toward the mid-to-high end of the range and is raising its Adjusted
EBITDA and Adjusted EPS guidance.
Metric
($millions, except EPS)
Fiscal 2023
All Company
Fiscal 2023
Ex-Divestitures
Fiscal 2024 Outlook
Ex-Divestitures
Former
Fiscal 2024 Outlook
Ex-Divestitures
Current
Adj. Revenue*
$2,020
$1,627
$1,580 to $1,630
Mid-to-High End of
Range
Research
$1,080
Flat to low-single digit
decline
Low end of range
Learning
$547
Low-single digit growth
Above range
Adj. EBITDA*
$422
$379
$305 to $330
$335 to $355
Adj. EPS*
$3.84
$3.48
$2.05 to $2.40
$2.45 to $2.65
*“Adjusted Revenue,” “Adjusted EBITDA,” and “Adjusted EPS”
exclude businesses held for sale, including Wiley Edge (formerly
Talent Development) and CrossKnowledge, as well as those sold:
University, Services, Test Prep and Advancement Courses.
EARNINGS CONFERENCE CALL
Scheduled for today, March 7 at 10:00 am (ET). Access webcast at
Investor Relations at investors.wiley.com, or directly at
https://events.q4inc.com/attendee/269336383. 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
global leader in research and learning. Dedicated to the creation
and application of knowledge, Wiley serves the world’s researchers,
learners, innovators, and leaders, helping them achieve their goals
and solve the world's most important challenges. 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 CTP,” “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 2024 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
2024 in connection with our multiyear Global Restructuring Program
and planned 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; 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: EARNINGS RELEASES CATEGORY: CORPORATE NEWS
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 Nine Months
Ended January 31, January 31,
2024
2023
2024
2023
Revenue, net
$
460,705
$
491,368
$
1,404,526
$
1,493,773
Costs and expenses: Cost of sales
143,662
174,051
456,377
518,384
Operating and administrative expenses
253,375
255,798
761,458
791,578
Impairment of goodwill (3)
81,754
99,800
108,449
99,800
Restructuring and related charges
14,808
8,807
52,033
45,204
Amortization of intangible assets
13,517
19,968
42,730
65,389
Total costs and expenses
507,116
558,424
1,421,047
1,520,355
Operating loss
(46,411
)
(67,056
)
(16,521
)
(26,582
)
As a % of revenue
-10.1
%
-13.6
%
-1.2
%
-1.8
%
Interest expense
(13,321
)
(11,521
)
(37,592
)
(27,185
)
Foreign exchange transaction gains (losses)
488
421
(3,489
)
283
Losses on sale of businesses and impairment charges related to
assets held-for-sale (3)
(52,404
)
-
(179,747
)
-
Other (expense) income, net
(648
)
705
(3,700
)
976
Loss before taxes
(112,296
)
(77,451
)
(241,049
)
(52,508
)
Provision (benefit) for income taxes
1,579
(5,982
)
(15,465
)
(1,397
)
Effective tax rate
-1.4
%
7.7
%
6.4
%
2.7
%
Net loss
$
(113,875
)
$
(71,469
)
$
(225,584
)
$
(51,111
)
As a % of revenue
-24.7
%
-14.5
%
-16.1
%
-3.4
%
Loss per share Basic
$
(2.08
)
$
(1.29
)
$
(4.10
)
$
(0.92
)
Diluted (4)
$
(2.08
)
$
(1.29
)
$
(4.10
)
$
(0.92
)
Weighted average number of common shares outstanding
Basic
54,812
55,514
55,061
55,625
Diluted (4)
54,812
55,514
55,061
55,625
Notes: (1) The supplementary information included in
this press release for the three and nine months ended January 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, we are divesting
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 cost to sell prior to its disposition. On January 1,
2024 we completed the sale of University Services, and on January
8, 2024 we signed an agreement to sell Wiley Edge. We expect to
complete the sale of Wiley Edge and CrossKnowledge by the first
quarter of fiscal year 2025.As a result, we reorganized our
segments in the first quarter of fiscal year 2024, and our new
structure consists of three reportable segments which includes
Research (no change), Learning, and Held for Sale or Sold, 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 University
Services reporting unit within the Held for Sale or Sold segment
was below its carrying value which resulted in a pretax noncash
goodwill impairment of $11.4 million in the nine months ended
January 31, 2024. After the realignment, we concluded that the fair
value of the CrossKnowledge reporting unit within the Held for Sale
or Sold segment was below its carrying value which resulted in a
pretax noncash goodwill impairment of $15.3 million in the nine
months ended January 31, 2024.As a result of signing an agreement
to sell Wiley Edge and the decrease in the fair value of the
business, we tested the goodwill of the Wiley Edge reporting unit
within the Held for Sale or Sold segment for impairment. We
concluded that the carrying value of the reporting unit was above
its fair value which resulted in a pretax noncash goodwill
impairment of $81.7 million in the three and nine months ended
January 31, 2024.On January 1, 2024, we completed the sale of
University Services and recorded a pretax loss of $101.4 million
(net of tax loss of $76.1 million). Prior to the disposition, we
had recorded a held-for-sale impairment of $75.4 million for
University Services. This resulted in an additional loss of $26.0
million in the three months ended January 31, 2024. We also
completed the sale of our Tuition Manager business previously in
our Held for Sale or Sold segment, which resulted in a total net
pretax loss of $1.5 million (net of tax loss of $1.1 million) in
the nine months ended January 31, 2024.Wiley Edge and
CrossKnowledge continue to be reported as held-for-sale. We
recorded a held-for-sale pretax impairment charge of $26.4 million
and $76.8 million in the three and nine months ended January 31,
2024, respectively, related to Wiley Edge and CrossKnowledge. The
total impairment charge for Wiley Edge in the three and nine months
ended January 31, 2024 was $20.6 million. The total impairment
charge for CrossKnowledge in the nine months ended January 31, 2024
was $56.2 million, which includes $5.8 million in the three months
ended January 31, 2024. (4) In calculating diluted net loss
per common share for the three and nine months ended January 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 Nine Months Ended
January 31, January 31,
2024
2023
2024
2023
US GAAP Loss Per Share - Diluted
$
(2.08
)
$
(1.29
)
$
(4.10
)
$
(0.92
)
Adjustments: Impairment of goodwill
1.48
1.69
1.90
1.69
Legal settlement (3)
-
0.05
-
0.05
Restructuring and related charges
0.20
0.12
0.70
0.60
Foreign exchange (gains) losses on intercompany transactions,
including the write off of certain cumulative translation
adjustments (4)
(0.03
)
(0.03
)
0.02
0.01
Amortization of acquired intangible assets (5)
0.22
0.29
0.65
0.96
Losses on sale of businesses and impairment charges related to
assets held-for-sale (6)
0.83
-
2.77
-
Held for Sale or Sold segment Adjusted Net Income (6)
(0.05
)
(0.04
)
(0.39
)
(0.11
)
EPS impact of using weighted-average dilutive shares for adjusted
EPS calculation (7)
0.02
0.02
0.04
0.01
Non-GAAP Adjusted Earnings Per Share - Diluted
$
0.59
$
0.81
$
1.59
$
2.29
Reconciliation of US GAAP Loss Before Taxes to Non-GAAP
Adjusted Income Before Taxes Three Months Ended Nine
Months Ended (amounts in thousands)
January 31,
January 31,
2024
2023
2024
2023
US GAAP Loss Before Taxes
$
(112,296
)
$
(77,451
)
$
(241,049
)
$
(52,508
)
Pretax Impact of Adjustments: Impairment of goodwill
81,754
99,800
108,449
99,800
Legal settlement (3)
-
3,671
-
3,671
Restructuring and related charges
14,808
8,807
52,033
45,204
Foreign exchange (gains) losses on intercompany transactions,
including the write off of certain cumulative translation
adjustments (4)
(2,128
)
(2,414
)
1,089
906
Amortization of acquired intangible assets (5)
13,580
21,042
44,550
68,611
Losses on sale of businesses and impairment charges related to
assets held-for-sale (6)
52,404
-
179,747
-
Held for Sale or Sold segment Adjusted Income Before Taxes (6)
(4,120
)
(2,484
)
(28,253
)
(8,120
)
Non-GAAP Adjusted Income Before Taxes
$
44,002
$
50,971
$
116,566
$
157,564
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)
$
1,579
$
(5,982
)
$
(15,465
)
$
(1,397
)
Income Tax Impact of Adjustments (8) Impairment of goodwill
-
4,857
2,697
4,857
Legal settlement (3)
-
716
-
716
Restructuring and related charges
3,985
2,221
13,237
11,159
Foreign exchange (gains) losses on intercompany transactions,
including the write off of certain cumulative translation
adjustments (4)
(742
)
(596
)
112
274
Amortization of acquired intangible assets (5)
1,152
4,591
8,668
14,811
Losses on sale of businesses and impairment charges related to
assets held-for-sale (6)
6,508
-
25,711
-
Held for Sale or Sold segment Adjusted Tax Provision (6)
(1,252
)
(531
)
(6,518
)
(1,977
)
Non-GAAP Adjusted Income Tax Provision
$
11,230
$
5,276
$
28,442
$
28,443
US GAAP Effective Tax Rate
-1.4
%
7.7
%
6.4
%
2.7
%
Non-GAAP Adjusted Effective Tax Rate
25.5
%
10.4
%
24.4
%
18.1
%
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, 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 the three months ended January 31, 2023, we
settled a litigation matter related to consideration for a previous
acquisition for $3.7 million. (4) In fiscal year 2023 due to
the closure of our operations in Russia, the Russia entity was
deemed substantially liquidated. In the three and nine months ended
January 31, 2024, we wrote off an additional $0.2 million and $0.8
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. (5) 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. (6) We are divesting non-core
businesses, including University Services, Wiley Edge, and
CrossKnowledge. On January 1, 2024 we completed the sale of
University Services. Wiley Edge 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 cost to sell. We
recorded a held-for-sale pretax impairment charge of $20.6 million
in the three and nine months ended January 31, 2024 related to
Wiley Edge. We recorded a held-for-sale pretax impairment charge of
$5.8 million and $56.2 million, in the three and nine months ended
January 31, 2024, respectively, related to CrossKnowledge.On
January 1, 2024, we completed the sale of University Services and
recorded a pretax loss of $101.4 million (net of tax loss of $76.1
million). Prior to the disposition, we had recorded a held-for-sale
impairment of $75.4 million for University Services. This resulted
in an additional loss of $26.0 million in the three months ended
January 31, 2024. We also completed the sale of our Tuition Manager
business previously in our Held for Sale or Sold segment, which
resulted in a total net pretax loss of $1.5 million (net of tax
loss of $1.1 million) in the nine months ended January 31, 2024.In
addition, our Adjusted EPS excludes the Adjusted Net Income of our
Held for Sale or Sold segment. (7) Represents the impact of
using diluted weighted-average number of common shares outstanding
(55.3 million and 55.6 million shares for the three and nine months
ended January 31, 2024, respectively, and 56.1 million 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 and nine months ended January 31, 2024,
substantially all of the tax impact was from deferred taxes. For
the three months ended January 31, 2023, the tax impact was $4.0
million from current taxes and $7.2 million from deferred taxes.
For the nine months ended January 31, 2023, the tax impact was $5.5
million from current taxes and $24.3 million from deferred taxes.
JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION
(1) RECONCILIATION OF US GAAP NET LOSS TO NON-GAAP EBITDA
AND ADJUSTED EBITDA (unaudited) Three Months
Ended Nine Months Ended January 31, January
31,
2024
2023
2024
2023
Net Loss
$
(113,875
)
$
(71,469
)
$
(225,584
)
$
(51,111
)
Interest expense
13,321
11,521
37,592
27,185
Provision (benefit) for income taxes
1,579
(5,982
)
(15,465
)
(1,397
)
Depreciation and amortization
45,474
52,442
129,376
163,142
Non-GAAP EBITDA
(53,501
)
(13,488
)
(74,081
)
137,819
Impairment of goodwill
81,754
99,800
108,449
99,800
Legal settlement
-
3,671
-
3,671
Restructuring and related charges
14,808
8,807
52,033
45,204
Foreign exchange (gains) losses, including the write off of certain
cumulative translation adjustments
(488
)
(421
)
3,489
(283
)
Losses on sale of businesses and impairment charges related to
assets held-for-sale
52,404
-
179,747
-
Other expense (income), net
648
(705
)
3,700
(976
)
Held for Sale or Sold segment Adjusted EBITDA (2)
(4,118
)
(7,325
)
(29,739
)
(22,979
)
Non-GAAP Adjusted EBITDA
$
91,507
$
90,339
$
243,598
$
262,256
Adjusted EBITDA Margin
22.7
%
22.8
%
20.7
%
21.8
%
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 and nine months ended January 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 January 31, Favorable (Unfavorable)
2024
2023 (3)
Reported Constant Currency Research:
Revenue, net Research Publishing
$
216,586
$
213,720
1
%
0
%
Research Solutions
39,613
39,880
-1
%
-1
%
Total Revenue, net
$
256,199
$
253,600
1
%
0
%
Contribution to Profit
$
57,847
$
56,860
2
%
2
%
Adjustments: Restructuring (credits) charges
(749
)
317
# #
Non-GAAP Adjusted Contribution to Profit
$
57,098
$
57,177
0
%
0
%
Depreciation and amortization
22,029
23,123
5
%
6
%
Non-GAAP Adjusted EBITDA
$
79,127
$
80,300
-1
%
-2
%
Adjusted EBITDA margin
30.9
%
31.7
%
Learning: Revenue, net Academic
$
87,216
$
82,822
5
%
5
%
Professional
59,118
60,421
-2
%
-3
%
Total Revenue, net
$
146,334
$
143,243
2
%
2
%
Contribution to Profit
$
36,200
$
28,453
27
%
27
%
Adjustments: Restructuring charges
1,313
1,415
7
%
7
%
Non-GAAP Adjusted Contribution to Profit
$
37,513
$
29,868
26
%
25
%
Depreciation and amortization
13,812
14,490
5
%
5
%
Non-GAAP Adjusted EBITDA
$
51,325
$
44,358
16
%
15
%
Adjusted EBITDA margin
35.1
%
31.0
%
Held for Sale or Sold: Total Revenue, net
$
58,172
$
94,525
-38
%
-39
%
Contribution to Profit
$
(79,134
)
$
(103,873
)
24
%
24
%
Adjustments: Restructuring charges
1,498
508
# # Impairment of goodwill
81,754
99,800
18
%
18
%
Non-GAAP Adjusted Contribution to Profit
$
4,118
$
(3,565
)
#
# Depreciation and amortization
-
10,890
# #
Non-GAAP Adjusted EBITDA
$
4,118
$
7,325
-44
%
-45
%
Adjusted EBITDA margin
7.1
%
7.7
%
Corporate Expenses:
$
(61,324
)
$
(48,496
)
-26
%
-26
%
Adjustments: Restructuring charges
12,746
6,567
-94
%
-94
%
Legal settlement (6)
-
3,671
# #
Non-GAAP Adjusted Contribution to Profit
$
(48,578
)
$
(38,258
)
-27
%
-26
%
Depreciation and amortization
9,633
3,939
# #
Non-GAAP Adjusted EBITDA
$
(38,945
)
$
(34,319
)
-13
%
-13
%
Consolidated Results: Revenue, net
$
460,705
$
491,368
-6
%
-7
%
Less: Held for Sale or Sold Segment (5)
(58,172
)
(94,525
)
-38
%
-39
%
Adjusted Revenue, net
$
402,533
$
396,843
1
%
1
%
Operating Loss
$
(46,411
)
$
(67,056
)
31
%
31
%
Adjustments: Restructuring charges
14,808
8,807
-68
%
-68
%
Impairment of goodwill
81,754
99,800
18
%
18
%
Legal settlement (6)
-
3,671
# # Held for Sale or Sold Segment Adjusted Contribution to Profit
(5)
(4,118
)
3,565
# #
Non-GAAP Adjusted Operating Income
$
46,033
$
48,787
-6
%
-5
%
Depreciation and amortization
45,474
52,442
13
%
14
%
Less: Held for Sale or Sold Segment depreciation and amortization
(5)
-
(10,890
)
# #
Non-GAAP Adjusted EBITDA
$
91,507
$
90,339
1
%
1
%
Adjusted EBITDA margin
22.7
%
22.8
%
Notes: (1) The supplementary information included in this
press release for the three and nine months ended January 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 the three
months ended July 31, 2023 we changed our reportable segments. Our
new segment reporting structure consists of three reportable
segments which includes Research (no change), Learning, and Held
for Sale or Sold, as well as a Corporate expense category (no
change). Prior period segment results have been revised to the new
segment presentation. There were no changes to our consolidated
financial results. (4) 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 Held for Sale or Sold 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. (5) 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. (6) In
the three months ended January 31, 2023, we settled a litigation
matter related to consideration for a previous acquisition for $3.7
million. # 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)
2024
2023 (3)
Reported Constant Currency Research:
Revenue, net Research Publishing
$
659,329
$
685,884
-4
%
-5
%
Research Solutions
112,344
113,988
-1
%
-2
%
Total Revenue, net
$
771,673
$
799,872
-4
%
-5
%
Contribution to Profit
$
163,528
$
199,162
-18
%
-18
%
Adjustments: Restructuring charges
5,953
1,577
# #
Non-GAAP Adjusted Contribution to Profit
$
169,481
$
200,739
-16
%
-16
%
Depreciation and amortization
67,909
70,308
3
%
4
%
Non-GAAP Adjusted EBITDA
$
237,390
$
271,047
-12
%
-13
%
Adjusted EBITDA margin
30.8
%
33.9
%
Learning: Revenue, net Academic
$
224,633
$
223,826
0
%
0
%
Professional
179,961
178,713
1
%
0
%
Total Revenue, net
$
404,594
$
402,539
1
%
0
%
Contribution to Profit
$
77,661
$
58,975
32
%
32
%
Adjustments: Restructuring charges
7,390
8,210
10
%
10
%
Non-GAAP Adjusted Contribution to Profit
$
85,051
$
67,185
27
%
27
%
Depreciation and amortization
41,338
42,445
3
%
3
%
Non-GAAP Adjusted EBITDA
$
126,389
$
109,630
15
%
15
%
Adjusted EBITDA margin
31.2
%
27.2
%
Held for Sale or Sold: Total Revenue, net
$
228,259
$
291,362
-22
%
-23
%
Contribution to Profit
$
(88,290
)
$
(119,486
)
26
%
26
%
Adjustments: Restructuring charges
6,143
4,281
-43
%
-43
%
Impairment of goodwill
108,449
99,800
-9
%
-9
%
Accelerated amortization of an intangible asset (4)
-
4,594
# #
Non-GAAP Adjusted Contribution to Profit
$
26,302
$
(10,811
)
# # Depreciation and amortization
3,437
33,790
90
%
90
%
Non-GAAP Adjusted EBITDA
$
29,739
$
22,979
29
%
28
%
Adjusted EBITDA margin
13.0
%
7.9
%
Corporate Expenses:
$
(169,420
)
$
(165,233
)
-3
%
-2
%
Adjustments: Restructuring charges
32,547
31,136
-5
%
-5
%
Legal settlement (6)
-
3,671
# #
Non-GAAP Adjusted Contribution to Profit
$
(136,873
)
$
(130,426
)
-5
%
-4
%
Depreciation and amortization
16,692
12,005
-39
%
-39
%
Non-GAAP Adjusted EBITDA
$
(120,181
)
$
(118,421
)
-1
%
-1
%
Consolidated Results: Revenue, net
$
1,404,526
$
1,493,773
-6
%
-7
%
Less: Held for Sale or Sold Segment (5)
(228,259
)
(291,362
)
-22
%
-23
%
Adjusted Revenue, net
$
1,176,267
$
1,202,411
-2
%
-3
%
Operating Loss
$
(16,521
)
$
(26,582
)
38
%
38
%
Adjustments: Restructuring charges
52,033
45,204
-15
%
-15
%
Impairment of goodwill
108,449
99,800
-9
%
-9
%
Legal settlement (6)
-
3,671
# # Accelerated amortization of an intangible asset (4)
-
4,594
# # Held for Sale or Sold Segment Adjusted Contribution to Profit
(5)
(26,302
)
10,811
# # Non-GAAP Adjusted Operating Income
$
117,659
$
137,498
-14
%
-14
%
Depreciation and amortization
129,376
158,548
18
%
19
%
Less: Held for Sale or Sold depreciation and amortization (5)
(3,437
)
(33,790
)
90
%
90
%
Non-GAAP Adjusted EBITDA
$
243,598
$
262,256
-7
%
-7
%
Adjusted EBITDA margin
20.7
%
21.8
%
# Variance greater than 100%
JOHN WILEY &
SONS, INC. SUPPLEMENTARY INFORMATION (1) CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in
thousands) (unaudited) January 31,
April 30,
2024
2023
Assets: Current assets Cash and cash equivalents
$
93,100
$
106,714
Accounts receivable, net
161,009
310,121
Inventories, net
28,377
30,733
Prepaid expenses and other current assets
68,868
93,711
Current assets held-for-sale (2)
32,648
-
Total current assets
384,002
541,279
Technology, property and equipment, net
208,339
247,149
Intangible assets, net
628,886
854,794
Goodwill
1,096,674
1,204,050
Operating lease right-of-use assets
71,306
91,197
Other non-current assets
298,582
170,341
Non-current assets held-for-sale (2)
19,499
-
Total assets
$
2,707,288
$
3,108,810
Liabilities and shareholders' equity: Current
liabilities Accounts payable
$
44,992
$
84,325
Accrued royalties
151,159
113,423
Short-term portion of long-term debt
6,250
5,000
Contract liabilities
300,675
504,695
Accrued employment costs
78,203
80,458
Short-term portion of operating lease liabilities
18,181
19,673
Other accrued liabilities
78,771
87,979
Current liabilities held-for-sale (2)
33,908
-
Total current liabilities
712,139
895,553
Long-term debt
900,524
743,292
Accrued pension liability
72,374
86,304
Deferred income tax liabilities
94,862
144,042
Operating lease liabilities
98,219
115,540
Other long-term liabilities
71,160
79,052
Long-term liabilities held-for-sale (2)
9,704
-
Total liabilities
1,958,982
2,063,783
Shareholders' equity
748,306
1,045,027
Total liabilities and shareholders' equity
$
2,707,288
$
3,108,810
Notes: (1) The supplementary information included in this
press release for January 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 and CrossKnowledge. These businesses met the
held-for-sale criteria and were measured at the lower of carrying
value or fair value less cost to sell. We recorded a pretax
impairment of $76.8 million in the nine months ended January 31,
2024 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) Nine Months Ended
January 31,
2024
2023
Operating activities: Net loss
$
(225,584
)
$
(51,111
)
Impairment of goodwill
108,449
99,800
Losses on sale of businesses and impairment charges related to
assets held-for-sale
179,747
-
Amortization of intangible assets
42,730
65,389
Amortization of product development assets
17,894
25,175
Depreciation and amortization of technology, property, and
equipment
68,752
72,578
Other noncash charges
50,146
71,660
Net change in operating assets and liabilities
(217,782
)
(229,773
)
Net cash provided by operating activities
24,352
53,718
Investing activities: Additions to technology,
property, and equipment
(57,275
)
(57,616
)
Product development spending
(12,324
)
(17,763
)
Businesses acquired in purchase transactions, net of cash acquired
(3,116
)
(5,792
)
(Costs) proceeds related to the sale of businesses and certain
assets
(1,237
)
40
Acquisitions of publication rights and other
(4,541
)
1,059
Net cash used in investing activities
(78,493
)
(80,072
)
Financing activities: Net debt borrowings
158,681
162,303
Cash dividends
(57,869
)
(58,067
)
Purchases of treasury shares
(29,000
)
(24,000
)
Other
(16,458
)
(24,952
)
Net cash provided by financing activities
55,354
55,284
Effects of exchange rate changes on cash, cash
equivalents and restricted cash
432
(2,670
)
Change in cash, cash equivalents and restricted cash for
period
1,645
26,260
Cash, cash equivalents and restricted cash -
beginning
107,262
100,727
Cash, cash equivalents and restricted cash - ending (2)
$
108,907
$
126,987
CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT
DEVELOPMENT SPENDING (3) Nine Months Ended
January 31,
2024
2023
Net cash provided by operating activities
$
24,352
$
53,718
Less: Additions to technology, property, and equipment
(57,275
)
(57,616
)
Less: Product development spending
(12,324
)
(17,763
)
Free cash flow less product development spending
$
(45,247
)
$
(21,661
)
Notes: (1) The supplementary information included in this
press release for the nine months ended January 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 January 31, 2024 includes held-for-sale cash,
cash equivalents and restricted cash of $15.8 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 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 Revenue, 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 2024 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/20240307297781/en/
Brian Campbell Investor Relations brian.campbell@wiley.com +1
(201) 748-6874
John Wiley and Sons (NYSE:WLYB)
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