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
June 15, 2022
(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,<br> 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 | WLY | New York Stock Exchange |
| Class B Common Stock, par value $1.00 per share | WLYB | 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 June 15, 2022, John Wiley & Sons Inc., a New York corporation (the “Company”), issued a press release announcing the Company’s financial results for the fourth quarter and 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 June 15, 2022, the Company held its fourth 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 June 15, 2022 “Wiley Reports Fourth Quarter and Fiscal Year 2022 Results.”
99.2 - Presentation materials dated June 15, 2022.
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/ Christina Van Tassell |
| --- | --- |
| Christina Van Tassell | |
| Executive Vice President and<br><br> <br>Chief Financial Officer | |
| Dated: June 15, 2022 | |
| --- |
Wiley Reports Fourth Quarter and Fiscal Year 2022 Results
June 15, 2022 - Hoboken, NJ – Wiley (NYSE: WLY), a global leader in scientific research and career-connected education, today announced results for the fourth quarter and fiscal year ended April 30, 2022.
FOURTH QUARTER SUMMARY
| • | GAAP Results: Revenue of $546 million (+2%),<br> Operating Income of $58 million (+14%), and EPS of $0.76 (+4%) |
|---|---|
| • | Adjusted Results (at constant currency): Revenue of $546 million (+4%), Adjusted EBITDA of $111 million (flat), and Adjusted EPS of $1.08 (-6%) |
| --- | --- |
FULL YEAR SUMMARY
| • | Guidance: In line for Revenue, Adjusted<br> EBITDA and Adjusted EPS. Exceeded for Free Cash Flow |
|---|---|
| • | GAAP Results: Revenue of $2,083 million<br> (+7%), Operating Income of $219 million (+18%), EPS of $2.62 (-0.4%), and Cash Provided by Operating Activities of $339 million (-6%) |
| --- | --- |
| • | Adjusted Results (at constant currency): Revenue of $2,083 million (+7%), Adjusted EBITDA of $433 million (+3%), and Adjusted EPS of $4.16 (+1%) |
| --- | --- |
| • | Free Cash Flow of $223 million, down 13% due to one-time items in prior year |
| --- | --- |
| • | Digital Products and Tech-Enabled Services:<br> 83% of total revenue |
| --- | --- |
| • | Recurring Revenue: 58% of total revenue |
| --- | --- |
MANAGEMENT COMMENTARY
"Wiley delivered another solid year in Fiscal 2022 as we materially accelerated organic growth, delivered on our financial targets, and surpassed $2 billion in revenue for the first time," said Brian Napack, President and CEO. "Our consistent strategy to lead in open scientific research and career-connected education, our strong cash flow, and our dedication to operational excellence position us well for the future."
FOURTH QUARTER PERFORMANCE
| GAAP Measures<br> Unaudited (millions except for EPS) | Q4 2022 | Q4 2021 | Change | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 545.7 | $ | 536.3 | 2 | % | ||||
| Operating Income | 58.4 | $ | 51.2 | 14 | % | ||||
| Diluted EPS | 0.76 | $ | 0.73 | 4 | % | ||||
| Non-GAAP Measures | Q4 2022 | Q4 2021 | Change | Change<br><br> <br>Constant Currency | |||||
| Revenue | 545.7 | $ | 536.3 | +2 | % | +4 | % | ||
| Adjusted EBITDA | 110.9 | $ | 112.7 | (2 | %) | 0 | % | ||
| Adjusted EPS | 1.08 | $ | 1.15 | (6 | %) | (6 | %) |
All values are in US Dollars.
| • | Excluding FX and acquisitions, revenue rose 2% for the quarter. |
|---|---|
| • | Wiley recorded an unfavorable FX variance of $11 million in revenue and $1 million in Adjusted EBITDA. There was no material FX<br> variance to Adjusted EPS. |
| --- | --- |
Revenue
| • | Research Publishing & Platforms rose 5%<br> as reported and 6% at constant currency and excluding acquisitions, driven by growth in both publishing and platforms. |
|---|---|
| • | Academic & Professional Learning declined 7% as reported and 5% at constant currency driven by declines in Education Publishing and trade publishing, offsetting a continued strong recovery in<br> corporate training. |
| --- | --- |
| • | Education Services rose 8% as reported and 6%<br> at constant currency and excluding acquisition, with robust growth in Talent Development Services offsetting a decline in University Services. |
| --- | --- |
Adjusted EBITDA
| • | Research Publishing & Platforms rose 12%<br> mainly driven by revenue performance. Q4 Adjusted EBITDA margin of 34%. |
|---|---|
| • | Academic & Professional Learning declined<br> 3% at constant currency, with the revenue decline mitigated by lower employee costs. Q4 Adjusted EBITDA margin of 27%. |
| --- | --- |
| • | Education Services was down 29% mainly due to investments to expand our corporate client relationships in Talent Development. Q4 Adjusted EBITDA margin of 12%. |
| --- | --- |
| • | Adjusted Corporate Expenses rose 14% mainly due to higher technology and marketing expenses. |
| --- | --- |
EPS
| • | GAAP EPS was $0.76 compared to $0.73 in the<br> prior year period. |
|---|---|
| • | Adjusted EPS decline primarily due Adjusted<br> EBITDA decline. |
| --- | --- |
FISCAL YEAR 2022 PERFORMANCE
| GAAP Measures<br><br> <br>Unaudited ($millions except for EPS) | Fiscal 2022 | Fiscal 2021 | Change | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $ | 2,082.9 | $ | 1,941.5 | +7 | % | ||||
| Operating Income | $ | 219.3 | $ | 185.5 | +18 | % | ||||
| Diluted EPS | $ | 2.62 | $ | 2.63 | (0.4 | %) | ||||
| Net Cash Provided by Operating Activities | $ | 339.1 | $ | 359.9 | (6 | %) | ||||
| Non-GAAP Measures | Fiscal 2022 | Fiscal 2021 | Change | Change<br><br> <br>Constant Currency | ||||||
| Revenue | $ | 2,082.9 | $ | 1,941.5 | +7 | % | +7 | % | ||
| Adjusted EBITDA | $ | 433.0 | $ | 419.0 | +3 | % | +3 | % | ||
| Adjusted EPS | $ | 4.16 | $ | 4.00 | +4 | % | +1 | % | ||
| Free Cash Flow Less Product Development Spending | $ | 223.2 | $ | 256.6 | (13 | %) | ||||
| • | Excluding FX and acquisitions, revenue rose 5%. | |||||||||
| --- | --- | |||||||||
| • | Wiley recorded a favorable FX variance of $6 million in revenue and $1 million in Adjusted EBITDA, along with a favorable FX<br> variance of $0.11 in Adjusted EPS. | |||||||||
| --- | --- | |||||||||
| • | Starting in Fiscal 2022, Wiley’s Adjusted EPS metric now excludes the impact of certain non-cash items related to acquisitions,<br> notably the amortization of acquired intangible assets. The Company does not consider these non-cash items to be indicative of ongoing operating performance. | |||||||||
| --- | --- |
| • | Revenue growth driven by Research Publishing<br> & Platforms (+9% as reported and +5% at constant currency and excluding impact of acquisitions) and Education Services (+14% and +12% at constant currency and excluding acquisition impact), with modest growth delivered by Academic & Professional Learning (+1% as reported and at constant currency) |
|---|---|
| • | GAAP EPS slight decline mainly due to a<br> higher effective tax rate (29% compared to 16% in Fiscal 2021) and higher interest expense, offsetting higher operating income and prior year restructuring charges. |
| --- | --- |
| • | Adjusted EPS and Adjusted EBITDA growth<br> largely due to revenue growth and cost savings, partially offset by investments in Research and Education Services growth initiatives. Wiley’s Adjusted EBITDA margin declined slightly from 21.6% in Fiscal 2021 to 20.8% in Fiscal 2022. |
| --- | --- |
| • | Balance Sheet: net debt-to-EBITDA ratio at April end was 1.6, down from 1.7 in prior year. |
| --- | --- |
| • | Free Cash Flow less Product Development Spending decline<br><br> due to non-recurrence of a $21 million cash tax refund in Fiscal 2021, higher annual incentive compensation payments and higher capital expenditures in Fiscal 2022. Capex rose $13 million to $116 million largely due to reduced investment<br> in Fiscal 2021 due to COVID-19. |
| --- | --- |
| • | Acquisitions: The Company spent $76 million<br> on acquisitions in Research Platforms and University Services. This was down from $300 million spent in Fiscal 2021. |
| --- | --- |
| • | Returns to Shareholders: The Company raised<br> its dividend for the 28^th^ consecutive year in Fiscal 2022. For the year, Wiley utilized $77 million for dividends and $30 million to repurchase approximately 544,000 shares at an average cost per share of $55.14. |
| --- | --- |
FISCAL YEAR 2023 OUTLOOK
| • | Revenue: The Company anticipates mid-single<br> digit revenue growth at constant currency driven by Research and Education Services. | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| • | Earnings: Wiley expects gains from revenue growth to be offset by wage inflation and growth investments<br><br> in Research and Corporate Talent Development. Adjusted EPS performance is expected to be adversely impacted by 35-cents of non-operational items such as higher interest expense, higher tax expense, and lower pension income. <br> Wiley’s adjusted effective tax rate is expected to be 22-23% in Fiscal 2023, up from 20% in Fiscal 2022. This is primarily due to an anticipated less favorable<br> mix of earnings by country and an increase in the UK statutory rate. Fiscal 2022 also benefitted from certain non-recurring tax benefits. | ||||||||
| --- | --- | ||||||||
| • | Free Cash Flow: Wiley expects positive cash earnings and lower incentive payouts for Fiscal 2022 performance compared to prior year to be offset by higher cash taxes,<br> interest and capex ($115 to $125 million vs. $116 million in Fiscal 2022). | ||||||||
| --- | --- | ||||||||
| • | Foreign Exchange Impact: With Wiley<br> generating 47% of its revenue from outside the US, the Company’s reported results are adversely impacted by a strengthening US dollar, particularly in relation to the Euro and the British pound. Given volatility in exchange rates, there is now a material FX impact to our Fiscal 2023 outlook relative to our outlook at constant currency. | ||||||||
| --- | --- | ||||||||
| Metric<br><br> <br>($millions, except EPS) | Fiscal 2022* | Fiscal 2023 Outlook*<br><br> <br>At constant currency | FX Impact** | Fiscal 2023 Outlook^<br><br> <br>At spot rates | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Revenue | $ | 2,083 | $ | 2,175 - $2,215 | $ | (75 | ) | $ | 2,100 - $2,140 |
| Adjusted EBITDA | $ | 433 | $ | 425 - $450 | $ | (25 | ) | $ | 400 - $425 |
| Adjusted EPS | $ | 4.16 | $ | 3.70 - $4.05 | $ | (0.30 | ) | $ | 3.40 - $3.75 |
| Free Cash Flow | $ | 223 | $ | 210 - $235 | $ | (25 | ) | $ | 185 - $210 |
*Based on Fiscal 2022 average rates of 1.15 euro and 1.36 British pound
**Variance between Fiscal 2022 average rates and spot rates as of June 10: 1.06 euro and 1.24 British pound
^Fiscal 2023 outlook at spot rates as of June 10
EARNINGS CONFERENCE CALL
Scheduled for today, June 15 at 10:00 am (ET). Access webcast at Investor Relations at investors.wiley.com,
or directly at https://events.q4inc.com/attendee/828353638. 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 a global leader in research and education, unlocking human potential by enabling discovery, powering education, and shaping workforces. For over two hundred 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 investors.wiley.com, 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,” “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,” and results on a Constant Currency basis to assess underlying business performance and trends. Management believes non-GAAP financial measures, which exclude the impact of restructuring charges and credits and certain other items, and the impact of acquisitions provide a useful comparable basis to analyze operating results and earnings. See the reconciliations of non-GAAP financial measures and explanations of the uses of non-GAAP measures in the supplementary information. We have not provided our 2023 outlook for the most directly comparable 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 Company’s ability to realize operating savings over time and in fiscal year 2023 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: 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 | Year Ended | |||||||||||
| April 30, | April 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Revenue, net | $ | 545,653 | $ | 536,252 | $ | 2,082,928 | $ | 1,941,501 | ||||
| Costs and expenses: | ||||||||||||
| Cost of sales | 187,004 | 168,037 | 700,658 | 625,335 | ||||||||
| Operating and administrative expenses | 279,331 | 286,882 | 1,079,585 | 1,022,660 | ||||||||
| Restructuring and related (credits) charges | (266 | ) | 8,497 | (1,427 | ) | 33,310 | ||||||
| Amortization of intangible assets | 21,153 | 21,596 | 84,836 | 74,685 | ||||||||
| Total costs and expenses | 487,222 | 485,012 | 1,863,652 | 1,755,990 | ||||||||
| Operating income | 58,431 | 51,240 | 219,276 | 185,511 | ||||||||
| As a % of revenue | 10.7 | % | 9.6 | % | 10.5 | % | 9.6 | % | ||||
| Interest expense | (5,063 | ) | (4,455 | ) | (19,802 | ) | (18,383 | ) | ||||
| Foreign exchange transaction losses | (1,704 | ) | (1,504 | ) | (3,192 | ) | (7,977 | ) | ||||
| Gain on sale of certain assets | - | - | 3,694 | - | ||||||||
| Other income, net | 161 | 4,992 | 9,685 | 16,761 | ||||||||
| Income before taxes | 51,825 | 50,273 | 209,661 | 175,912 | ||||||||
| Provision for income taxes | 8,679 | 8,944 | 61,352 | 27,656 | ||||||||
| Effective tax rate | 16.7 | % | 17.8 | % | 29.3 | % | 15.7 | % | ||||
| Net income | $ | 43,146 | $ | 41,329 | $ | 148,309 | $ | 148,256 | ||||
| As a % of revenue | 7.9 | % | 7.7 | % | 7.1 | % | 7.6 | % | ||||
| Earnings per share | ||||||||||||
| Basic | $ | 0.78 | $ | 0.74 | $ | 2.66 | $ | 2.65 | ||||
| Diluted | $ | 0.76 | $ | 0.73 | $ | 2.62 | $ | 2.63 | ||||
| Weighted average number of common shares outstanding | ||||||||||||
| Basic | 55,668 | 55,814 | 55,759 | 55,930 | ||||||||
| Diluted | 56,529 | 56,616 | 56,598 | 56,461 | ||||||||
| Notes: | ||||||||||||
| (1) The supplementary information included in this press release for the three months and year ended April 30, 2022 is preliminary and subject to<br> change prior to the filing of our upcoming Annual Report on Form 10-K with the Securities and Exchange Commission.<br><br> <br><br><br> <br>In the year ended April 30, 2022, we completed the acquisition of certain assets of XYZ Media Inc. (Education Services segment), the assets of the<br> eJournalPress business and J&J Editorial Services, LLC (both in Research Publishing & Platforms segment), two immaterial businesses in our Research Publishing & Platforms segment, and one immaterial business included in our<br> Education Services segment. | ||||||||||||
| (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 | ||||||||||||
| Year Ended | ||||||||||||
| April 30, | ||||||||||||
| 2021 | 2022 | 2021 | ||||||||||
| US GAAP Earnings Per Share - Diluted | 0.76 | $ | 0.73 | $ | 2.62 | $ | 2.63 | |||||
| Adjustments: | ||||||||||||
| Restructuring and related (credits) charges | - | 0.12 | (0.02 | ) | 0.44 | |||||||
| Foreign exchange losses (gains) on intercompany transactions | 0.02 | (0.01 | ) | 0.02 | (0.02 | ) | ||||||
| Amortization of acquired intangible assets (3) | 0.29 | 0.31 | 1.21 | 1.08 | ||||||||
| Gain on sale of certain assets (4) | - | - | (0.05 | ) | - | |||||||
| Income tax adjustments (5) (6) | 0.01 | - | 0.38 | (0.13 | ) | |||||||
| Non-GAAP Adjusted Earnings Per Share - Diluted | 1.08 | $ | 1.15 | $ | 4.16 | $ | 4.00 | |||||
| Reconciliation of US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes | ||||||||||||
| Year Ended | ||||||||||||
| (amounts in thousands) | April 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| US GAAP Income Before Taxes | 51,825 | $ | 50,273 | $ | 209,661 | $ | 175,912 | |||||
| Pretax Impact of Adjustments: | ||||||||||||
| Restructuring and related (credits) charges | (266 | ) | 8,497 | (1,427 | ) | 33,310 | ||||||
| Foreign exchange losses (gains) on intercompany transactions | 1,019 | (385 | ) | 1,513 | (1,457 | ) | ||||||
| Amortization of acquired intangible assets | 22,265 | 22,728 | 89,346 | 79,421 | ||||||||
| Gain on sale of certain assets (4) | - | - | (3,694 | ) | - | |||||||
| Non-GAAP Adjusted Income Before Taxes | 74,843 | $ | 81,113 | $ | 295,399 | $ | 287,186 | |||||
| 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 | 8,679 | $ | 8,944 | $ | 61,352 | $ | 27,656 | |||||
| Income Tax Impact of Adjustments ^(7)^ | ||||||||||||
| Restructuring and related (credits) charges | (142 | ) | 1,702 | (260 | ) | 8,065 | ||||||
| Foreign exchange losses (gains) on intercompany transactions | 41 | 40 | 597 | (363 | ) | |||||||
| Amortization of acquired intangible assets | 6,017 | 5,187 | 20,816 | 18,511 | ||||||||
| Gain on sale of certain assets (4) | - | - | (922 | ) | - | |||||||
| Income Tax Adjustments: | ||||||||||||
| Impact of increase in UK statutory rate on deferred tax balances (5) | (689 | ) | 3,261 | (21,415 | ) | (3,511 | ) | |||||
| Impact of US CARES Act (6) | - | - | - | 13,998 | ||||||||
| Impact of change in certain U.S. state tax rates in 2021 (8) | - | (3,225 | ) | - | (3,225 | ) | ||||||
| Non-GAAP Adjusted Income Tax Provision | 13,906 | $ | 15,909 | $ | 60,168 | $ | 61,131 | |||||
| US GAAP Effective Tax Rate | 16.7 | % | 17.8 | % | 29.3 | % | 15.7 | % | ||||
| Non-GAAP Adjusted Effective Tax Rate | 18.6 | % | 19.6 | % | 20.4 | % | 21.3 | % | ||||
| Notes: | ||||||||||||
| (1) | See Explanation of Usage of Non-GAAP Performance Measures included in this supplementary information for additional details on the reasons why management believes presentation of each non-GAAP performance measure provides useful<br> information to investors. The supplementary information included in this press release for the three months and year ended April 30, 2022 is preliminary and subject to change prior to the filing of our upcoming Annual Report on Form 10-K<br> with the Securities and Exchange Commission. | |||||||||||
| (2) | All amounts are approximate due to rounding. | |||||||||||
| (3) | Reflects the amortization of intangible assets established on the opening balance sheet for an acquired business. This includes the amortization of<br> 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<br> amortization of acquired product development assets, which is reflected in "Cost of sales" in the Condensed Consolidated Statements of Net Income. | |||||||||||
| (4) | 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<br> Learning segment, and resulted in a pretax gain of approximately 3.7 million during the year ended April 30, 2022. | |||||||||||
| (5) | In the three months ended July 31, 2021, the UK enacted legislation that increased its statutory rate from 19% to 25% effective April 1, 2023. This<br> resulted in a non-cash deferred tax expense from the re-measurement of the Company’s applicable UK net deferred tax liabilities of 0.7 million, or 0.01 per share for the three months ended April 30, 2022, and 21.4 million, or 0.38 per<br> share for the year ended April 30, 2022 . These adjustments impacted deferred taxes.<br> <br> <br> In the three months ended July 31, 2020, the UK enacted legislation that increased its statutory rate from 17% to 19%. This resulted in a 3.3<br> million, or (0.06) per share, non-cash deferred tax benefit, and a 3.5 million, or 0.06 per share, non-cash deferred tax expense from the re-measurement of the Company’s applicable U.K. net deferred tax liabilities for the three months<br> and year ended April 30, 2021, respectively. These adjustments impacted deferred taxes. | |||||||||||
| (6) | In connection with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and certain regulations, we carried back our April 30, 2020<br> US net operating loss (NOL) to our year ended April 30, 2015 and claimed a 20.7 million refund. The refund plus interest was received in February 2021. The NOL was carried back to fiscal year 2015 when the US corporate tax rate was 35.0%.<br> The carryback to a year with a higher rate, plus certain additional net permanent deductions included in the carryback resulted in a 14.0 million tax benefit, or (0.25) per share, 8.4 million from current taxes and 5.6 million from<br> deferred taxes, for the year ended April 30, 2021. | |||||||||||
| (7) | For the three months and year ended April 30, 2022 and 2021, substantially all of the tax impact was from deferred taxes. | |||||||||||
| (8) | In connection with the increase in certain US state tax apportionment factors in 2021, we recorded income tax expense of 3.2 million, or 0.06 per<br> share for the three months and year ended April 30, 2021. These adjustments impacted deferred taxes. |
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 | Year Ended | |||||||||||
| April 30, | April 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Net Income | $ | 43,146 | $ | 41,329 | $ | 148,309 | $ | 148,256 | ||||
| Interest expense | 5,063 | 4,455 | 19,802 | 18,383 | ||||||||
| Provision for income taxes | 8,679 | 8,944 | 61,352 | 27,656 | ||||||||
| Depreciation and amortization | 52,686 | 52,936 | 215,170 | 200,189 | ||||||||
| Non-GAAP EBITDA | 109,574 | 107,664 | 444,633 | 394,484 | ||||||||
| Restructuring and related (credits) charges | (266 | ) | 8,497 | (1,427 | ) | 33,310 | ||||||
| Foreign exchange transaction losses | 1,704 | 1,504 | 3,192 | 7,977 | ||||||||
| Gain on sale of certain assets | - | - | (3,694 | ) | - | |||||||
| Other income, net | (161 | ) | (4,992 | ) | (9,685 | ) | (16,761 | ) | ||||
| Non-GAAP Adjusted EBITDA | $ | 110,851 | $ | 112,673 | $ | 433,019 | $ | 419,010 | ||||
| Adjusted EBITDA Margin | 20.3 | % | 21.0 | % | 20.8 | % | 21.6 | % | ||||
| 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 and year ended April 30, 2022 is<br> preliminary and subject to change prior to the filing of our upcoming Annual Report on Form 10-K with the Securities and Exchange Commission. |
| JOHN WILEY & SONS, INC. | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| SUPPLEMENTARY INFORMATION (1) | |||||||||||
| SEGMENT RESULTS | |||||||||||
| (in thousands) | |||||||||||
| (unaudited) | |||||||||||
| % Change | |||||||||||
| Favorable (Unfavorable) | |||||||||||
| 2021 | Reported | Constant<br><br> <br>Currency | |||||||||
| Research Publishing & Platforms: | |||||||||||
| Revenue, net | |||||||||||
| Research Publishing | 281,907 | $ | 272,030 | 4 | % | 6 | % | ||||
| Research Platforms | 16,185 | 11,325 | 43 | % | 44 | % | |||||
| Total Revenue, net | 298,092 | $ | 283,355 | 5 | % | 8 | % | ||||
| Contribution to Profit | 76,985 | $ | 68,371 | 13 | % | 15 | % | ||||
| Adjustments: | |||||||||||
| Restructuring charges | - | 316 | 100 | % | 100 | % | |||||
| Non-GAAP Adjusted Contribution to Profit | 76,985 | $ | 68,687 | 12 | % | 15 | % | ||||
| Depreciation and amortization | 23,759 | 23,403 | -2 | % | 3 | % | |||||
| Non-GAAP Adjusted EBITDA | 100,744 | $ | 92,090 | 9 | % | 12 | % | ||||
| Adjusted EBITDA margin | 33.8 | % | 32.5 | % | |||||||
| Academic & Professional Learning: | |||||||||||
| Revenue, net | |||||||||||
| Education Publishing (2) | 89,533 | $ | 97,492 | -8 | % | -7 | % | ||||
| Professional Learning | 70,864 | 74,398 | -5 | % | -3 | % | |||||
| Total Revenue, net | 160,397 | $ | 171,890 | -7 | % | -5 | % | ||||
| Contribution to Profit | 28,375 | $ | 26,308 | 8 | % | 9 | % | ||||
| Adjustments: | |||||||||||
| Restructuring (credits) charges | (375 | ) | 1,601 | # | # | ||||||
| Non-GAAP Adjusted Contribution to Profit | 28,000 | $ | 27,909 | 0 | % | 2 | % | ||||
| Depreciation and amortization | 16,011 | 18,240 | 12 | % | 14 | % | |||||
| Non-GAAP Adjusted EBITDA | 44,011 | $ | 46,149 | -5 | % | -3 | % | ||||
| Adjusted EBITDA margin | 27.4 | % | 26.8 | % | |||||||
| Education Services: | |||||||||||
| Revenue, net | |||||||||||
| University Services (3) | 58,566 | $ | 64,452 | -9 | % | -9 | % | ||||
| Talent Development Services (2) (4) | 28,598 | 16,555 | 73 | % | 78 | % | |||||
| Total Revenue, net | 87,164 | $ | 81,007 | 8 | % | 9 | % | ||||
| Contribution to Profit | 1,733 | $ | 6,995 | -75 | % | -76 | % | ||||
| Adjustments: | |||||||||||
| Restructuring charges | 31 | 237 | 87 | % | 87 | % | |||||
| Non-GAAP Adjusted Contribution to Profit | 1,764 | $ | 7,232 | -76 | % | -76 | % | ||||
| Depreciation and amortization | 8,781 | 7,672 | -14 | % | -14 | % | |||||
| Non-GAAP Adjusted EBITDA | 10,545 | $ | 14,904 | -29 | % | -29 | % | ||||
| Adjusted EBITDA margin | 12.1 | % | 18.4 | % | |||||||
| Corporate Expenses: | (48,662 | ) | $ | (50,434 | ) | 4 | % | 0 | % | ||
| Adjustments: | |||||||||||
| Restructuring charges | 78 | 6,343 | 99 | % | 99 | % | |||||
| Non-GAAP Adjusted Contribution to Profit | (48,584 | ) | $ | (44,091 | ) | -10 | % | -14 | % | ||
| Depreciation and amortization | 4,135 | 3,621 | -14 | % | -16 | % | |||||
| Non-GAAP Adjusted EBITDA | (44,449 | ) | $ | (40,470 | ) | -10 | % | -14 | % | ||
| Consolidated Results: | |||||||||||
| Revenue, net | 545,653 | $ | 536,252 | 2 | % | 4 | % | ||||
| Operating Income | 58,431 | $ | 51,240 | 14 | % | 15 | % | ||||
| Adjustments: | |||||||||||
| Restructuring (credits) charges | (266 | ) | 8,497 | # | # | ||||||
| Non-GAAP Adjusted Operating Income | 58,165 | $ | 59,737 | -3 | % | -2 | % | ||||
| Depreciation and amortization | 52,686 | 52,936 | 0 | % | 2 | % | |||||
| Non-GAAP Adjusted EBITDA | 110,851 | $ | 112,673 | -2 | % | 0 | % | ||||
| Adjusted EBITDA margin | 20.3 | % | 21.0 | % | |||||||
| Notes: | |||||||||||
| (1) The supplementary information included in this press release for the three months and year ended April 30, 2022 is preliminary and subject<br> to change prior to the filing of our upcoming Annual Report on Form 10-K with the Securities and Exchange Commission. | |||||||||||
| (2) In May 2021, we moved the WileyNXT product offering from Academic & Professional Learning – Education Publishing to Education Services<br> – 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 Profit and<br> Adjusted EBITDA for WileyNXT was 1.0 million, (0.2) million, and (0.2) million, respectively, for the three months ended April 30, 2021. The Revenue, Adjusted Contribution to Profit and Adjusted EBITDA for WileyNXT was 2.7 million,<br> (0.7) million, and (0.7) million, respectively, for the year ended April 30, 2021. 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)^ | ||||||||||||
| SEGMENT RESULTS | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| % Change | ||||||||||||
| Year Ended April 30, | Favorable (Unfavorable) | |||||||||||
| 2022 | 2021 | Reported | Constant<br><br> <br>Currency | |||||||||
| Research Publishing & Platforms: | ||||||||||||
| Revenue, net | ||||||||||||
| Research Publishing | $ | 1,057,022 | $ | 972,512 | 9 | % | 8 | % | ||||
| Research Platforms | 54,321 | 42,837 | 27 | % | 27 | % | ||||||
| Total Revenue, net | $ | 1,111,343 | $ | 1,015,349 | 9 | % | 9 | % | ||||
| Contribution to Profit | $ | 294,989 | $ | 273,059 | 8 | % | 9 | % | ||||
| Adjustments: | ||||||||||||
| Restructuring charges (credits) | 238 | (36 | ) | # | # | |||||||
| Non-GAAP Adjusted Contribution to Profit | $ | 295,227 | $ | 273,023 | 8 | % | 9 | % | ||||
| Depreciation and amortization | 94,899 | 83,866 | -13 | % | -13 | % | ||||||
| Non-GAAP Adjusted EBITDA | $ | 390,126 | $ | 356,889 | 9 | % | 10 | % | ||||
| Adjusted EBITDA margin | 35.1 | % | 35.1 | % | ||||||||
| Academic & Professional Learning: | ||||||||||||
| Revenue, net | ||||||||||||
| Education Publishing ^(2)^ | $ | 349,992 | $ | 361,194 | -3 | % | -4 | % | ||||
| Professional Learning | 296,831 | 280,667 | 6 | % | 6 | % | ||||||
| Total Revenue, net | $ | 646,823 | $ | 641,861 | 1 | % | 1 | % | ||||
| Contribution to Profit | $ | 112,372 | $ | 88,860 | 26 | % | 26 | % | ||||
| Adjustments: | ||||||||||||
| Restructuring (credits) charges | (455 | ) | 3,503 | # | # | |||||||
| Non-GAAP Adjusted Contribution to Profit | $ | 111,917 | $ | 92,363 | 21 | % | 20 | % | ||||
| Depreciation and amortization | 69,561 | 71,997 | 3 | % | 3 | % | ||||||
| Non-GAAP Adjusted EBITDA | $ | 181,478 | $ | 164,360 | 10 | % | 10 | % | ||||
| Adjusted EBITDA margin | 28.1 | % | 25.6 | % | ||||||||
| Education Services: | ||||||||||||
| Revenue, net | ||||||||||||
| University Services ^(3)^ | $ | 226,131 | $ | 227,700 | -1 | % | -1 | % | ||||
| Talent Development Services ^(2)(4)^ | 98,631 | 56,591 | 74 | % | 72 | % | ||||||
| Total Revenue, net | $ | 324,762 | $ | 284,291 | 14 | % | 14 | % | ||||
| Contribution to Profit | $ | 3,281 | $ | 19,957 | -84 | % | -84 | % | ||||
| Adjustments: | ||||||||||||
| Restructuring charges | 8 | 531 | 98 | % | 98 | % | ||||||
| Non-GAAP Adjusted Contribution to Profit | $ | 3,289 | $ | 20,488 | -84 | % | -85 | % | ||||
| Depreciation and amortization | 34,157 | 29,654 | -15 | % | -15 | % | ||||||
| Non-GAAP Adjusted EBITDA | $ | 37,446 | $ | 50,142 | -25 | % | -26 | % | ||||
| Adjusted EBITDA margin | 11.5 | % | 17.6 | % | ||||||||
| Corporate Expenses: | $ | (191,366 | ) | $ | (196,365 | ) | 3 | % | 2 | % | ||
| Adjustments: | ||||||||||||
| Restructuring (credits) charges | (1,218 | ) | 29,312 | # | # | |||||||
| Non-GAAP Adjusted Contribution to Profit | $ | (192,584 | ) | $ | (167,053 | ) | -15 | % | -16 | % | ||
| Depreciation and amortization | 16,553 | 14,672 | -13 | % | -13 | % | ||||||
| Non-GAAP Adjusted EBITDA | $ | (176,031 | ) | $ | (152,381 | ) | -16 | % | -16 | % | ||
| Consolidated Results: | ||||||||||||
| Revenue, net | $ | 2,082,928 | $ | 1,941,501 | 7 | % | 7 | % | ||||
| Operating Income | $ | 219,276 | $ | 185,511 | 18 | % | 18 | % | ||||
| Adjustments: | ||||||||||||
| Restructuring (credits) charges | (1,427 | ) | 33,310 | # | # | |||||||
| Non-GAAP Adjusted Operating Income | $ | 217,849 | $ | 218,821 | 0 | % | -1 | % | ||||
| Depreciation and amortization | 215,170 | 200,189 | -7 | % | -7 | % | ||||||
| Non-GAAP Adjusted EBITDA | $ | 433,019 | $ | 419,010 | 3 | % | 3 | % | ||||
| Adjusted EBITDA margin | 20.8 | % | 21.6 | % | ||||||||
| # Variance greater than 100% |
| JOHN WILEY & SONS, INC. | ||||
|---|---|---|---|---|
| SUPPLEMENTARY INFORMATION ^(1)^ | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||
| (in thousands) | ||||
| (unaudited) | ||||
| April 30, | April 30, | |||
| 2022 | 2021 | |||
| Assets: | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 100,397 | $ | 93,795 |
| Accounts receivable, net | 331,960 | 311,571 | ||
| Inventories, net | 36,585 | 42,538 | ||
| Prepaid expenses and other current assets | 81,924 | 78,393 | ||
| Total current assets | 550,866 | 526,297 | ||
| Technology, property and equipment, net | 271,572 | 282,270 | ||
| Intangible assets, net | 931,429 | 1,015,302 | ||
| Goodwill | 1,302,142 | 1,304,340 | ||
| Operating lease right-of-use assets | 111,719 | 121,430 | ||
| Other non-current assets | 193,967 | 196,800 | ||
| Total assets | $ | 3,361,695 | $ | 3,446,439 |
| Liabilities and shareholders' equity: | ||||
| Current liabilities | ||||
| Accounts payable | $ | 77,438 | $ | 95,791 |
| Accrued royalties | 101,596 | 78,582 | ||
| Short-term portion of long-term debt | 18,750 | 12,500 | ||
| Contract liabilities | 538,126 | 545,425 | ||
| Accrued employment costs | 117,121 | 144,744 | ||
| Short-term portion of operating lease liabilities | 20,576 | 22,440 | ||
| Other accrued liabilities | 95,812 | 89,490 | ||
| Total current liabilities | 969,419 | 988,972 | ||
| Long-term debt | 768,277 | 809,088 | ||
| Accrued pension liability | 78,622 | 146,247 | ||
| Deferred income tax liabilities | 180,065 | 172,903 | ||
| Operating lease liabilities | 132,541 | 145,832 | ||
| Other long-term liabilities | 90,502 | 92,106 | ||
| Total liabilities | 2,219,426 | 2,355,148 | ||
| Shareholders' equity | 1,142,269 | 1,091,291 | ||
| Total liabilities and shareholders' equity | $ | 3,361,695 | $ | 3,446,439 |
| Notes: | ||||
| (1) The supplementary information included in this press release for April 30, 2022 is preliminary and subject to change prior to the filing<br> of our upcoming Annual Report on Form 10-K with the Securities and Exchange Commission. |
| JOHN WILEY & SONS, INC. | ||||||
|---|---|---|---|---|---|---|
| SUPPLEMENTARY INFORMATION^(1)^ | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (in thousands) | ||||||
| (unaudited) | ||||||
| Year Ended | ||||||
| April 30, | ||||||
| 2022 | 2021 | |||||
| Operating activities: | ||||||
| Net income | $ | 148,309 | $ | 148,256 | ||
| Amortization of intangible assets | 84,836 | 74,685 | ||||
| Amortization of product development assets | 35,162 | 34,365 | ||||
| Depreciation and amortization of technology, property, and equipment | 95,172 | 91,139 | ||||
| Other noncash charges | 80,050 | 111,382 | ||||
| Net change in operating assets and liabilities | (104,429 | ) | (99,904 | ) | ||
| Net cash provided by operating activities | 339,100 | 359,923 | ||||
| Investing activities: | ||||||
| Additions to technology, property, and equipment | (88,843 | ) | (77,407 | ) | ||
| Product development spending | (27,015 | ) | (25,954 | ) | ||
| Businesses acquired in purchase transactions, net of cash acquired | (75,703 | ) | (299,942 | ) | ||
| Proceeds related to the sale of certain assets | 3,375 | - | ||||
| Acquisitions of publication rights and other | (5,838 | ) | (29,851 | ) | ||
| Net cash used in investing activities | (194,024 | ) | (433,154 | ) | ||
| Financing activities: | ||||||
| Net debt (repayments) borrowings | (10,996 | ) | 30,653 | |||
| Cash dividends | (77,205 | ) | (76,938 | ) | ||
| Purchases of treasury shares | (30,000 | ) | (15,765 | ) | ||
| Other | (13,437 | ) | 14,964 | |||
| Net cash used in financing activities | (131,638 | ) | (47,086 | ) | ||
| Effects of exchange rate changes on cash, cash equivalents and restricted cash | (7,070 | ) | 11,629 | |||
| Change in cash, cash equivalents and restricted cash for period | 6,368 | (108,688 | ) | |||
| Cash, cash equivalents and restricted cash - beginning | 94,359 | 203,047 | ||||
| Cash, cash equivalents and restricted cash - ending | $ | 100,727 | $ | 94,359 | ||
| CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT DEVELOPMENT SPENDING ^(2)^ | ||||||
| Year Ended | ||||||
| April 30, | ||||||
| 2022 | 2021 | |||||
| Net cash provided by operating activities | $ | 339,100 | $ | 359,923 | ||
| Less: Additions to technology, property, and equipment | (88,843 | ) | (77,407 | ) | ||
| Less: Product development spending | (27,015 | ) | (25,954 | ) | ||
| Free cash flow less product development spending | $ | 223,242 | $ | 256,562 | ||
| Notes: | ||||||
| (1) The supplementary information included in this press release for the year ended April 30, 2022 is preliminary and subject to change<br> prior to the filing of our upcoming Annual Report on Form 10-K with the Securities and Exchange Commission. | ||||||
| (2) See Explanation of Usage of Non-GAAP Performance Measures included in this supplemental information. |
| JOHN WILEY & SONS, INC. |
|---|
| EXPLANATION OF USAGE OF NON-GAAP PERFORMANCE MEASURES |
| In this earnings release and supplemental information, management may present the following non-GAAP performance measures: |
| • Adjusted Earnings Per Share (Adjusted EPS); |
| • Free Cash Flow less Product Development Spending; |
| • Adjusted Contribution to Profit and margin; |
| • Adjusted Operating Income and margin; |
| • Adjusted Income Before Taxes; |
| • Adjusted Income Tax Provision; |
| • Adjusted Effective Tax Rate; |
| • EBITDA, Adjusted EBITDA and margin; |
| • Organic revenue; and |
| • Results on a constant currency basis. |
| Management uses these non-GAAP performance measures as supplemental indicators of our operating performance and financial position as<br> 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<br> 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<br> 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 Operating Income, Adjusted Income Before Taxes, Adjusted Income Tax Provision, Adjusted Effective Tax Rate, 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, we have historically provided these or similar non-GAAP performance measures and understand that some investors and<br> 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,<br> 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<br> performance to our investors due to the comprehensive nature of our disclosures. |
| We have not provided our 2023 outlook for the most directly comparable US GAAP financial measures, as they are not available without<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-GAAP financial<br> 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. |
June 15, 2022 Fourth Quarter and Fiscal 2022 Earnings Review Brian Napack, President and CEO Christina Van Tassell, EVP and CFO
SAFE HARBOR STATEMENT This 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 2023 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 MEASURES In 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; and Results 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 2023 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.
3 $2.08B Revenue 83% Digital & Services $433M Adjusted EBITDA 58% Recurring Revenue* $223M Free Cash Flow 28 Years Dividend Increases *Recurring revenue is revenue that is contractually obligated or set to recur with a high degree of certainty
Research Publishing Research Solutions Education Products Education Services Cross the divide to lead the transition to open research Bridge the gap to connect education to career outcomes Leader in Scientific Research & Career-Connected Education
Fiscal 2022 Review Metric (Millions, ex-EPS) FY22 Outlook FY22 Reported FY22 Growth* FY20-FY22 CAGR* Revenue $2,070 to $2,100 $2,083 +7% +7% Adj. EBITDA $415 to $435 $433 +3% +10% Adj. EPS** $4.00 to $4.25 $4.16 +4% +12% Free Cash Flow** $200 to $220 $223 -13%# +14% Delivered on outlook even with post-COVID, market-related challenges in higher education (US enrollment declines) Materially improved our organic revenue growth profile, driven by Research and Talent Development Earnings growth muted by planned strategic and operational investments and challenges in higher education Drove solid Fiscal 2020-2022 performance across all metrics Surpassed $2B in revenue for the first time ever *As reported (including currency impact and acquisitions) **GAAP EPS of $2.62 vs. $2.63 in Fiscal 2021 and Cash From Operations of $339M vs. $360M in Fiscal 2021 #FY22 Free Cash Flow change due to prior year one-time favorable items, including cash tax refund and timing of higher incentive comp ^
Fiscal 2022: Leading Transition to Open Research FY22 Commitment Outcomes Publish more research to meet global demand 7% growth in output. Down 3% organically vs. COVID surge; 2-year CAGR +6%; 19% growth in pure OA output (excluding Hindawi); pricing power strong Drive Hindawi integration and revenue synergies Integration complete; 36% growth in Hindawi publishing output; strong double-digit growth in revenue and exceptional profitability Scale offerings for societiesand corporations Platforms +8%; Corporate +16%; Solutions expanded via multiple acquisitions; 36 new Solutions partners; 16% now subscribe to more than one Wiley service Expand publishing capacity and drive automation 50% of rejected articles now offered a Wiley referral, up from 33% in FY21; Material improvement in publishing cycle time
FY22 Commitment Outcomes Expand online degree programs and drive online enrollment 5 universities signed, 3 not renewed; 81 online degree programs added Online enrollment growth (+1%) slowed due to strong labor market Expand student acquisition capabilities Acquired XYZ Media to drive enrollment and reduce student acquisition costs Generates approximately 140K qualified student leads per year universities Scale digital content and courseware Digital content revenue +6%; zyBooks courseware +15% zyBooks now in 903 institutions, up from 855 Expand corporate services pipeline and relationships 19 corporate clients signed; new industry verticals and upskill programs IT placements with existing clients up 112%; revenue growth 70%+ Fiscal 2022: Connecting Education to Career Outcomes
Fiscal 2022: Driving Impact and ESG Progress America’s Most Trusted Companies; Most Trusted Company in Media Rated Low Risk; ESG Regional Top Rated Driving real-world impact across multiple SDGs, including Climate Action, Reducing Inequalities, and Quality Education Drive real-world impact in line with UN Global Compact √ Drive CarbonNeutral® certification across our Global Operations; 100% renewable energy through green tariffs and energy attribute certificates; progress toward science-based targets √ Drive DEI initiatives and disclose diversity metrics √ Drive strong ESG ratings from third party assessors √
Performance Financial Position Outlook
Fourth Quarter 2022 Summary Revenue* +4% $546M GAAP EPS +4% $0.76 Adj. EPS -6% $1.08 Adj. EBITDA Flat $111M All variances at constant currency except GAAP EPS *Q4 organic revenue at CC +2% Q4 Summary Strong continued momentum in open research, research partner solutions, corporate talent development, and corporate training offsetting market-related challenges in University Services, Education Publishing and trade publishing Earnings performance due to revenue performance and second half investments in Research and Talent Development growth initiatives
Research Publishing & Platforms (millions) Q4 2022 Change Change CC Research Publishing $282 4% 6% Research Platforms $16 43% 44% TOTAL REVENUE $298 5% 8% ADJUSTED EBITDA $101 12% ADJ. EBITDA MARGIN 34% FY 2022 Change Change CC $1,057 9% 8% $54 27% 27% $1,111 9% 9% $390 10% 35% Full Year Summary Strong performance driven by open access, platforms, and corporate solutions Continued momentum for transformational, multi-year ‘read and publish’ agreements, with 27 signed across regions; 35% of traditional subscription business now successfully migrated to new multi-year model Research Solutions buildout accelerated by multiple acquisitions; strong momentum in signing up new partners and upselling existing partners Profit growth driven by higher revenue; 35% Adj. EBITDA margin even with prior year 53% Share of Total Wiley Revenue 35% Adj. EBITDA Margin Revenue at constant currency and excluding acquisitions +5% FY22 and +6% Q4
Academic & Professional Learning (millions) Q4 2022 Change Change CC Education Publishing $89 (8%) (7%) Professional Learning $71 (5%) (3%) TOTAL REVENUE $160 (7%) (5%) ADJUSTED EBITDA $44 (3%) ADJ. EBITDA MARGIN 27% FY 2022 Change Change CC $350 (3%) (4%) $297 6% 6% $647 1% 1% $181 10% 28% 31% Share of Total Wiley Revenue 28% Adj. EBITDA Margin Full Year Summary Education Publishing decline mainly from lower US enrollment and an unfavorable comparison to prior year digital surge; digital content +6%; zyBooks courseware +15%; print –9% Professional Learning growth due to continued strong performance in corporate training (back to pre-COVID levels) and growth in trade publishing Adjusted EBITDA growth driven by revenue growth and lower employee costs; Adjusted EBITDA margin of 28%, up from prior year margin of 26%
Education Services (millions) Q4 2022 Change Change CC University Services $58 (9%) (9%) Talent Development $29 73% 78% TOTAL REVENUE $87 8% 9% ADJUSTED EBITDA $11 (29%) ADJ. EBITDA MARGIN 12% FY 2022 Change Change CC $226 (1%) (1%) $99 74% 72% $325 14% 14% $37 (26%) 12% 16% Share of Total Wiley Revenue 12% Adj. EBITDA Margin Full Year Summary Signed 19 new corporate clients across industry verticals (5 signed in Q4) and grew IT talent placements by 112%. Mthree rebranded to Wiley Edge. Margin decline from investments to drive placement growth and expand corporate client relationships; Adjusted EBITDA margin of 12% down from 18% in the prior year University Services decline reflects market-wide enrollment challenges (+1% for FY22 vs. +14% in prior year) and easing of pandemic tailwinds Signed 5 new university partners (4 in Q4) and added 81 new programs (23 in Q4); 68 total partners at year end, up from 66 Revenue at constant currency and excluding acquisitions +12% FY22 and +6% Q4
Strong Cash Flow and Balance Sheet Free Cash Flow millions Net Debt to EBITDA $173 $257* $223 1.6 1.7 1.6 *elevated by $21M tax refund and lower capex spend due to COVID
Capital Allocation Item FY22 Highlights FY20 FY21 FY22 Capex Research: Automation and Platform development Education: Courseware development Corporate: Backoffice systems $115 $103 $116 Acquisitions J&J Editorial (Research) Knowledge Unlatched (Research) eJournal Press (Research) XYZ Media (Education) $230 $300 $76 Dividends 28th consecutive annual raise; 2.6% current yield; 30% payout ratio $76.7 $76.9 $77.2 Repurchases $197M remaining in current program $47 $16 $30 Fiscal 2023 Capex projected to be $115-$125M focused on development of new products and digital commerce platform Targeted M&A strategy focused on expanding journal portfolio, research solutions offerings, and corporate talent development capabilities Annual dividend review in late June 2022
Operational Excellence Update Restructuring Targeted reduction to generate an approximate $19-$21M charge in Q1, to also include real estate optimization Expected to yield approximately $30-$35M in run rate savings ($20-$25M in Fiscal 23, already reflected in current outlook) Real Estate Optimization Wiley benefitting from hybrid workforce model globally Existing office footprint reduced by 18% since spring 2020, including four offices this quarter Operational Effectiveness and Simplification Process re-engineering, standardization and automation ongoing Additional cost savings opportunities to be identified throughout the year
Fiscal 2023: Outlook Metric (Millions, except EPS) Fiscal 2022* Fiscal 2023 Outlook* At Constant Currency FX Impact** Fiscal 2023 Outlook^ At Spot Rates Revenue $2,083 $2,175 to $2,215 ($75) $2,100 to $2,140 Adjusted EBITDA $433 $425 to $450 ($25) $400 to $425 Adjusted EPS $4.16 $3.70 to $4.05 ($0.30) $3.40 to $3.75 Free Cash Flow $223 $210 to $235 ($25) $185 to $210 At constant currency Revenue: mid-single digit growth mainly driven by Research and Education Services EBITDA: higher revenue partially offset by higher employee costs and targeted growth investments EPS: impacted by higher interest expense, higher tax expense, and lower pension income (combined -$0.35) FCF: positive cash earnings and lower incentive payouts offset by higher cash taxes, interest and capex *Based on Fiscal 2022 average rates of 1.15 euro and 1.36 British pound **Variance between Fiscal 2022 average rates and spot rates as of June 10: 1.06 euro and 1.24 British pound ^Fiscal 2023 outlook at spot rates as of June 10
Fiscal 2023: Driving Growth and Optimization 18 Driving solid organic revenue growth through consistent strategies aligned with market trends Prioritizing reinvestment in Research Publishing & Solutions, and Corporate Talent Development Accelerating operational excellence initiatives and focusing on margin expansion beyond Fiscal 2023 Balancing capital allocation for profitable growth investments and return to shareholders Company to share long range financial targets at Fiscal 23 Investor Day
Fiscal 2023: Key Priorities Education Drive publishing growth to meet global demand Extend transformational agreements globally Drive growth and go-to-market in Research Solutions Continue to streamline publishing operations Expand corporate client base for talent development Drive university partnerships and programs Drive differentiated courseware offerings Drive efficiency gains across Ed Services and APL Research
Key Takeaways Delivered on Fiscal 2022 outlook for revenue, earnings and cash flow Driving solid organic revenue growth from positive market dynamics in key areas Favorable long-term growth trends continuing in scientific research and career-connected education Accelerating operational excellence initiatives and focusing on margin expansion beyond Fiscal 2023 Strong balance sheet and cash flow enabling balanced capital allocation, including driving profitable growth and rewarding long term shareholders
Thank you for joining us Investor website at https://investors.wiley.com/ Q1 2023 Earnings Call – September 2022 Contact us for follow-up at: 201.748.6874 or brian.campbell@wiley.com
Appendix – Reconciliation of US GAAP to Non-GAAP EPS See accompanying notes on following page
Appendix – Reconciliation of US GAAP to Non-GAAP EPS
Appendix – Reconciliation of Net Income to Adjusted EBITDA