Wiley Reports First Quarter 2024 Results
- Underlying strength and momentum returning in Research
- Wiley reaffirms Fiscal 2024 outlook
- Revenue decline of 7% in Q1
- Operating loss of -$16 million in Q1
- Adjusted revenue decline of 8% at constant currency
-
GAAP Results: Revenue of
(-$451 million 7% ), Operating loss of - (+$16 million 4% ), and EPS loss of - ($1.67 - ). GAAP earnings impacted by impairment charges totalling$1.35 , including non-cash goodwill and assets held-for-sale impairment and loss on sale of a business.$103 million -
Adjusted Results at Constant Currency (excluding Held for Sale or Sold segment results): Adjusted Revenue of
(-$367 million 8% ), Adjusted EBITDA of (-$60 million 10% ), and Adjusted EPS of (-$0.27 37% ).
FISCAL YEAR 2024 TRANSITION
- Wiley recently realigned its organization to focus on its core strengths in research, academic, and professional publishing, improve profit and performance, and drive greater operating and capital efficiency.
- In June of 2023, Wiley announced that it was divesting University Services, Wiley Edge, and CrossKnowledge. These businesses are currently reported in Held for Sale or Sold segment.
- Wiley is rightsizing its cost structure to reflect smaller revenue base and a more narrowly focused company.
- The benefits of these portfolio and restructuring actions are expected to be realized in Fiscal 2025 and Fiscal 2026.
MANAGEMENT COMMENTARY
“Our Q1 performance was as expected as we continue to execute on our plans and position Wiley for the future,” said Brian Napack, President and CEO. “While Research was down due to an unusual publishing pause in the second half of last year, we are seeing underlying strength and momentum returning, including growing article volumes, higher journal impact scores, and new partner signings. We are making steady progress on our transition and recently streamlined Wiley into one focused, market-facing team to better leverage our collective strength and drive operating leverage.”
FINANCIAL PERFORMANCE
See accompanying financial tables for the First Quarter 2024. For GAAP purposes, Wiley’s reporting structure consists of three segments: (1) Research, (2) Learning, and (3) Held for Sale or Sold. Research is unchanged with reporting lines of Research Publishing and Research Solutions. Learning includes reporting lines of Academic (education publishing) and Professional (professional publishing and assessments).
Research
-
Revenue of
was down$258 million 6% , or7% at constant currency, mainly due to the Hindawi publishing pause and macro headwinds impacting our corporate advertising and recruitment offerings. This offset continued strong growth in our core open access publishing program. Excluding Hindawi, revenue was flat. -
Adjusted EBITDA of
was down$77 million 18% at constant currency due to the Hindawi publishing pause. Adjusted EBITDA margin for the quarter was29.8% compared to33.8% in the prior year period. Excluding Hindawi, Adjusted EBITDA was up modestly.
Learning
-
Revenue of
was down$109 million 9% as reported and at constant currency due to lower print sales in a seasonally light quarter for academic publishing, offsetting solid growth in assessments. -
Adjusted EBITDA of
was up$21 million 19% as reported and at constant currency mainly due to restructuring savings. Adjusted EBITDA margin for the quarter was19.4% compared to14.9% in the prior year period.
Businesses Held for Sale or Sold
-
Revenue of
was down$84 million 10% on a reported and constant currency basis driven by declines in Wiley Edge (Talent Development) and CrossKnowledge, and the disposal of test prep and advancement courses lines. Adjusted EBITDA of is up from a$6 million loss in the prior year.$2 million
Corporate Expenses
-
Corporate Expenses of
declined$49 million 24% due to restructuring savings and lower occupancy costs. Adjusted Corporate Expenses (Adjusted EBITDA) of declined$38 million 15% .
EPS
-
GAAP EPS loss of
compared to a loss of$1.67 in the prior year period due to (1) non-cash goodwill impairment and (2) impairment of held-for-sale assets and a loss on the sale of a business totalling$0.32 .$103 million -
Adjusted EPS excluding businesses held for sale or sold of
was down$0.27 37% primarily due to higher interest expense and lower Adjusted Operating Income.
Balance Sheet, Cash Flow, and Capital Allocation
- Net Debt-to-EBITDA Ratio (Trailing Twelve Months) at quarter end was 1.9x compared to 2.1x at prior year end.
-
Net Cash Used in Operating Activities was a use of
compared to a use of$82 million in the prior year period due to reduced incentive compensation. Note, Wiley’s regular use of cash in the first half of the fiscal year is driven by the timing of cash collections for annual journal subscriptions, which are concentrated in Q3 and Q4.$90 million -
Free Cash Flow less Product Development Spending was a use of
compared to a use of$106 million . Capex was essentially flat. Note, Wiley does not provide an adjusted free cash flow metric; results related to held for sale or sold businesses are included for the period owned.$114 million -
Returns to Shareholders: The Company raised its dividend for the 30th consecutive year in June. For the quarter, Wiley allocated
toward dividends and$19 million toward repurchasing 301,000 shares at an average cost per share of$10 million . This compares to 212,000 shares repurchased in the prior year period. There were no material acquisitions in the quarter.$33.25
FISCAL YEAR 2024 TRANSITION YEAR OUTLOOK
Wiley is reaffirming its Fiscal 2024 outlook. The outlook excludes businesses held for sale or sold: University Services, Wiley Edge (Talent Development), and CrossKnowledge. Collectively, these businesses generated
Metric ($millions, except EPS) |
Fiscal 2023
|
Fiscal 2023
|
Fiscal 2024 Outlook
|
Adjusted Revenue* |
|
|
|
Research |
|
|
Flat (+ |
Learning |
|
|
Down low single digits |
Adjusted EBITDA* |
|
|
|
Adjusted EPS* |
|
|
|
*Wiley’s Fiscal 2024 outlook (“Adjusted Revenue,” “Adjusted EBITDA,” and “Adjusted EPS”) exclude businesses held for sale, including University Services, Wiley Edge (formerly Talent Development), and CrossKnowledge, as well as those sold in Fiscal 2023: Test Prep and Advancement Courses. |
Fiscal Year 2024 Transition Year Outlook
- Adjusted Revenue - primarily due to the Hindawi special issues publishing pause and lower print demand in Academic. Note, this is a new metric defined as revenue adjusted to exclude businesses held for sale or sold.
- Adjusted EBITDA - primarily due to projected revenue performance, notably Hindawi, and higher employee costs from the combination of an incentive compensation reset and wage inflation. From its portfolio and restructuring actions, the Company expects material margin improvement in Fiscal 2025 and Fiscal 2026.
-
Adjusted EPS - further impacted by
of non-operational items including a higher tax rate ($0.42 - /share), pension expense ($0.21 - /share), and interest expense ($0.11 - /share). Wiley’s higher tax rate is primarily due to a less favorable mix of earnings by country and an increase in the$0.10 UK statutory rate. Wiley froze itsU.S. andU.K. pension programs in 2015, and they are approximately90% funded.
Wiley is not providing a Free Cash Flow outlook at this time due to the uncertainty around the timing of divestitures and the size and scope of restructuring payments.
EARNINGS CONFERENCE CALL
Scheduled for today, September 7 at 10:00 am (ET). Access webcast at Investor Relations at investors.wiley.com, or directly at https://events.q4inc.com/attendee/255554735.
ABOUT WILEY
Wiley is a knowledge company and a global leader in research, publishing, and knowledge solutions. Dedicated to the creation and application of knowledge, Wiley serves the world’s researchers, learners, innovators, and leaders, helping them achieve their goals and solve the world's most important challenges. For more than two centuries, Wiley has been delivering on its timeless mission to unlock human potential. Visit us at Wiley.com. Follow us on Facebook, Twitter, LinkedIn and Instagram.
NON-GAAP FINANCIAL MEASURES
Wiley provides non-GAAP financial measures and performance results such as “Adjusted EPS,” “Adjusted Operating Income,” “Adjusted EBITDA,” “Adjusted CTP,” “Adjusted Income before Taxes,” “Adjusted Income Tax Provision,” “Adjusted Effective Income Tax Rate,” “Free Cash Flow less Product Development Spending,” “organic revenue,” “Adjusted Revenue,” and results on a Constant Currency basis to assess underlying business performance and trends. Management believes non-GAAP financial measures, which exclude the impact of restructuring charges and credits and certain other items, and the impact of acquisitions provide a useful comparable basis to analyze operating results and earnings. See the reconciliations of non-GAAP financial measures and explanations of the uses of non-GAAP measures in the supplementary information. We have not provided our 2024 outlook for the most directly comparable
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements concerning the Company's operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company and are subject to change based on many important factors. Such factors include, but are not limited to: (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company's journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of the Company's educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) the Company's ability to protect its copyrights and other intellectual property worldwide (ix) the ability of the Company to successfully integrate acquired operations and realize expected opportunities; (x) the ability to realize operating savings over time and in fiscal year 2024 in connection with our multiyear Global Restructuring Program and planned dispositions; (xi) the possibility that the divestitures will not be pursued, failure to obtain necessary regulatory approvals or required financing or to satisfy any of the other conditions to planned dispositions; and (xii) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.
CATEGORY: EARNINGS RELEASES
JOHN WILEY & SONS, INC. | ||||||
SUPPLEMENTARY INFORMATION (1)(2) | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS | ||||||
(Dollars in thousands, except per share information) | ||||||
(unaudited) | ||||||
Three Months Ended | ||||||
July 31, | ||||||
|
2023 |
|
2022 |
|||
Revenue, net | $ |
451,013 |
$ |
487,569 |
||
Costs and expenses: | ||||||
Cost of sales |
|
157,101 |
|
174,031 |
||
Operating and administrative expenses |
|
255,801 |
|
282,751 |
||
Impairment of goodwill (3) |
|
26,695 |
|
- |
||
Restructuring and related charges |
|
12,123 |
|
22,441 |
||
Amortization of intangible assets |
|
15,648 |
|
25,311 |
||
Total costs and expenses |
|
467,368 |
|
504,534 |
||
Operating loss |
|
(16,355) |
|
(16,965) |
||
As a % of revenue |
|
- |
|
- |
||
Interest expense |
|
(11,334) |
|
(6,332) |
||
Foreign exchange transaction losses |
|
(1,620) |
|
(616) |
||
Impairment charge related to assets held-for-sale and loss on sale of a business (3) |
|
(75,929) |
|
- |
||
Other (expense) income, net |
|
(1,485) |
|
526 |
||
Loss before taxes |
|
(106,723) |
|
(23,387) |
||
Benefit for income taxes |
|
(14,459) |
|
(5,552) |
||
Effective tax rate |
|
|
|
|
||
Net loss | $ |
(92,264) |
$ |
(17,835) |
||
As a % of revenue |
|
- |
|
- |
||
Loss per share | ||||||
Basic | $ |
(1.67) |
$ |
(0.32) |
||
Diluted (4) | $ |
(1.67) |
$ |
(0.32) |
||
Weighted average number of common shares outstanding | ||||||
Basic |
|
55,270 |
|
55,736 |
||
Diluted (4) |
|
55,270 |
|
55,736 |
||
Notes: | ||||||
(1) The supplementary information included in this press release for the three months ended July 31, 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. | ||||||
(2) All amounts are approximate due to rounding. | ||||||
(3) As previously announced, we are divesting non-core businesses, including University Services, Wiley Edge, and CrossKnowledge. These dispositions are expected to be completed during fiscal year 2024. As a result, we reorganized our segments and our new structure consists of three reportable segments which includes Research (no change), Learning, and Held for Sale or Sold, as well as a Corporate expense category (no change). As a result of this realignment, we were required to test goodwill for impairment immediately before and after the realignment. Prior to the realignment, we concluded that the fair value of the University Services reporting unit within the Held for Sale or Sold segment was below its carrying value which resulted in a pretax non-cash goodwill impairment of (4) In calculating diluted net loss per common share for the three months ended July 31, 2023 and 2022, our diluted weighted average number of common shares outstanding excludes the effect of unvested restricted stock units and other stock awards as the effect was antidilutive. This occurs when a US GAAP net loss is reported and the effect of using dilutive shares is antidilutive. |
||||||
JOHN WILEY & SONS, INC. | |||||||
SUPPLEMENTARY INFORMATION (1) (2) | |||||||
RECONCILIATION OF US GAAP MEASURES to NON-GAAP MEASURES | |||||||
(unaudited) | |||||||
Reconciliation of US GAAP EPS to Non-GAAP Adjusted EPS | |||||||
Three Months Ended | |||||||
July 31, | |||||||
|
2023 |
|
2022 |
||||
US GAAP Loss Per Share - Diluted | $ |
(1.67) |
$ |
(0.32) |
|||
Adjustments: | |||||||
Impairment of goodwill |
|
0.43 |
|
- |
|||
Restructuring and related charges |
|
0.16 |
|
0.30 |
|||
Foreign exchange (gains) losses on intercompany transactions, including the write off of certain cumulative translation adjustments (3) |
|
- |
|
0.01 |
|||
Amortization of acquired intangible assets (4) |
|
0.23 |
|
0.36 |
|||
Impairment charge related to assets held-for-sale and loss on sale of a business (5) |
|
1.17 |
|
- |
|||
Held for Sale or Sold segment Adjusted Net (Income) Loss (5) |
|
(0.07) |
|
0.10 |
|||
EPS impact of using weighted-average dilutive shares for adjusted EPS calculation (6) |
|
0.02 |
|
0.01 |
|||
Non-GAAP Adjusted Earnings Per Share - Diluted | $ |
0.27 |
$ |
0.46 |
|||
Reconciliation of US GAAP Loss Before Taxes to Non-GAAP Adjusted Income Before Taxes | |||||||
Three Months Ended | |||||||
(amounts in thousands) | July 31, | ||||||
|
2023 |
|
2022 |
||||
US GAAP Loss Before Taxes | $ |
(106,723) |
$ |
(23,387) |
|||
Pretax Impact of Adjustments: | |||||||
Impairment of goodwill |
|
26,695 |
|
- |
|||
Restructuring and related charges |
|
12,123 |
|
22,441 |
|||
Foreign exchange (gains) losses on intercompany transactions, including the write off of certain cumulative translation adjustments (3) |
|
(6) |
|
666 |
|||
Amortization of acquired intangible assets (4) |
|
16,668 |
|
26,385 |
|||
Impairment charge related to assets held-for-sale and loss on sale of a business (5) |
|
75,929 |
|
- |
|||
Held for Sale or Sold segment Adjusted (Income) Loss Before Taxes (5) |
|
(5,034) |
|
7,594 |
|||
Non-GAAP Adjusted Income Before Taxes | $ |
19,652 |
$ |
33,699 |
|||
Reconciliation of US GAAP Income Tax Benefit to Non-GAAP Adjusted Income Tax Provision, including our US GAAP Effective Tax Rate and our Non-GAAP Adjusted Effective Tax Rate | |||||||
US GAAP Income Tax Benefit | $ |
(14,459) |
$ |
(5,552) |
|||
Income Tax Impact of Adjustments (7) | |||||||
Impairment of goodwill |
|
2,697 |
|
- |
|||
Restructuring and related charges |
|
2,936 |
|
5,517 |
|||
Foreign exchange (gains) losses on intercompany transactions, including the write off of certain cumulative translation adjustments (3) |
|
(34) |
|
175 |
|||
Amortization of acquired intangible assets (4) |
|
3,873 |
|
5,832 |
|||
Impairment charge related to assets held-for-sale and loss on sale of a business (5) |
|
10,660 |
|
- |
|||
Held for Sale or Sold segment Adjusted Tax (Provision) Benefit (5) |
|
(996) |
|
1,569 |
|||
Non-GAAP Adjusted Income Tax Provision | $ |
4,677 |
$ |
7,541 |
|||
US GAAP Effective Tax Rate |
|
|
|
|
|||
Non-GAAP Adjusted Effective Tax Rate |
|
|
|
|
|||
Notes: | |||||||
(1) See Explanation of Usage of Non-GAAP Performance Measures included in this supplementary information for additional details on the reasons why management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three months ended July 31, 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. | |||||||
(2) All amounts are approximate due to rounding. | |||||||
(3) In fiscal year 2023 due to the closure of our operations in |
|||||||
(4) Reflects the amortization of intangible assets established on the opening balance sheet for an acquired business. This includes the amortization of intangible assets such as developed technology, customer relationships, tradenames, etc., which is reflected in the "Amortization of intangible assets" line in the Condensed Consolidated Statements of Net Loss. It also includes the amortization of acquired product development assets, which is reflected in Cost of sales in the Condensed Consolidated Statements of Net Loss. | |||||||
(5) We are divesting non-core businesses, including University Services, Wiley Edge, and CrossKnowledge. These three businesses met the held-for-sale criteria and we measured each business at the lower of carrying value or fair value less cost to sell. We recorded a pretax impairment of In the three months ended July 31, 2023, the loss on sale of a business is due to the sale of our Tuition Manager business previously in our Held for Sale or Sold segment, which resulted in a pretax loss of approximately In addition, our Adjusted EPS excludes the Adjusted Net (Income) Loss of our Held for Sale or Sold segment. |
|||||||
(6) Represents the impact of using diluted weighted-average number of common shares outstanding (55.8 million shares and 56.5 million shares for the three months ended July 31, 2023 and 2022, respectively) included in the Non-GAAP Adjusted EPS calculation in order to apply the dilutive impact on adjusted net income due to the effect of unvested restricted stock units and other stock awards. This impact occurs when a US GAAP net loss is reported and the effect of using dilutive shares is antidilutive. | |||||||
(7) For the three months ended July 31, 2023 and 2022, substantially all of the tax impact was from deferred taxes. | |||||||
JOHN WILEY & SONS, INC. | |||||||
SUPPLEMENTARY INFORMATION (1) | |||||||
RECONCILIATION OF US GAAP NET LOSS TO NON-GAAP EBITDA AND ADJUSTED EBITDA | |||||||
(unaudited) | |||||||
Three Months Ended | |||||||
July 31, | |||||||
|
2023 |
|
2022 |
||||
Net Loss | $ |
(92,264) |
$ |
(17,835) |
|||
Interest expense |
|
11,334 |
|
6,332 |
|||
Benefit for income taxes |
|
(14,459) |
|
(5,552) |
|||
Depreciation and amortization |
|
43,728 |
|
58,279 |
|||
Non-GAAP EBITDA |
|
(51,661) |
|
41,224 |
|||
Impairment of goodwill |
|
26,695 |
|
- |
|||
Restructuring and related charges |
|
12,123 |
|
22,441 |
|||
Foreign exchange losses, including the write off of certain cumulative translation adjustments |
|
1,620 |
|
616 |
|||
Impairment charge related to assets held-for-sale and loss on sale of a business |
|
75,929 |
|
- |
|||
Other expense (income), net |
|
1,485 |
|
(526) |
|||
Held for Sale or Sold segment Adjusted EBITDA (2) |
|
(6,521) |
|
2,435 |
|||
Non-GAAP Adjusted EBITDA | $ |
59,670 |
$ |
66,190 |
|||
Adjusted EBITDA Margin |
|
|
|
|
|||
Notes: | |||||||
(1) See Explanation of Usage of Non-GAAP Performance Measures included in this supplementary information for additional details on the reasons why management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three months ended July 31, 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. | |||||||
(2) Our Non-GAAP Adjusted EBITDA excludes the Held for Sale or Sold segment Non-GAAP Adjusted EBITDA. |
JOHN WILEY & SONS, INC. | |||||||||||
SUPPLEMENTARY INFORMATION (1) (2) (3) | |||||||||||
SEGMENT RESULTS | |||||||||||
(in thousands) | |||||||||||
(unaudited) | |||||||||||
% Change | |||||||||||
Three Months Ended July 31, | Favorable (Unfavorable) | ||||||||||
|
2023 |
|
2022 (3) |
Reported |
Constant
|
||||||
Research: | |||||||||||
Revenue, net | |||||||||||
Research Publishing | $ |
223,000 |
$ |
239,523 |
- |
- |
|||||
Research Solutions |
|
34,804 |
|
35,390 |
- |
- |
|||||
Total Revenue, net | $ |
257,804 |
$ |
274,913 |
- |
- |
|||||
Contribution to Profit | $ |
51,580 |
$ |
69,023 |
- |
- |
|||||
Adjustments: | |||||||||||
Restructuring charges |
|
1,947 |
|
81 |
# | # | |||||
Non-GAAP Adjusted Contribution to Profit | $ |
53,527 |
$ |
69,104 |
- |
- |
|||||
Depreciation and amortization |
|
23,212 |
|
23,801 |
|
|
|||||
Non-GAAP Adjusted EBITDA | $ |
76,739 |
$ |
92,905 |
- |
- |
|||||
Adjusted EBITDA margin |
|
|
|
|
|||||||
Learning: | |||||||||||
Revenue, net | |||||||||||
Academic | $ |
48,292 |
$ |
58,748 |
- |
- |
|||||
Professional |
|
61,028 |
|
60,899 |
|
|
|||||
Total Revenue, net | $ |
109,320 |
$ |
119,647 |
- |
- |
|||||
Contribution to Profit | $ |
7,408 |
$ |
610 |
# | # | |||||
Adjustments: | |||||||||||
Restructuring charges |
|
218 |
|
3,131 |
|
|
|||||
Non-GAAP Adjusted Contribution to Profit | $ |
7,626 |
$ |
3,741 |
# | # | |||||
Depreciation and amortization |
|
13,552 |
|
14,055 |
|
|
|||||
Non-GAAP Adjusted EBITDA | $ |
21,178 |
$ |
17,796 |
|
|
|||||
Adjusted EBITDA margin |
|
|
|
|
|||||||
Held for Sale or Sold: | |||||||||||
Total Revenue, net | $ |
83,889 |
$ |
93,009 |
- |
- |
|||||
Contribution to Profit | $ |
(26,234) |
$ |
(22,194) |
- |
- |
|||||
Adjustments: | |||||||||||
Restructuring charges |
|
2,623 |
|
3,492 |
|
|
|||||
Impairment of goodwill |
|
26,695 |
|
- |
# | # | |||||
Accelerated amortization of an intangible asset (4) |
|
- |
|
4,594 |
# | # | |||||
Non-GAAP Adjusted Contribution to Profit | $ |
3,084 |
$ |
(14,108) |
# | # | |||||
Depreciation and amortization |
|
3,437 |
|
11,673 |
|
|
|||||
Non-GAAP Adjusted EBITDA | $ |
6,521 |
$ |
(2,435) |
# | # | |||||
Adjusted EBITDA margin |
|
|
|
- |
|||||||
Corporate Expenses: | $ |
(49,109) |
$ |
(64,404) |
|
|
|||||
Adjustments: | |||||||||||
Restructuring charges |
|
7,335 |
|
15,737 |
|
|
|||||
Non-GAAP Adjusted Contribution to Profit | $ |
(41,774) |
$ |
(48,667) |
|
|
|||||
Depreciation and amortization |
|
3,527 |
|
4,156 |
|
|
|||||
Non-GAAP Adjusted EBITDA | $ |
(38,247) |
$ |
(44,511) |
|
|
|||||
Consolidated Results: | |||||||||||
Revenue, net | $ |
451,013 |
$ |
487,569 |
- |
- |
|||||
Less: Held for Sale or Sold Segment (5) |
|
(83,889) |
|
(93,009) |
- |
- |
|||||
Adjusted Revenue, net | $ |
367,124 |
$ |
394,560 |
- |
- |
|||||
Operating Loss | $ |
(16,355) |
$ |
(16,965) |
- |
- |
|||||
Adjustments: | |||||||||||
Restructuring charges |
|
12,123 |
|
22,441 |
|
|
|||||
Impairment of goodwill |
|
26,695 |
|
- |
# | # | |||||
Accelerated amortization of an intangible asset (4) |
|
- |
|
4,594 |
# | # | |||||
Held for Sale or Sold Segment Adjusted Contribution to Profit (5) |
|
(3,084) |
|
14,108 |
# | # | |||||
Non-GAAP Adjusted Operating Income | $ |
19,379 |
$ |
24,178 |
- |
- |
|||||
Depreciation and amortization |
|
43,728 |
|
53,685 |
|
|
|||||
Less: Held for Sale or Sold Segment depreciation and amortization (5) |
|
(3,437) |
|
(11,673) |
|
|
|||||
Non-GAAP Adjusted EBITDA | $ |
59,670 |
$ |
66,190 |
- |
- |
|||||
Adjusted EBITDA margin |
|
|
|
|
|||||||
Notes: | |||||||||||
(1) The supplementary information included in this press release for the three months ended July 31, 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. | |||||||||||
(2) All amounts are approximate due to rounding. | |||||||||||
(3) As previously announced, in the three months ended July 31, 2023 we changed our reportable segments. Our new segment reporting structure consists of three reportable segments which includes Research (no change), Learning, and Held for Sale or Sold, as well as a Corporate expense category (no change). Prior period segment results have been revised to the new segment presentation. There were no changes to our consolidated financial results. | |||||||||||
(4) On January 1, 2020, Wiley acquired mthree, a talent placement provider that addresses the IT skills gap by finding, training, and placing job-ready technology talent in roles with leading corporations worldwide. Its results of operations are included in our Held for Sale or Sold segment. In late May 2022, Wiley renamed the mthree talent development solution to Wiley Edge and discontinued use of the mthree trademark during the three months ended July 31, 2022. As a result of these actions, we determined that a revision of the useful life was warranted, and the intangible asset was fully amortized over its remaining useful life resulting in accelerated amortization expense of |
|||||||||||
(5) Our Adjusted Revenue, Adjusted Operating Income and Adjusted EBITDA excludes the impact of our Held for Sale or Sold segment Revenue, Adjusted Operating Income or Loss and Adjusted EBITDA results. | |||||||||||
# | Variance greater than |
||||||||||
JOHN WILEY & SONS, INC. | |||||||
SUPPLEMENTARY INFORMATION (1) | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
July 31, | April 30, | ||||||
2023 |
2023 |
||||||
Assets: | |||||||
Current assets | |||||||
Cash and cash equivalents | $ |
75,144 |
$ |
106,714 |
|||
Accounts receivable, net |
|
153,392 |
|
310,121 |
|||
Inventories, net |
|
30,289 |
|
30,733 |
|||
Prepaid expenses and other current assets |
|
79,703 |
|
93,711 |
|||
Current assets held-for-sale (2) |
|
139,250 |
|
- |
|||
Total current assets |
|
477,778 |
|
541,279 |
|||
Technology, property and equipment, net |
|
223,534 |
|
247,149 |
|||
Intangible assets, net |
|
657,093 |
|
854,794 |
|||
Goodwill |
|
1,102,499 |
|
1,204,050 |
|||
Operating lease right-of-use assets |
|
82,415 |
|
91,197 |
|||
Other non-current assets |
|
141,159 |
|
170,341 |
|||
Non-current assets held-for-sale (2) |
|
241,483 |
|
- |
|||
Total assets | $ |
2,925,961 |
$ |
3,108,810 |
|||
Liabilities and shareholders' equity: | |||||||
Current liabilities | |||||||
Accounts payable | $ |
43,713 |
$ |
84,325 |
|||
Accrued royalties |
|
98,690 |
|
113,423 |
|||
Short-term portion of long-term debt |
|
5,000 |
|
5,000 |
|||
Contract liabilities |
|
369,562 |
|
504,695 |
|||
Accrued employment costs |
|
52,307 |
|
80,458 |
|||
Short-term portion of operating lease liabilities |
|
17,869 |
|
19,673 |
|||
Other accrued liabilities |
|
68,541 |
|
87,979 |
|||
Current liabilities held-for-sale (2) |
|
50,257 |
|
- |
|||
Total current liabilities |
|
705,939 |
|
895,553 |
|||
Long-term debt |
|
890,917 |
|
743,292 |
|||
Accrued pension liability |
|
81,367 |
|
86,304 |
|||
Deferred income tax liabilities |
|
109,916 |
|
144,042 |
|||
Operating lease liabilities |
|
106,652 |
|
115,540 |
|||
Other long-term liabilities |
|
78,838 |
|
79,052 |
|||
Long-term liabilities held-for-sale (2) |
|
15,126 |
|
- |
|||
Total liabilities |
|
1,988,755 |
|
2,063,783 |
|||
Shareholders' equity |
|
937,206 |
|
1,045,027 |
|||
Total liabilities and shareholders' equity | $ |
2,925,961 |
$ |
3,108,810 |
|||
Notes: | |||||||
(1) The supplementary information included in this press release for July 31, 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. | |||||||
(2) As previously announced, we are divesting non-core businesses, including University Services, Wiley Edge and CrossKnowlegde. These businesses met the held-for-sale criteria and were measured at the lower of carrying value or fair value less cost to sell. We recorded a pretax impairment of |
|||||||
JOHN WILEY & SONS, INC. | |||||||
SUPPLEMENTARY INFORMATION (1) | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
Three Months Ended | |||||||
July 31, | |||||||
|
2023 |
|
2022 |
||||
Operating activities: | |||||||
Net loss | $ |
(92,264) |
$ |
(17,835) |
|||
Impairment of goodwill |
|
26,695 |
|
- |
|||
Impairment charge related to assets held-for-sale and loss on sale of a business |
|
75,929 |
|
- |
|||
Amortization of intangible assets |
|
15,648 |
|
25,311 |
|||
Amortization of product development assets |
|
6,687 |
|
8,288 |
|||
Depreciation and amortization of technology, property, and equipment |
|
21,393 |
|
24,680 |
|||
Other noncash charges |
|
8,753 |
|
27,714 |
|||
Net change in operating assets and liabilities |
|
(145,176) |
|
(158,097) |
|||
Net cash used in operating activities |
|
(82,335) |
|
(89,939) |
|||
Investing activities: | |||||||
Additions to technology, property, and equipment |
|
(20,086) |
|
(17,923) |
|||
Product development spending |
|
(3,747) |
|
(5,825) |
|||
Businesses acquired in purchase transactions, net of cash acquired |
|
(1,500) |
|
(96) |
|||
Proceeds related to the sale of a business |
|
457 |
|
- |
|||
Acquisitions of publication rights and other |
|
(866) |
|
2,038 |
|||
Net cash used in investing activities |
|
(25,742) |
|
(21,806) |
|||
Financing activities: | |||||||
Net debt borrowings |
|
145,473 |
|
156,873 |
|||
Cash dividends |
|
(19,382) |
|
(19,468) |
|||
Purchases of treasury shares |
|
(10,000) |
|
(10,000) |
|||
Other |
|
(10,277) |
|
(9,416) |
|||
Net cash provided by financing activities |
|
105,814 |
|
117,989 |
|||
Effects of exchange rate changes on cash, cash equivalents and restricted cash |
|
2,257 |
|
(1,985) |
|||
Change in cash, cash equivalents and restricted cash for period |
|
(6) |
|
4,259 |
|||
Cash, cash equivalents and restricted cash - beginning |
|
107,262 |
|
100,727 |
|||
Cash, cash equivalents and restricted cash - ending (2) | $ |
107,256 |
$ |
104,986 |
|||
CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT DEVELOPMENT SPENDING (3) | |||||||
Three Months Ended | |||||||
July 31, | |||||||
|
2023 |
|
2022 |
||||
Net cash used in operating activities | $ |
(82,335) |
$ |
(89,939) |
|||
Less: | Additions to technology, property, and equipment |
|
(20,086) |
|
(17,923) |
||
Less: | Product development spending |
|
(3,747) |
|
(5,825) |
||
Free cash flow less product development spending | $ |
(106,168) |
$ |
(113,687) |
|||
Notes: | |||||||
(1) The supplementary information included in this press release for the three months ended July 31, 2023 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. | |||||||
(2) Cash, cash equivalents and restricted cash as of July 31, 2023 includes held-for-sale cash, cash equivalents and restricted cash of |
|||||||
(3) See Explanation of Usage of Non-GAAP Performance Measures included in this supplemental information. | |||||||
JOHN WILEY & SONS, INC. |
EXPLANATION OF USAGE OF NON-GAAP PERFORMANCE MEASURES |
In this earnings release and supplemental information, management may present the following non-GAAP performance measures: |
· Adjusted Earnings Per Share (Adjusted EPS); |
· Free Cash Flow less Product Development Spending; |
· Adjusted Revenue; |
· Adjusted Contribution to Profit and margin; |
· Adjusted Operating Income and margin; |
· Adjusted Income Before Taxes; |
· Adjusted Income Tax Provision; |
· Adjusted Effective Tax Rate; |
· EBITDA, Adjusted EBITDA and margin; |
· Organic revenue; and |
· Results on a constant currency basis. |
For example:
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230907231263/en/
Investor Contact:
Brian Campbell
201.748.6874
brian.campbell@wiley.com
Source: John Wiley and Sons