Wolters Kluwer 2021 Nine-Month Trading Update
Wolters Kluwer reported a strong performance for the first nine months of 2021, achieving 6% organic revenue growth. This growth is attributed to a rebound in non-recurring revenues, which rose 9% organically. Nine-month adjusted operating profit increased by 14% in constant currencies, while free cash flow surged 30%. The net debt-to-EBITDA ratio improved to 1.5x. The company is on track to complete a €350 million share buyback this year and has plans for an additional €50 million buyback in early 2022. The full-year outlook has been strengthened, anticipating a growth in diluted adjusted EPS in constant currencies.
- 6% organic revenue growth driven by non-recurring revenues up 9%.
- 14% adjusted operating profit increase in constant currencies.
- 30% rise in adjusted free cash flow.
- Net debt-to-EBITDA ratio improved to 1.5x.
- On track for €350 million share buyback in 2021.
- Total revenue growth was muted at 2% due to adverse exchange rates.
- Underlying operating costs increased by 9% in Q3 due to higher hiring costs.
Wolters Kluwer 2021 Nine-Month Trading Update
November 3, 2021 – Wolters Kluwer, a global leader in professional information, software solutions and services, today releases its scheduled 2021 nine-month trading update.
Highlights
- Full-year 2021 outlook increased.
- Nine-month revenues up 6% organically.
- Recurring revenues (
81% of total revenues) up5% organically; non-recurring revenues up9% . - Digital & services revenues (
92% of total revenues) up6% organically; print up5% . - Expert solutions revenues (
54% of total) up6% organically.
- Recurring revenues (
- Nine-month adjusted operating profit up 14% in constant currencies.
- Nine-month adjusted free cash flow up 30% in constant currencies.
- Net-debt-to-EBITDA ratio 1.5x as of September 30, 2021.
- Share buyback 2021: on track to reach €350 million.
- Share buyback 2022: mandate signed to buy back up to €50 million in January and February 2022.
Nancy McKinstry, CEO and Chairman of the Executive Board, commented: “I am pleased to report that in the first nine months of the year, we have seen consistent growth in recurring revenues, led by subscriptions to cloud software and other expert solutions. This performance continued to be enhanced by a sharp post-pandemic rebound in non-recurring revenue streams, against a low base in the prior period. Underlying operating costs increased in the third quarter, as expected, as we invest in recruiting and developing the talent to drive future growth.”
Nine Months to September 30, 2021
Total revenues increased
Digital and services formats grew
Nine-month adjusted operating profit increased
Health: Nine-month revenues increased
Tax & Accounting: Nine-month revenues increased
Governance, Risk & Compliance (GRC): Nine-month revenues increased
Legal & Regulatory: Nine-month revenues were stable in constant currencies due to several small divestitures made in 2020. Organic growth was
Corporate costs declined
Cash Flow and Net Debt
Nine-month adjusted operating cash flow increased
Total net dividends paid to shareholders amounted to
As of September 30, 2021, net debt stood at
Environmental, Social & Governance (ESG)
In August, we completed our first diversity, equity, and inclusion (DE&I) survey, resulting in a baseline quantitative measure of belonging, which indicates the extent to which employees feel they can be authentic and fully accepted at work. The survey highlights several areas of strength and opportunity that will inform our integrated action plan to drive stronger belonging and employee engagement results in 2022.
In September, we commenced our annual all-employee compliance training program, covering general IT and cyber security, data privacy, ethics, and our company values. As of the end of October,
Share Buyback Programs
On February 24, 2021, we announced our intention to repurchase shares for up to
We have also signed a second third-party mandate to execute up to
Both mandates are governed by the limits of relevant laws and regulations (in particular Regulation (EU) 596/2014) and Wolters Kluwer’s Articles of Association. Repurchased shares are added to and held as treasury shares and are either cancelled or held to meet future obligations arising from share-based incentive plans. We remain committed to our anti-dilution policy which aims to offset the dilution caused by our annual incentive share issuance with share repurchases.
In September 2021, we cancelled 5.0 million shares that were held in treasury, as approved by shareholders at the AGM in April 2021. Following this cancellation, the number of issued ordinary shares is currently 262,516,153. As of September 30, 2021, 259.6 million shares were outstanding and 3.0 million shares were held in treasury.
Full-Year 2021 Outlook
We continue to expect all divisions to see a year-on-year improvement in organic growth, partly reflecting a rebound in non-recurring revenue streams. We expect organic growth to moderate in the fourth quarter as trends in print books and other non-recurring revenues reverse or slow. We continue to expect underlying operating costs to rise in the fourth quarter and into next year, as we step up investment and hiring to support growth, and as we partly restore travel, promotion, and other costs that were curtailed during the height of the pandemic. We have started implementing plans for a gradual return to our offices (when and where circumstances allow), with currently some around
Due to better-than-anticipated cash conversion, we now expect adjusted free cash flow to be around
Full-Year 2021 Outlook | |||
Performance indicators | 2021 Guidance | Previous 2021 Guidance | 2020 Actual |
Adjusted operating profit margin | Around | Around | |
Adjusted free cash flow | Around €975 million | | |
ROIC | Around | Around | |
Diluted adjusted EPS | Low double-digit growth | High single-digit growth | |
Guidance for adjusted operating profit margin and ROIC is in reported currencies and assumes an average EUR/USD rate in 2021 of €/ |
If current exchange rates persist, the U.S. dollar rate will have a negative effect on 2021 results reported in euros. In 2020, Wolters Kluwer generated more than
We include restructuring costs in adjusted operating profit. We currently expect that restructuring costs will be in the range of
Capital expenditure is expected to be within our normal range of
Any guidance we provide assumes no additional significant change to the scope of operations. We may make further acquisitions or disposals which can be dilutive to margins and earnings in the near term.
2021 Outlook by Division
Health: We continue to expect organic growth to improve over 2020 levels, despite a reversal in Health Learning, Research & Practice print book trends in the fourth quarter. We now expect the full-year adjusted operating profit margin to improve due to operational gearing and a slower fading of temporary cost savings.
Tax & Accounting: We continue to expect organic growth to improve from 2020 levels and the adjusted operating profit margin to decline due to the absence of one-time benefits, the fading of temporary cost savings, and increased investment to support growth.
Governance, Risk & Compliance: We continue to expect organic growth to improve from 2020 levels, as a rebound in Legal Services transactional revenues is now expected to more than compensate for lower revenues associated with the PPP1. We expect the full-year adjusted operating profit margin to improve on the back of lower restructuring and provisions, despite rising investment.
Legal & Regulatory: We continue to expect the division to return to positive organic growth this year, although the fourth quarter is expected to be negatively affected by the timing of print publications. We expect the adjusted operating profit margin to improve as lower restructuring more than offsets increased investment.
About Wolters Kluwer
Wolters Kluwer (WKL) is a global leader in professional information, software solutions, and services for the healthcare; tax and accounting; governance, risk and compliance; and legal and regulatory sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with technology and services.
Wolters Kluwer reported 2020 annual revenues of
Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt (ADR) program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).
For more information, visit www.wolterskluwer.com, follow us on Twitter, Facebook, LinkedIn, and YouTube.
Financial Calendar
February 23, 2022 Full-Year 2021 Results
March 9, 2022 Publication of 2021 Annual Report and ESG Data Overview
April 21, 2022 Annual General Meeting of Shareholders
April 25, 2022 Ex-dividend date: 2021 final dividend
April 26, 2022 Record date: 2021 final dividend
May 4, 2022 First-Quarter 2022 Trading Update
May 18, 2022 Payment date: 2021 final dividend ordinary shares
May 25, 2022 Payment date: 2021 final dividend ADRs
August 3, 2022 Half-Year 2022 Results
August 30, 2022 Ex-dividend date: 2022 interim dividend
August 31, 2022 Record date: 2022 interim dividend
September 22, 2022 Payment date: 2022 interim dividend
September 29, 2022 Payment date: 2022 interim dividend ADRs
November 2, 2022 Nine-Month 2022 Trading Update
Media Investors/Analysts
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Forward-looking Statements and Other Important Legal Information
This report contains forward-looking statements. These statements may be identified by words such as “expect”, “should”, “could”, “shall” and similar expressions. Wolters Kluwer cautions that such forward-looking statements are qualified by certain risks and uncertainties that could cause actual results and events to differ materially from what is contemplated by the forward-looking statements. Factors which could cause actual results to differ from these forward-looking statements may include, without limitation, general economic conditions; conditions in the markets in which Wolters Kluwer is engaged; conditions created by global pandemics, such as COVID-19; behavior of customers, suppliers, and competitors; technological developments; the implementation and execution of new ICT systems or outsourcing; and legal, tax, and regulatory rules affecting Wolters Kluwer’s businesses, as well as risks related to mergers, acquisitions, and divestments. In addition, financial risks such as currency movements, interest rate fluctuations, liquidity, and credit risks could influence future results. The foregoing list of factors should not be construed as exhaustive. Wolters Kluwer disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Elements of this press release contain or may contain inside information about Wolters Kluwer within the meaning of Article 7(1) of the Market Abuse Regulation (596/2014/EU).
Trademarks referenced are owned by Wolters Kluwer N.V. and its subsidiaries and may be registered in various countries.
1 PPP refers to the U.S. Small Business Association Paycheck Protection Program established by the 2020 U.S. CARES Act. Wolters Kluwer Compliance Solutions (part of Governance, Risk & Compliance) supported its bank customers in lending under this program.
2 EHS/ORM: environmental, health & safety and operational risk management.
3 Excludes the impact of exchange rate movements on intercompany balances, which is included in adjusted net financing costs and which is determined based on period-end spot rates and balances.
4 Guidance for adjusted net financing costs in constant currencies excludes the impact of exchange rate movements on currency hedging and intercompany balances.
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FAQ
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