8-K
John Wiley & Sons, Inc. (WLY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
September 2, 2021
(Date of Report)
(Date of earliest event reported)
JOHN WILEY & SONS, INC.
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of incorporation)
| 001-11507 | 13-5593032 |
|---|---|
| ---------------------------------------------------- | --------------------------------------------- |
| (Commission File Number) | (IRS Employer Identification No.) |
| 111 River Street, Hoboken New Jersey | 07030 |
| ---------------------------------------------------- | --------------------------------------------- |
| (Address of principal executive offices) | (Zip Code) |
| Registrant’s telephone number, including area code: | (201) 748-6000 |
| --------------------------------------------- |
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Class A Common Stock, par value $1.00 per share | JW.A | New York Stock Exchange |
| Class B Common Stock, par value $1.00 per share | JW.B | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On September 2, 2021, John Wiley & Sons Inc., a New York corporation (the “Company”), issued a press release announcing the Company’s financial results for the first quarter fiscal year 2022. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On September 2, 2021, the Company held its first quarter fiscal 2022 earnings conference call. The Company is furnishing as Exhibit 99.2 to this Current Report on Form 8-K the presentation materials that were provided and discussed during the earnings conference call.
The information in these Items 2.02 and 7.01, including the exhibits hereto, (x) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and (y) shall not be incorporated by reference into any filing of the Company with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filings (unless the Company specifically states that the information or exhibits in this particular report are incorporated by reference). The furnishing of the information set forth in this report is not intended to, and does not, constitute a determination or admission as to the materiality or completeness of such information.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
99.1 - Press release dated September 2, 2021 “Wiley Reports First Quarter Fiscal 2022 Results.”
99.2 - Presentation materials dated September 2, 2021.
104 - Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| JOHN WILEY & SONS, INC. | |
|---|---|
| (Registrant) | |
| By | /s/ Brian A. Napack |
| --- | --- |
| Brian A. Napack | |
| President and | |
| Chief Executive Officer | |
| By | /s/ John A. Kritzmacher |
| --- | --- |
| John A. Kritzmacher | |
| Executive Vice President and<br><br> <br>Chief Financial Officer | |
| Dated: September 2, 2021 | |
| --- |
Wiley Reports First Quarter Fiscal 2022 Results
September 2, 2021 - Hoboken, NJ – John Wiley & Sons, Inc. (NYSE: JW-A and JW-B), a global leader in research and education, today announced results for the first quarter ended July 31, 2021.
SUMMARY
| • | GAAP Results: Revenue of $488 million (+13%),<br> Operating Income of $41 million (+36%), and EPS of $0.24 (-17%) |
|---|---|
| • | Adjusted Results (at<br><br> constant currency): Revenue of $488 million (+9%), Adjusted EBITDA of $95 million (+12%), and Adjusted EPS of $0.54 (+17%) |
| --- | --- |
| • | Dividend: 28^th^ consecutive raise<br> in annualized dividend to $1.38 per share |
| --- | --- |
MANAGEMENT COMMENTARY
“Wiley’s steady execution of growth strategies in open research, online education, and talent development drove another quarter of strong revenue and profit gains,” said Brian Napack, President and CEO. “Our strategies continue to be tightly aligned with accelerating long-term trends across academic and corporate markets, and we are well-positioned to drive social impact by enabling discovery, powering education and shaping workforces.”
FIRST QUARTER PERFORMANCE
| GAAP Measures<br> Unaudited (millions except for EPS) | Q1 2022 | Q1 2021 | Change | |||
|---|---|---|---|---|---|---|
| Revenue | 488.4 | $ | 431.3 | +13 | % | |
| Operating Income | 41.0 | $ | 30.0 | +36 | % | |
| Diluted EPS | 0.24 | $ | 0.29 | (17 | %) | |
| Non-GAAP Measures | Q1 2022 | Q1 2021 | Change<br><br> <br>Constant Currency | |||
| Revenue | 488.4 | $ | 431.3 | +9 | % | |
| Adjusted EBITDA | 95.3 | $ | 81.8 | +12 | % | |
| Adjusted EPS | 0.54 | $ | 0.42 | +17 | % |
All values are in US Dollars.
Excluding acquisitions and currency impact, revenue rose 7% for the quarter. Wiley recorded a favorable FX variance of $16.7 million in Revenue, $3.7 million in Adjusted EBITDA, and $0.05 in Adjusted EPS.
Revenue
| • | Research Publishing & Platforms rose 14%<br> as reported, 10% at constant currency and 5% excluding acquisitions, driven by strong growth in open research, platforms and corporate sales. |
|---|---|
| • | Academic &<br> Professional Learning grew 10% as reported and 7% at constant currency, driven by strong growth in digital courseware and professional publishing,<br> accompanied by further recovery in corporate training. |
| --- | --- |
| • | Education Services increased 16% as reported<br> and 13% at constant currency, driven by growth in university services (formerly OPM) and talent development (formerly mthree). |
| --- | --- |
Adjusted EBITDA
| • | Research Publishing & Platforms rose 12%<br> at constant currency primarily driven by revenue growth. |
|---|---|
| • | Academic & Professional Learning rose 37%<br> at constant currency, reflecting revenue growth and continued business optimization gains. |
| --- | --- |
| • | Education Services declined 21% at constant<br> currency due to higher marketing costs and investments in growth initiatives. |
| --- | --- |
| • | Adjusted Corporate Expenses were up 18% mainly due to higher unallocated benefit costs. |
| --- | --- |
EPS
| • | GAAP EPS was $0.24 as compared to $0.29 in<br> the prior year period, primarily reflecting non-cash deferred tax expense of $21 million arising from an increase in the UK corporate income tax rate from<br> 19% to 25% effective April 2023. |
|---|---|
| • | Adjusted EPS of $0.54 was up 17% at constant currency, driven by higher adjusted EBITDA and a lower adjusted effective tax rate. |
| --- | --- |
Adjusted EPS Change
Going forward, Wiley’s Adjusted EPS metric will exclude the impact of certain non-cash items directly related to acquisitions, most notably the amortization of acquired intangible assets. The Company does not consider these non-cash items to be indicative of its ongoing operating performance. For the first quarter, under the new measurement, Adjusted EPS (excluding the impact of amortization of intangibles) was $0.85 compared to $0.67 in the prior year period. See the Adjusted EPS reconciliation table toward the end of this release for more information.
Balance Sheet, Cash Flow, and Capital Allocation
| • | Net debt-to-EBITDA ratio (trailing twelve<br> months) at quarter-end was 2.0, even with the year-ago period. |
|---|---|
| • | Net Cash Used in Operating Activities was $85<br> million compared to $121 million in the prior year period, with the $36 million improvement driven by higher cash earnings and favorable changes in working capital. Note, Wiley’s regular use of cash in the first half of the fiscal year is<br> driven by the timing of cash collections for annual journal subscriptions, which are concentrated in the third and fourth fiscal quarters. |
| --- | --- |
| • | Free Cash Flow less Product Development<br> Spending was a use of $108 million as compared to a use of $145 million in the prior year, an improvement of $37 million. |
| --- | --- |
| • | Dividends: In June, Wiley raised its dividend for the 28^th^ consecutive year. The current quarterly<br> dividend is equivalent to an annual dividend of $1.38 per share, an increase from $1.37 per share in Fiscal 2021. |
| --- | --- |
| • | Share Repurchases: The Company utilized<br> approximately $7.4 million to repurchase approximately 130,000 shares at an average cost per share of $56.88. |
| --- | --- |
FISCAL YEAR 2022 OUTLOOK
The Company is reaffirming its full year outlook and adding the newly defined Adjusted EPS metric. Going forward, Wiley will discontinue reporting on the former Adjusted EPS metric.
| Metric ($millions, except EPS) | Fiscal 2021 | Fiscal 2022 Outlook | ||
|---|---|---|---|---|
| Revenue | $ | 1,942 | $ | 2,070 to $2,100 |
| Adjusted EBITDA | $ | 419 | $ | 415 to $435 |
| Adjusted EPS - former | $ | 2.92 | $ | 2.80 to $3.05 |
| Adjusted EPS -newly defined | $ | 4.00 | $ | 4.00 to $4.25 |
| Free Cash Flow | $ | 257 | $ | 200 to $220 |
EARNINGS CONFERENCE CALL
Scheduled for today, September 2 at 10:00 am (ET). Access webcast at investors.wiley.com, or directly at https://event.on24.com/wcc/r/3384264/798549EF00EC73C2803C99A64C083AD2.
US callers, please dial \(844\) 418-0103 and enter the participant code 9996020#. International callers, please dial \(236\) 714-3019 and enter the
participant code 9996020#.
ABOUT WILEY
Wiley (NYSE: JW-A) is a global leader in research and education, unlocking human potential by enabling discovery, powering education, and shaping workforces. For over 200 years, Wiley has fueled the world’s knowledge ecosystem. Today, our high-impact content, platforms, and services help researchers, learners, institutions, and corporations achieve their goals in an ever-changing world. Visit us at Wiley.com, Like us on Facebook and Follow us on Twitter and LinkedIn
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 2022 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 2022 in connection with our multi-year Business Optimization Program; (xi) the impact of COVID-19 on our operations, performance, and financial condition; and (xii) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.
CATEGORY: ALL CORPORATE NEWS
CATEGORY: EARNINGS RELEASES
| JOHN WILEY & SONS, INC. | ||||||
|---|---|---|---|---|---|---|
| SUPPLEMENTARY INFORMATION^(1)(2)^ | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME | ||||||
| (Dollars in thousands, except per share information) | ||||||
| (unaudited) | ||||||
| Three Months Ended | ||||||
| July 31, | ||||||
| 2021 | 2020 | |||||
| Revenue, net | $ | 488,388 | $ | 431,326 | ||
| Costs and expenses: | ||||||
| Cost of sales | 165,956 | 144,809 | ||||
| Operating and administrative expenses | 260,589 | 237,369 | ||||
| Restructuring and related (credits) charges | (276 | ) | 2,218 | |||
| Amortization of intangible assets | 21,151 | 16,891 | ||||
| Total costs and expenses | 447,420 | 401,287 | ||||
| Operating income | 40,968 | 30,039 | ||||
| As a % of revenue | 8.4 | % | 7.0 | % | ||
| Interest expense | (4,639 | ) | (4,614 | ) | ||
| Foreign exchange transaction gains (losses) | 370 | (82 | ) | |||
| Gain on sale of certain assets | 3,750 | - | ||||
| Other income, net | 3,553 | 4,391 | ||||
| Income before taxes | 44,002 | 29,734 | ||||
| Provision for income taxes | 30,172 | 13,400 | ||||
| Effective tax rate | 68.6 | % | 45.1 | % | ||
| Net income | $ | 13,830 | $ | 16,334 | ||
| As a % of revenue | 2.8 | % | 3.8 | % | ||
| Earnings per share | ||||||
| Basic | $ | 0.25 | $ | 0.29 | ||
| Diluted | $ | 0.24 | $ | 0.29 | ||
| Weighted average number of common shares outstanding | ||||||
| Basic | 55,869 | 55,912 | ||||
| Diluted | 56,599 | 56,193 | ||||
| Notes: | ||||||
| (1) The supplementary information included in this press release for the three months ended July 31, 2021 is preliminary and subject to change prior<br> to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. | ||||||
| (2) All amounts are approximate due to rounding. |
| JOHN WILEY & SONS, INC. | |||||
|---|---|---|---|---|---|
| SUPPLEMENTARY INFORMATION (1) (2) | |||||
| RECONCILIATION OF US GAAP MEASURES to NON-GAAP MEASURES | |||||
| (unaudited) | |||||
| Reconciliation of US GAAP EPS to Non-GAAP Adjusted EPS | |||||
| 2020 | |||||
| US GAAP Earnings Per Share - Diluted | 0.24 | $ | 0.29 | ||
| Adjustments: | |||||
| Restructuring and related (credits) charges | (0.01 | ) | 0.03 | ||
| Foreign exchange gains on intercompany transactions | (0.01 | ) | (0.02 | ) | |
| Gain on sale of certain assets (A) | (0.05 | ) | - | ||
| Income tax adjustments (B) | 0.37 | 0.12 | |||
| Non-GAAP Adjusted Earnings Per Share - Diluted | 0.54 | $ | 0.42 | ||
| Reconciliation of US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes | |||||
| (amounts in thousands) | |||||
| 2021 | 2020 | ||||
| US GAAP Income Before Taxes | 44,002 | $ | 29,734 | ||
| Pretax Impact of Adjustments: | |||||
| Restructuring and related (credits) charges | (276 | ) | 2,218 | ||
| Foreign exchange gains on intercompany transactions | (795 | ) | (1,569 | ) | |
| Gain on sale of certain assets (A) | (3,750 | ) | - | ||
| Non-GAAP Adjusted Income Before Taxes | 39,181 | $ | 30,383 | ||
| Reconciliation of US GAAP Income Tax Provision to Non-GAAP Adjusted Income Tax Provision, including our US GAAP Effective Tax<br> Rate and our Non-GAAP Adjusted Effective Tax Rate | |||||
| US GAAP Income Tax Provision | 30,172 | $ | 13,400 | ||
| Income Tax Impact of Adjustments (C): | |||||
| Restructuring and related (credits) charges | 45 | 743 | |||
| Foreign exchange gains on intercompany transactions | (101 | ) | (612 | ) | |
| Gain on sale of certain assets (A) | (936 | ) | - | ||
| Income Tax Adjustments: | |||||
| Impact of increase in UK statutory rate on deferred tax balances (B) | (20,726 | ) | (6,689 | ) | |
| Non-GAAP Adjusted Income Tax Provision | 8,454 | $ | 6,842 | ||
| US GAAP Effective Tax Rate | 68.6 | % | 45.1 | % | |
| Non-GAAP Adjusted Effective Tax Rate | 21.6 | % | 22.5 | % | |
| Notes: | |||||
| (A) The gain on sale of certain assets is due to the sale of our world languages product portfolio which was included in our Academic &<br> Professional Learning segment and resulted in a pretax gain of approximately 3.8 million during the three months ended July 31, 2021. | |||||
| (B) On June 10, 2021, the UK officially increased its corporate tax rate from 19% to 25% effective April 1, 2023. This resulted in a 20.7 million<br> 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. During the first quarter of fiscal 2021, the UK officially enacted legislation<br> that increased its statutory rate from 17% to 19%. This resulted in a 6.7 million non-cash deferred tax expense from the re-measurement of the Company’s applicable UK net deferred tax liabilities during the three months ended July 31,<br> 2020. | |||||
| (C) For the three months ended July 31, 2021, substantially all of the tax impact was from deferred taxes. For the three months ended July 31,<br> 2020, the tax impact was 0.2 million from current taxes offset by 0.1 million from deferred taxes. | |||||
| (1) See Explanation of Usage of Non-GAAP Performance Measures included in this supplementary information for additional details on the reasons why<br> management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three months ended July 31, 2021 is preliminary and subject<br> 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. |
All values are in US Dollars.
| JOHN WILEY & SONS, INC. | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SUPPLEMENTARY INFORMATION (1) (2) | ||||||||||||||||||||
| RECONCILIATION OF NON-GAAP ADJUSTED EPS - FROM PREVIOUSLY REPORTED TO NEWLY DEFINED | ||||||||||||||||||||
| (Dollars in thousands, except per share information) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Fiscal Year 2021 | Fiscal Year | |||||||||||||||||||
| Q1 | Q1 | Q2 | Q3 | Q4 | Fiscal Year | 2020 | ||||||||||||||
| Non-GAAP Adjusted Income Before Taxes (Previously Reported) | 39,181 | $ | 30,383 | $ | 70,664 | $ | 48,334 | $ | 58,385 | $ | 207,765 | $ | 173,119 | |||||||
| Plus: Amortization of acquired intangible assets (A) | 22,284 | 18,149 | 18,381 | 20,163 | 22,728 | 79,421 | 68,269 | |||||||||||||
| Non-GAAP Adjusted Income Before Taxes (Newly Defined) | 61,465 | 48,532 | 89,045 | 68,497 | 81,113 | 287,186 | 241,388 | |||||||||||||
| Less: Non-GAAP Adjusted Income Tax Provision (Newly Defined) | 13,297 | 11,140 | 19,107 | 14,974 | 15,909 | 61,131 | 53,995 | |||||||||||||
| Non-GAAP Adjusted Net Income (Newly Defined) | 48,168 | $ | 37,392 | $ | 69,938 | $ | 53,523 | $ | 65,204 | $ | 226,055 | $ | 187,393 | |||||||
| Non-GAAP Adjusted Earnings Per Share - Diluted (Newly Defined) | 0.85 | $ | 0.67 | $ | 1.25 | $ | 0.95 | $ | 1.15 | $ | 4.00 | $ | 3.30 | |||||||
| Non-GAAP Adjusted Earnings Per Share - Diluted (Previously Reported) | 0.54 | $ | 0.42 | $ | 1.00 | $ | 0.68 | $ | 0.84 | $ | 2.92 | $ | 2.40 | |||||||
| Weighted average number of common shares outstanding (shares in 000's) | ||||||||||||||||||||
| Diluted (B) | 56,599 | 56,193 | 56,165 | 56,332 | 56,616 | 56,461 | 56,729 | |||||||||||||
| Reconciliation of US GAAP EPS to Non-GAAP Adjusted EPS | ||||||||||||||||||||
| Fiscal Year 2021 | Fiscal Year | |||||||||||||||||||
| Q1 | Q1 | Q2 | Q3 | Q4 | Fiscal Year | 2020 | ||||||||||||||
| US GAAP Earnings (Loss) Per Share - Diluted | 0.24 | $ | 0.29 | $ | 1.22 | $ | 0.39 | $ | 0.73 | $ | 2.63 | $ | (1.32 | ) | ||||||
| Adjustments: | ||||||||||||||||||||
| Restructuring and related (credits) charges | (0.01 | ) | 0.03 | 0.02 | 0.28 | 0.12 | 0.44 | 0.43 | ||||||||||||
| Foreign exchange (gains) losses on intercompany transactions | (0.01 | ) | (0.02 | ) | 0.01 | 0.01 | (0.01 | ) | (0.02 | ) | 0.02 | |||||||||
| Gain on sale of certain assets | (0.05 | ) | - | - | - | - | - | - | ||||||||||||
| Impairment of goodwill | - | - | - | - | - | - | 1.94 | |||||||||||||
| Impairment of Blackwell trade name | - | - | - | - | - | - | 1.31 | |||||||||||||
| Impairment of developed technology intangible | - | - | - | - | - | - | 0.04 | |||||||||||||
| Income tax adjustments | 0.37 | 0.12 | (0.25 | ) | - | - | (0.13 | ) | (0.03 | ) | ||||||||||
| EPS impact of using weighted-average dilutive shares for adjusted EPS calculation (B) | - | - | - | - | - | - | 0.01 | |||||||||||||
| Non-GAAP Adjusted Earnings Per Share - Diluted (Previously Reported) | 0.54 | $ | 0.42 | $ | 1.00 | $ | 0.68 | $ | 0.84 | $ | 2.92 | $ | 2.40 | |||||||
| Amortization of acquired intangible assets | 0.31 | 0.25 | 0.25 | 0.27 | 0.31 | 1.08 | 0.90 | |||||||||||||
| Non-GAAP Adjusted Earnings Per Share - Diluted (Newly Defined) | 0.85 | $ | 0.67 | $ | 1.25 | $ | 0.95 | $ | 1.15 | $ | 4.00 | $ | 3.30 | |||||||
| Reconciliation of US GAAP Income (Loss) Before Taxes to Non-GAAP Adjusted Income Before Taxes | ||||||||||||||||||||
| US GAAP Income (Loss) Before Taxes | 44,002 | $ | 29,734 | $ | 68,513 | $ | 27,392 | $ | 50,273 | $ | 175,912 | $ | (63,092 | ) | ||||||
| Pretax Impact of Adjustments: | ||||||||||||||||||||
| Restructuring and related (credits) charges | (276 | ) | 2,218 | 1,920 | 20,675 | 8,497 | 33,310 | 32,607 | ||||||||||||
| Foreign exchange (gains) losses on intercompany transactions | (795 | ) | (1,569 | ) | 231 | 267 | (385 | ) | (1,457 | ) | 1,256 | |||||||||
| Gain on sale of certain assets | (3,750 | ) | - | - | - | - | - | - | ||||||||||||
| Impairment of goodwill | - | - | - | - | - | - | 110,000 | |||||||||||||
| Impairment of Blackwell trade name | - | - | - | - | - | - | 89,507 | |||||||||||||
| Impairment of developed technology intangible | - | - | - | - | - | - | 2,841 | |||||||||||||
| Non-GAAP Adjusted Income Before Taxes (Previously Reported) | 39,181 | $ | 30,383 | $ | 70,664 | $ | 48,334 | $ | 58,385 | $ | 207,765 | $ | 173,119 | |||||||
| Amortization of acquired intangible assets (A) | 22,284 | 18,149 | 18,381 | 20,163 | 22,728 | 79,421 | 68,269 | |||||||||||||
| Non-GAAP Adjusted Income Before Taxes (Newly Defined) | 61,465 | $ | 48,532 | $ | 89,045 | $ | 68,497 | $ | 81,113 | $ | 287,186 | $ | 241,388 | |||||||
| Reconciliation of US GAAP Income Tax Provision to Non-GAAP Adjusted Income Tax Provision, including our US GAAP Effective Tax<br> Rate and our Non-GAAP Adjusted Effective Tax Rate | ||||||||||||||||||||
| US GAAP Income Tax Provision | 30,172 | $ | 13,400 | $ | 81 | $ | 5,231 | $ | 8,944 | $ | 27,656 | $ | 11,195 | |||||||
| Income Tax Impact of Adjustments: (C) | ||||||||||||||||||||
| Restructuring and related (credits) charges | 45 | 743 | 654 | 4,965 | 1,702 | 8,065 | 7,949 | |||||||||||||
| Foreign exchange (gains) losses on intercompany transactions | (101 | ) | (612 | ) | 122 | 87 | 40 | (363 | ) | 242 | ||||||||||
| Gain on sale of certain assets | (936 | ) | - | - | - | - | - | - | ||||||||||||
| Impairment of goodwill | - | - | - | - | - | - | - | |||||||||||||
| Impairment of Blackwell trade name | - | - | - | - | - | - | 15,216 | |||||||||||||
| Impairment of developed technology intangible | - | - | - | - | - | - | 686 | |||||||||||||
| Income Tax Adjustments: | ||||||||||||||||||||
| Impact of increase in UK statutory rate on deferred tax balances (D) | (20,726 | ) | (6,689 | ) | (83 | ) | - | 3,261 | (3,511 | ) | - | |||||||||
| Impact of US CARES Act (E) | - | - | 13,998 | - | - | 13,998 | - | |||||||||||||
| Impact of change in certain US state tax rates in 2021 and tax rates in France in 2020 (D) | - | - | - | - | (3,225 | ) | (3,225 | ) | 1,887 | |||||||||||
| Non-GAAP Adjusted Income Tax Provision (Previously Reported) | 8,454 | $ | 6,842 | $ | 14,772 | $ | 10,283 | $ | 10,722 | $ | 42,620 | $ | 37,175 | |||||||
| Amortization of acquired intangible assets (C) | 4,843 | 4,298 | 4,335 | 4,691 | 5,187 | 18,511 | 16,820 | |||||||||||||
| Non-GAAP Adjusted Income Tax Provision (Newly Defined) | 13,297 | $ | 11,140 | $ | 19,107 | $ | 14,974 | $ | 15,909 | $ | 61,131 | $ | 53,995 | |||||||
| Non-GAAP Adjusted Net Income (Previously Reported) | 30,727 | $ | 23,541 | $ | 55,892 | $ | 38,051 | $ | 47,663 | $ | 165,145 | $ | 135,944 | |||||||
| Non-GAAP Adjusted Net Income (Newly Defined) | 48,168 | $ | 37,392 | $ | 69,938 | $ | 53,523 | $ | 65,204 | $ | 226,055 | $ | 187,393 | |||||||
| US GAAP Effective Tax Rate | 68.6 | % | 45.1 | % | 0.1 | % | 19.1 | % | 17.8 | % | 15.7 | % | -17.7 | % | ||||||
| Non-GAAP Adjusted Effective Tax Rate (Previously Reported) | 21.6 | % | 22.5 | % | 20.9 | % | 21.3 | % | 18.4 | % | 20.5 | % | 21.5 | % | ||||||
| Non-GAAP Adjusted Effective Tax Rate (Newly Defined) | 21.6 | % | 23.0 | % | 21.5 | % | 21.9 | % | 19.6 | % | 21.3 | % | 22.4 | % | ||||||
| Notes: | ||||||||||||||||||||
| (A) Reflects the amortization of intangible assets established on the opening balance sheet for an acquired business. This includes the<br> 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 Income. It also<br> includes the amortization of acquired product development assets, which is reflected in "Cost of sales" in the Condensed Consolidated Statements of Net Income. | ||||||||||||||||||||
| (B) For Fiscal Year 2020, represents the impact of using diluted weighted-average number of common shares outstanding (56.7 million shares for<br> the year ended April 30, 2020) included in the Non-US 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<br> occurs when a US GAAP net loss is reported and the effect of using dilutive shares is antidilutive. | ||||||||||||||||||||
| (C) These adjustments substantially impacted deferred taxes. | ||||||||||||||||||||
| (D) These adjustments impacted deferred taxes. | ||||||||||||||||||||
| (E) The tax impact was 8.4 million from current taxes and 5.6 million from deferred taxes in the three months ended October 31, 2020 and the<br> year ended April 30, 2021. | ||||||||||||||||||||
| (1) See Explanation of Usage of Non-GAAP Performance Measures included in this supplementary information for additional details on the reasons<br> why management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three months ended July 31, 2021 is preliminary and<br> 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. |
All values are in US Dollars.
| JOHN WILEY & SONS, INC. | ||||||
|---|---|---|---|---|---|---|
| SUPPLEMENTARY INFORMATION ^(1)^ | ||||||
| RECONCILIATION OF US GAAP NET INCOME TO NON-GAAP EBITDA AND ADJUSTED EBITDA | ||||||
| (unaudited) | ||||||
| Three Months Ended | ||||||
| July 31, | ||||||
| 2021 | 2020 | |||||
| Net Income | $ | 13,830 | $ | 16,334 | ||
| Interest expense | 4,639 | 4,614 | ||||
| Provision for income taxes | 30,172 | 13,400 | ||||
| Depreciation and amortization | 54,566 | 49,507 | ||||
| Non-GAAP EBITDA | 103,207 | 83,855 | ||||
| Restructuring and related (credits) charges | (276 | ) | 2,218 | |||
| Foreign exchange transaction (gains) losses | (370 | ) | 82 | |||
| Gain on sale of certain assets | (3,750 | ) | - | |||
| Other income, net | (3,553 | ) | (4,391 | ) | ||
| Non-GAAP Adjusted EBITDA | $ | 95,258 | $ | 81,764 | ||
| Adjusted EBITDA Margin | 19.5 | % | 19.0 | % | ||
| Notes: | ||||||
| (1) See Explanation of Usage of Non-GAAP Performance Measures included in this supplementary information for additional details on the reasons<br> why management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three months ended July 31, 2021 is preliminary and<br> subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. |
| JOHN WILEY & SONS, INC. | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| SUPPLEMENTARY INFORMATION (1) | |||||||||||
| SEGMENT RESULTS | |||||||||||
| (in thousands) | |||||||||||
| (unaudited) | |||||||||||
| % Change | |||||||||||
| Favorable (Unfavorable) | |||||||||||
| 2020 | Reported | Constant<br><br> <br>Currency | |||||||||
| Research Publishing & Platforms: | |||||||||||
| Revenue, net | |||||||||||
| Research Publishing | 263,358 | $ | 230,464 | 14 | % | 10 | % | ||||
| Research Platforms | 11,398 | 10,346 | 10 | % | 10 | % | |||||
| Total Revenue, net | 274,756 | $ | 240,810 | 14 | % | 10 | % | ||||
| Contribution to Profit | 78,808 | $ | 69,818 | 13 | % | 10 | % | ||||
| Adjustments: | |||||||||||
| Restructuring charges (credits) | 216 | (197 | ) | # | # | ||||||
| Non-GAAP Adjusted Contribution to Profit | 79,024 | $ | 69,621 | 14 | % | 10 | % | ||||
| Depreciation and amortization | 23,762 | 19,701 | -21 | % | -18 | % | |||||
| Non-GAAP Adjusted EBITDA | 102,786 | $ | 89,322 | 15 | % | 12 | % | ||||
| Adjusted EBITDA margin | 37.4 | % | 37.1 | % | |||||||
| Academic & Professional Learning: | |||||||||||
| Revenue, net | |||||||||||
| Education Publishing (2) | 66,380 | $ | 63,603 | 4 | % | 1 | % | ||||
| Professional Learning | 72,884 | 62,829 | 16 | % | 13 | % | |||||
| Total Revenue, net | 139,264 | $ | 126,432 | 10 | % | 7 | % | ||||
| Contribution to Profit | 8,152 | $ | (278 | ) | # | # | |||||
| Adjustments: | |||||||||||
| Restructuring charges | 171 | 33 | # | # | |||||||
| Non-GAAP Adjusted Contribution to Profit | 8,323 | $ | (245 | ) | # | # | |||||
| Depreciation and amortization | 18,364 | 18,804 | 2 | % | 5 | % | |||||
| Non-GAAP Adjusted EBITDA | 26,687 | $ | 18,559 | 44 | % | 37 | % | ||||
| Adjusted EBITDA margin | 19.2 | % | 14.7 | % | |||||||
| Education Services: | |||||||||||
| Revenue, net | |||||||||||
| University Services (3) | 54,394 | $ | 50,262 | 8 | % | 8 | % | ||||
| Talent Development Services (2) (4) | 19,974 | 13,822 | 45 | % | 34 | % | |||||
| Total Revenue, net | 74,368 | $ | 64,084 | 16 | % | 13 | % | ||||
| Contribution to Profit | (1,827 | ) | $ | 456 | # | # | |||||
| Adjustments: | |||||||||||
| Restructuring (credits) charges | (34 | ) | 139 | # | # | ||||||
| Non-GAAP Adjusted Contribution to Profit | (1,861 | ) | $ | 595 | # | # | |||||
| Depreciation and amortization | 8,303 | 7,279 | -14 | % | -13 | % | |||||
| Non-GAAP Adjusted EBITDA | 6,442 | $ | 7,874 | -18 | % | -21 | % | ||||
| Adjusted EBITDA margin | 8.7 | % | 12.3 | % | |||||||
| Corporate Expenses: | (44,165 | ) | $ | (39,957 | ) | -11 | % | -9 | % | ||
| Adjustments: | |||||||||||
| Restructuring (credits) charges | (629 | ) | 2,243 | # | # | ||||||
| Non-GAAP Adjusted Contribution to Profit | (44,794 | ) | $ | (37,714 | ) | -19 | % | -17 | % | ||
| Depreciation and amortization | 4,137 | 3,723 | -11 | % | -11 | % | |||||
| Non-GAAP Adjusted EBITDA | (40,657 | ) | $ | (33,991 | ) | -20 | % | -18 | % | ||
| Consolidated Results: | |||||||||||
| Revenue, net | 488,388 | $ | 431,326 | 13 | % | 9 | % | ||||
| Operating Income | 40,968 | $ | 30,039 | 36 | % | 28 | % | ||||
| Adjustments: | |||||||||||
| Restructuring (credits) charges | (276 | ) | 2,218 | # | # | ||||||
| Non-GAAP Adjusted Contribution to Profit | 40,692 | $ | 32,257 | 26 | % | 18 | % | ||||
| Depreciation and amortization | 54,566 | 49,507 | -10 | % | -12 | % | |||||
| Non-GAAP Adjusted EBITDA | 95,258 | $ | 81,764 | 17 | % | 12 | % | ||||
| Adjusted EBITDA margin | 19.5 | % | 19.0 | % | |||||||
| (1) The supplementary information included in this press release for the three months ended July 31, 2021 is preliminary and subject to<br> change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. | |||||||||||
| (2) In May 2021, we moved the WileyNXT product offering from Academic & Professional Learning – Education Publishing to Education<br> Services – Talent Development Services. As a result, the prior period results related to the WileyNXT product offering have been included in Education Services - Talent Development Services. The Revenue, Adjusted Contribution to<br> Profit and Adjusted EBITDA for WileyNXT was 0.5 million, 0.1 million, and 0.1 million, respectively, for the three months ended July 31, 2020. There were no changes to our total consolidated financial results. | |||||||||||
| (3) University Services was previously referred to as Education Services OPM. | |||||||||||
| (4) Talent Development Services was previously referred to as mthree. | |||||||||||
| # Variance greater than 100% |
All values are in US Dollars.
| JOHN WILEY & SONS, INC. | ||||
|---|---|---|---|---|
| SUPPLEMENTARY INFORMATION ^(1)^ | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||
| (in thousands) | ||||
| (unaudited) | ||||
| July 31, | April 30, | |||
| 2021 | 2021 | |||
| Assets: | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 82,982 | $ | 93,795 |
| Accounts receivable, net | 284,579 | 311,571 | ||
| Inventories, net | 40,392 | 42,538 | ||
| Prepaid expenses and other current assets | 70,736 | 78,393 | ||
| Total current assets | 478,689 | 526,297 | ||
| Product development assets, net | 49,017 | 49,517 | ||
| Royalty advances, net | 27,668 | 39,582 | ||
| Technology, property and equipment, net | 273,306 | 282,270 | ||
| Intangible assets, net | 995,613 | 1,015,302 | ||
| Goodwill | 1,301,599 | 1,304,340 | ||
| Operating lease right-of-use assets | 122,334 | 121,430 | ||
| Other non-current assets | 114,574 | 107,701 | ||
| Total assets | $ | 3,362,800 | $ | 3,446,439 |
| Liabilities and shareholders' equity: | ||||
| Current liabilities | ||||
| Accounts payable | $ | 62,230 | $ | 95,791 |
| Accrued royalties | 90,064 | 78,582 | ||
| Short-term portion of long-term debt | 12,500 | 12,500 | ||
| Contract liabilities | 418,459 | 545,425 | ||
| Accrued employment costs | 66,771 | 144,744 | ||
| Accrued income taxes | 9,628 | 8,590 | ||
| Short-term portion of operating lease liabilities | 21,547 | 22,440 | ||
| Other accrued liabilities | 81,902 | 80,900 | ||
| Total current liabilities | 763,101 | 988,972 | ||
| Long-term debt | 952,020 | 809,088 | ||
| Accrued pension liability | 136,391 | 146,247 | ||
| Deferred income tax liabilities | 188,880 | 172,903 | ||
| Operating lease liabilities | 145,340 | 145,832 | ||
| Other long-term liabilities | 99,163 | 92,106 | ||
| Total liabilities | 2,284,895 | 2,355,148 | ||
| Shareholders' equity | 1,077,905 | 1,091,291 | ||
| Total liabilities and shareholders' equity | $ | 3,362,800 | $ | 3,446,439 |
| (1) The supplementary information included in this press release for July 31, 2021 is preliminary and subject to change prior to the filing<br> 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) | ||||||
| Three Months Ended | ||||||
| July 31, | ||||||
| 2021 | 2020 | |||||
| Operating activities: | ||||||
| Net income | $ | 13,830 | 16,334 | |||
| Amortization of intangible assets | 21,151 | 16,891 | ||||
| Amortization of product development assets | 9,058 | 9,148 | ||||
| Depreciation and amortization of technology, property, and equipment | 24,357 | 23,468 | ||||
| Other noncash charges | 35,856 | 25,932 | ||||
| Net change in operating assets and liabilities | (189,026 | ) | (212,556 | ) | ||
| Net cash used in operating activities | (84,774 | ) | (120,783 | ) | ||
| Investing activities: | ||||||
| Additions to technology, property, and equipment | (17,910 | ) | (18,964 | ) | ||
| Product development spending | (5,670 | ) | (5,325 | ) | ||
| Businesses acquired in purchase transactions, net of cash acquired | (3,032 | ) | (136 | ) | ||
| Proceeds related to the sale of certain assets | 3,375 | - | ||||
| Acquisitions of publication rights and other | (295 | ) | (3,855 | ) | ||
| Net cash used in investing activities | (23,532 | ) | (28,280 | ) | ||
| Financing activities: | ||||||
| Net debt borrowings | 142,703 | 67,356 | ||||
| Cash dividends | (19,307 | ) | (19,261 | ) | ||
| Purchases of treasury shares | (7,367 | ) | - | |||
| Other | (16,940 | ) | (4,611 | ) | ||
| Net cash provided by financing activities | 99,089 | 43,484 | ||||
| Effects of exchange rate changes on cash, cash equivalents and restricted cash | (1,586 | ) | 4,500 | |||
| Change in cash, cash equivalents and restricted cash for period | (10,803 | ) | (101,079 | ) | ||
| Cash, cash equivalents and restricted cash - beginning | 94,359 | 203,047 | ||||
| Cash, cash equivalents and restricted cash - ending | $ | 83,556 | $ | 101,968 | ||
| CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT DEVELOPMENT SPENDING | ||||||
| Three Months Ended | ||||||
| July 31, | ||||||
| 2021 | 2020 | |||||
| Net cash used in operating activities | $ | (84,774 | ) | $ | (120,783 | ) |
| Less: Additions to technology, property, and equipment | (17,910 | ) | (18,964 | ) | ||
| Less: Product development spending | (5,670 | ) | (5,325 | ) | ||
| Free cash flow less product development spending | $ | (108,354 | ) | $ | (145,072 | ) |
| See Explanation of Usage of Non-GAAP Performance Measures included in this supplemental information. | ||||||
| (1) The supplementary information included in this press release for the three months ended July 31, 2021 is preliminary and subject to<br> change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. |
| JOHN WILEY & SONS, INC. |
|---|
| EXPLANATION OF USAGE OF NON-GAAP PERFORMANCE MEASURES |
| In this earnings release and supplemental information, management may present the following non-GAAP performance measures: |
| • Adjusted Earnings Per Share (Adjusted EPS); |
| • Free Cash Flow less Product Development Spending; |
| • Adjusted Contribution to Profit and margin; |
| • Adjusted Income Before Taxes; |
| • Adjusted Income Tax Provision; |
| • Adjusted Effective Tax Rate; |
| • Adjusted Net Income; |
| • 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<br> well for internal reporting and forecasting purposes, when publicly providing its outlook, to evaluate the Company's performance and calculate incentive compensation. |
| The Company presents these non-GAAP performance measures in addition to US GAAP financial results because it believes that these<br> 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<br> 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<br> Contribution to Profit. We present both Adjusted Contribution to Profit and Adjusted EBITDA for each of our reportable segments since we believe Adjusted EBITDA provides additional useful information to certain investors and<br> financial analysts for operational trends and comparisons over time as it removes the impact of depreciation and amortization expense, as well as a consistent basis to evaluate operating profitability and comparing our financial<br> performance to that of our peer companies and competitors. |
| For example: |
| • Adjusted EPS, Adjusted Contribution to Profit, Adjusted Income Before Taxes, Adjusted Income Tax Provision, Adjusted Effective Tax Rate, Adjusted Net Income, Adjusted EBITDA and<br> 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<br> common stock dividends and fund share repurchases and acquisitions. |
| • Results on a constant currency basis removes distortion from the effects of foreign currency movements to provide better comparability of our business trends from period to period. We<br> 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, the Company has historically provided these or similar non-GAAP performance measures and understand that some investors and<br> financial analysts find this information helpful in analyzing the Company's operating margins and net income, and in comparing the Company's financial performance to that of its peer companies and competitors. Based on<br> interactions with investors, we also believe that the Company's non-GAAP performance measures are regarded as useful to our investors as supplemental to our US GAAP financial results, and that there is no confusion regarding the<br> adjustments or our operating performance to our investors due to the comprehensive nature of our disclosures. |
| We have not provided our 2022 outlook for the most directly comparable US GAAP financial measures, as they are not available without<br> 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<br> 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<br> 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<br> 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-US GAAP<br> 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-US GAAP measures. |
First Quarter Fiscal 2022 Earnings Review September 2, 2021
SAFE HARBOR STATEMENTThis presentation 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 many 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 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 2022 in connection with our multi-year Business Optimization Program; (xi) the impact of COVID-19 on our operations, performance, and financial condition; and (xii) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances. NON-GAAP MEASURESIn this presentation, management provides the following non-GAAP performance measures:Adjusted Earnings Per Share (“Adjusted EPS”);Free Cash Flow less Product Development Spending;Adjusted Contribution to Profit (“Adjusted CTP”) and margin;Adjusted EBITDA and margin;Organic revenue; andResults on a constant currency (“CC”) basis.Management believes non-GAAP financial measures, which exclude the impact of restructuring charges and credits and other items, provide supplementary information to support analyzing operating results and earnings and are 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. 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 applying the same foreign currency exchange rates for the current and equivalent prior period. We have not provided our 2022 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.
Wiley unlocks human potential by powering discovery and learning
First Quarter Summary Revenue+9%*$488M GAAP EPS-17%$0.24 Adj. EPS+17%$0.54 Adj. EBITDA+12% $95M Consistent strategies and solid execution driving strong revenue growth across all segments Research (+10%)Academic & Professional Learning (+7%)Education Services (+13%)Strong profit performance driven by Research and Academic & Professional LearningLong-term trends accelerating in open research, digital education and talent development Wiley continues to drive impact by enabling discovery, powering career-connected education and shaping workforces *Organic revenue +7% *Organic revenue excludes acquisition and currency impacts
Strong momentum across academic and corporate markets Enabling Discovery Powering Education Shaping Workforces Open Research Revenue+56%Corporate Revenue (Research)+37% Digital Courseware Revenue+31%Online Program Enrollment +9% Talent Development Revenue+34%Professional Learning Revenue +13% Q1 Metrics
Research Publishing & Platforms (millions) Q1 2022 Change Change CC Research Publishing $264 14% 10% Research Platforms $11 10% 10% TOTAL REVENUE* $275 14% 10% ADJUSTED EBITDA $103 12% ADJ. EBITDA MARGIN 37% Organic growth in research article output (+5%) and usage (+25%)Strategic read-and-publish agreements generating strong momentumSolid growth continuing for Research Platforms and corporate sales Advances in publishing process optimization supporting volume growthEBITDA growth primarily driven by revenue growth Q1Summary *Organic revenue +5% Organic revenue excludes acquisition and currency impacts
Academic & Professional Learning Q1Summary Education Publishing driven by growth in digital content and courseware, partly offset by continued softness in test prepProfessional Learning driven by growth in professional publishing and corporate learning accompanied by further COVID-related recovery in corporate training Strong profit growth from revenue momentum and business optimization (millions) Q1 2022 Change Change CC Education Publishing $66 4% 1% Professional Learning $73 16% 13% TOTAL REVENUE $139 10% 7% ADJUSTED EBITDA $27 37% ADJ. EBITDA MARGIN 19%
Education Services Q1Summary Solid growth in online enrollment (+9%) and 13 new degree programs signedEarly indications of slowing online enrollment growth vs. prior year COVID-related spikeTalent Development signed three new Fortune 500 partners and delivered 69% growth in IT talent placementsEBITDA decline primarily due to higher University Services marketing costs and investments in Talent Development growth (millions) Q1 2022 Change Change CC University Services $54 8% 8% Talent Development $20 45% 34% TOTAL REVENUE $74 16% 13% ADJUSTED EBITDA $6 (21%) ADJ. EBITDA MARGIN 9%
Financial Position and Outlook
Financial Position and Capital Allocation Modest Leverage: Net Debt/EBITDA ratio of 2.0 TTM inclusive of acquisitions, even with prior year Free Cash Flow: Use of $108M (vs. use of $145M in Q1’21). FCF historically a use through 1H due to timing of annual journal subscription receipts. Wiley FCF outlook for Fiscal 2022 is between $200M and $220M. M&A: M&A focused on adding scale or capabilities in key strategic areas of research and career-connected education. Hindawi (open research) integration on track. Dividends: In Q1, Wiley raised dividend for 28th consecutive year. Yield at ~2.4% (as of Sept 1, 2021). Share Repurchases: Acquired ~130K shares for $7.4M at an average cost of $56.88/share $19M $27M Dividends and RepurchasesQ1 Allocation
Fiscal 2022 Growth and Optimization Initiatives Open Research Publish more to meet global demandLeverage Hindawi acquisition to advance leadership position in OA Scale service offerings for societies and corporations Career-Connected Education Expand online degree programs and drive online enrollment Scale digital courseware Expand Talent Development corporate pipeline and existing relationships Business Optimization Simplify, standardize and automate workflows, particularly for publishing processes and back-office operationsExpand and optimize student acquisition capabilitiesBuild direct-to-consumer capabilities and enhance ecommerce experience
New Adjusted EPS Q1’22 Q1’21 FY21 FY20 Adjusted Income Before Taxes (previously reported) $39.2 $30.4 $207.8 $173.1 +Amortization of Acquired Intangible Assets(1) $22.3 $18.1 $79.4 $68.3 Adjusted Income Before Taxes (new) $61.5 $48.5 $287.2 $241.4 +Adjusted Tax Provision $13.3 $11.1 $61.1 $54.0 Adjusted Net Income (newly defined) $48.2 $37.4 $226.1 $187.4 Adjusted EPS (newly defined) $0.85 $0.67 $4.00 $3.30 Previously reported Adjusted EPS $0.54 $0.42 $2.92 $2.40 Adjusted EPS - excluding the amortization of acquired intangibles (non-cash) - is more indicative of underlying operational performance (1) 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 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 Income.
Fiscal 2022 Outlook Reaffirmed Metric (Millions, except EPS) Fiscal 2021 Fiscal 2022 Outlook Revenue $1,942 $2,070 to $2,100 Adjusted EBITDA $419 $415 to $435 Adjusted EPS - formerAdjusted EPS - newly defined $2.92$4.00 $2.80 to $3.05$4.00 to $4.25 Free Cash Flow $257 $200 to $220
Key Takeaways Consistent strategies and solid execution driving strong revenue growth across all segments Research (+10%)Academic & Professional Learning (+7%)Education Services (+13%)Strong profit performance driven by Research and Academic & Professional LearningLong-term trends accelerating in open research, digital education and talent development Wiley continues to drive impact by enabling discovery, powering career-connected education and shaping workforces
Thanks for joining us. IR website at https://investors.wiley.com/Q2 2022 Earnings Call – December 7, 2021Contact us for follow-up at: brian.campbell@wiley.com | +1(201) 748-6874
Appendix – Reconciliation of US GAAP to Non-GAAP 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 July 31, 2021 2020 US GAAP Earnings Per Share - Diluted $ 0.24 $ 0.29 Adjustments: Restructuring and related (credits) charges (0.01) 0.03 Foreign exchange gains on intercompany transactions (0.01) (0.02) Gain on sale of certain assets (A) (0.05) - Income tax adjustments (B) 0.37 0.12 Non-GAAP Adjusted Earnings Per Share - Diluted $ 0.54 $ 0.42 Reconciliation of US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes Three Months Ended (amounts in thousands) July 31, 2021 2020 US GAAP Income Before Taxes $ 44,002 $ 29,734 Pretax Impact of Adjustments: Restructuring and related (credits) charges (276) 2,218 Foreign exchange gains on intercompany transactions (795) (1,569) Gain on sale of certain assets (A) (3,750) - Non-GAAP Adjusted Income Before Taxes $ 39,181 $ 30,383 Reconciliation of US GAAP Income Tax 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 Provision $ 30,172 $ 13,400 Income Tax Impact of Adjustments (C): Restructuring and related (credits) charges 45 743 Foreign exchange gains on intercompany transactions (101) (612) Gain on sale of certain assets (A) (936) - Income Tax Adjustments: Impact of increase in UK statutory rate on deferred tax balances (B) (20,726) (6,689) Non-GAAP Adjusted Income Tax Provision $ 8,454 $ 6,842 US GAAP Effective Tax Rate 68.6% 45.1% Non-GAAP Adjusted Effective Tax Rate 21.6% 22.5% Notes: (A) The gain on sale of certain assets is due to the sale of our world languages product portfolio which was included in our Academic & Professional Learning segment and resulted in a pretax gain of approximately $3.8 million during the three months ended July 31, 2021. (B) On June 10, 2021, the UK officially increased its corporate tax 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. During the first quarter of fiscal 2021, the UK officially enacted legislation that increased its statutory rate from 17% to 19%. This resulted in a $6.7 million non-cash deferred tax expense from the re-measurement of the Company’s applicable UK net deferred tax liabilities during the three months ended July 31, 2020. (C) For the three months ended July 31, 2021, substantially all of the tax impact was from deferred taxes. For the three months ended July 31, 2020, the tax impact was $0.2 million from current taxes offset by $0.1 million from deferred taxes. (1) See Explanation of Usage of Non-GAAP Performance Measures included in this supplementary information for additional details on the reasons why management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three months ended July 31, 2021 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.
Appendix – Previous Adjusted EPS to Newly Defined
Appendix – Reconciliation of Net Income to Adjusted EBITDA