HOBOKEN, N.J.--(BUSINESS WIRE)--John Wiley & Sons, Inc. (NYSE: JW-A and JW-B), a global leader in
research and education, today announced results for the second quarter
ended October 31, 2018.
SECOND QUARTER 2019 HIGHLIGHTS
-
Reported results (GAAP): Revenue of $449 million (-1% vs. prior year),
Operating Income of $57 million (-29%), and EPS of $0.76 (-27%), with
earnings performance impacted by $10 million in restructuring charges
in the current quarter
-
Non-GAAP results (constant currency): Revenue +1%, Adjusted Operating
Income -10%, and Adjusted EPS -9%, with lower adjusted earnings
performance primarily due to investments in growth initiatives,
including publishing more in Research and driving enrollment growth in
Education Services
-
Acquisition of The Learning House (completed on November 1)
strengthens Wiley’s leadership in the rapidly-growing $10 billion
education services market for universities and corporations
-
Full-year guidance reaffirmed (excluding Learning House acquisition)
FIRST HALF 2019 HIGHLIGHTS
-
Reported results (GAAP): Revenue of $860 million (flat with prior
year), Operating Income of $94 million (flat), and EPS of $1.21 (+1%),
with earnings performance impacted by higher restructuring charges in
prior year
-
Non-GAAP results (constant currency): Revenue flat, Adjusted Operating
Income -16%, and Adjusted EPS -17%, with lower adjusted earnings
performance primarily due to investments in growth initiatives,
including publishing more in Research and driving enrollment growth in
Education Services
-
Calendar Year 2019 society journal publishing net wins +$3 million;
Open Access growth +36%
-
New Education Services partnership agreements signed with Michigan
State University, University of Glasgow, and University of Bath;
long-term partnership extensions signed with Our Lady of the Lake
University (TX) and Saint Mary’s University (MN)
MANAGEMENT COMMENTARY
“We continued to make good progress in the second quarter, with 3%
constant currency growth in Research, fueled by double-digit growth in
Open Access and Atypon, and 9% constant currency growth in our Solutions
segment,” said Brian Napack, Wiley’s President and CEO. “We are
successfully signing high-profile university partners, winning new
research publishing business and growing in important areas such as Open
Access publishing, Corporate Learning, WileyPLUS, Test Prep, and
Professional Assessment. We are also making important progress on our
operational effectiveness and cost reduction initiatives. We are
particularly excited about our acquisition of The Learning House, which
strengthens our leadership position in a rapidly-growing $10 billion
market for tech-enabled services that help universities and corporations
deliver powerful, career-enhancing learning, and expands our education
delivery offerings to include career-enhancing short courses,
certification programs, and continuing education programs.”
FINANCIAL SUMMARY
Wiley provides non-GAAP financial measures and performance results such
as “Adjusted EPS,” “Adjusted Operating Income,” “Adjusted CTP,” “Free
Cash Flow less Product Development Spending,” and results on a Constant
Currency (or “CC”) basis to assess underlying business performance and
trends. Management believes non-GAAP financial measures, which exclude
the impact of restructuring charges and credits and certain other items,
provide for a more comparable basis to analyze operating results and
earnings. See the reconciliations of non-GAAP financial measures and
explanations of the uses of non-GAAP measures in the supplementary
information accompanying this press release.
Second Quarter Results
|
GAAP Measures
Unaudited ($millions except for EPS)
|
|
Q2 2019
|
|
Q2 2018
|
|
Change
|
|
Change
Constant Currency
|
|
Revenue
|
|
$448.6
|
|
$451.7
|
|
(-1%)
|
|
1%
|
|
Operating Income
|
|
$57.5
|
|
$80.8
|
|
(-29%)
|
|
|
|
Diluted EPS
|
|
$0.76
|
|
$1.04
|
|
(-27%)
|
|
|
|
Non-GAAP Measures
|
|
Q2 2019
|
|
Q2 2018
|
|
|
|
Change
Constant Currency
|
|
Adjusted Operating Income
|
|
$67.5
|
|
$79.4
|
|
|
|
(-10%)
|
|
Adjusted EPS
|
|
$0.89
|
|
$1.03
|
|
|
|
(-9%)
|
Wiley recorded foreign currency variances in the quarter of $8.7
million unfavorable in revenue, $3.9 million unfavorable in operating
income, and $0.05 unfavorable in EPS.
-
Revenue reflected steady momentum in Research (0% reported, +3%
CC) and high single-digit growth in Solutions (+8%, +9% CC) offset by
a decline in Publishing (-5%, -3% CC).
-
Research segment results were driven by
double-digit growth in Open Access (+47%, 50% CC) and Atypon
Publishing Technology Services (+17%). Journal Subscriptions were
flat at constant currency.
-
Publishing segment results reflected declines in Education
Publishing (-10%, -8% CC) and STM and Professional Publishing
(-6%, -5% CC), which offset higher revenue in WileyPLUS (+13%,
+14% CC, mostly due to prior-year revenue deferrals for courses
extending across two semesters) and growth in Test Preparation
(+6%, +7% CC).
-
Solutions segment growth was driven by Corporate Learning
(+24%, +28% CC) and Professional Assessment (+9%). Education
Services performance (0%, +1% CC) saw same-school growth (9%)
offset by the termination of certain underperforming partnerships,
as previously reported.
-
GAAP Operating Income decline reflected investment in growth
initiatives and the timing of restructuring charges and credits ($10.0
million charge this period and a $1.4 million credit in prior year),
as well as unfavorable foreign exchange impacts. Adjusted Operating
Income declined mainly due to investment in growth initiatives.
-
Research CTP declined 16% on a reported basis and 7% on an
adjusted basis at constant currency, reflecting higher society
publishing royalties and investments in editorial resources to
support increased journal publishing, as well as investments in
increased sales resources.
-
Publishing CTP declined 6% reported and 2% adjusted at
constant currency due to lower revenue.
-
Solutions CTP declined 4% reported but rose 22% adjusted at
constant currency due to revenue growth and efficiency gains,
offsetting higher investment in Education Services to drive
enrollment growth.
-
Corporate Expenses rose 24% on a reported basis due to
restructuring charges, or 10% on an adjusted basis at constant
currency, primarily due to costs associated with strategic
planning.
-
GAAP EPS performance mainly reflected lower operating income. Adjusted
EPS declined primarily due to investments in growth initiatives.
-
Restructuring Charges: Wiley recorded $10 million of
restructuring charges in the quarter reflecting continued cost
reduction actions across the business. These actions will yield
approximately $15 million in run rate savings commencing in the second
half of fiscal 2020. The charges are primarily related to severance
costs.
First Half Results
|
GAAP Measures
Unaudited ($millions except for EPS)
|
|
1H 2019
|
|
1H 2018
|
|
Change
|
|
Change
“CC”
|
|
Revenue
|
|
$859.5
|
|
$863.2
|
|
0%
|
|
0%
|
|
Operating Income
|
|
$93.6
|
|
$93.4
|
|
0%
|
|
|
|
Diluted EPS
|
|
$1.21
|
|
$1.20
|
|
1%
|
|
|
|
Cash Used by Operating Activities
|
|
($121.1)
|
|
($45.8)
|
|
|
|
|
|
Non-GAAP Measures
|
|
1H 2019
|
|
1H 2018
|
|
Change
|
|
Change
“CC”
|
|
Adjusted Operating Income
|
|
$97.5
|
|
$121.3
|
|
|
|
(-16%)
|
|
Adjusted EPS
|
|
$1.31
|
|
$1.62
|
|
|
|
(-17%)
|
|
Free Cash Flow less Product
Development Spending
|
|
($163.5)
|
|
($117.2)
|
|
(-40%)
|
|
|
Wiley recorded foreign currency variances in the first six months of
$6.3 million unfavorable in revenue, $4.4 million unfavorable in
operating income, and $0.04 unfavorable in EPS
-
Revenue reflected steady performance in Research (0% reported,
+1% CC) and growth in Solutions (+8%) offset by a decline in
Publishing (-5%, -4% CC).
-
Research segment results were driven by
double-digit growth in Open Access (+36%) and Atypon Publishing
Technology Services (+10%), offsetting a decline in Journal
Subscriptions, primarily related to timing of publications.
-
Publishing segment performance primarily reflected a
decline in Education Publishing (-13% reported, -12% CC).
Education Publishing represents approximately 10% of total Wiley
revenue. Modest declines in STM and Professional Publishing (-2%,
-1% CC) offset higher revenue in WileyPLUS (+10%, +11% CC), due in
large part to revenue recognition timing, and growth in Test
Preparation (+2% reported, +3% CC).
-
Solutions segment growth included higher revenue in all
three businesses: Education Services (+5%), Corporate Learning
(+13%), and Professional Assessment (+8%).
-
GAAP Operating Income largely reflected higher restructuring
charges in prior year. Adjusted Operating Income declined
mainly due to investment in growth initiatives.
-
Research CTP declined 11% on a reported basis and 10% on an
adjusted basis at constant currency. Performance reflected higher
society publishing royalties and investments in editorial
resources to support increased journal publishing, as well as
investments in increased sales resources.
-
Publishing CTP rose 15% on a reported basis due to higher
restructuring and impairment charges in the prior year period but
declined 6% on an adjusted basis at constant currency due to lower
revenue.
-
Solutions CTP grew 92% on a reported basis or 47% adjusted
a constant currency due to higher revenue and efficiency gains,
offsetting higher investment in Education Services to drive
enrollment growth.
-
Corporate Expenses decreased 3% on a reported basis due to
higher restructuring charges in the prior year period but
increased 8% on an adjusted basis at constant currency primarily
due to costs associated with strategic planning.
-
GAAP EPS largely reflected higher reported operating income and
lower foreign exchange losses. Adjusted EPS decline was
primarily due to lower adjusted operating income.
-
Net Cash Used in Operating Activities was primarily due to
timing swings in working capital including a delay in billings and
subsequent collections for calendar year 2019 subscriptions and, to a
lesser extent, higher payments for expenses. Free Cash Flow less
Product Development Spending performance was due to higher cash
used in operating activities. Cash flow from operations is a use of
cash in the first half of Wiley’s fiscal year principally due to the
timing of collections for annual journal subscriptions. Capital
expenditures, including Technology, Property, and Equipment and
Product Development Spending, declined $29 million to $42 million due
to the completion of Wiley’s headquarters transformation, the May 2018
implementation of our ERP order-to-cash release for journal
subscriptions, and reporting changes from the adoption of ASC 606.
-
Shareholder Return: In June, Wiley raised its annual dividend
for the 25th consecutive year to $0.33 per quarter (+3%).
In the half, the Company utilized $38 million of cash for dividends
and approximately $25 million for share repurchases with an average
per share cost of $58.79.
FISCAL YEAR 2019 OUTLOOK
The Company reaffirms its fiscal 2019 guidance.
|
Metric ($M, except EPS)
|
|
FY18 Actual
|
|
FY19 Expectation
Constant Currency
|
|
Status
|
|
Revenue
|
|
$1,796.1
|
|
Even with prior year
|
|
Reaffirmed
|
|
Adjusted EPS
|
|
$3.43
|
|
Mid-single digit decline
|
|
Reaffirmed
|
|
Cash Provided by Operating Activities
|
|
$381.8
|
|
High-single digit decline
|
|
Reaffirmed
|
|
Capital Expenditures
|
|
$150.7
|
|
Lower
|
|
Reaffirmed
|
*Outlook excludes contributions from The Learning House acquisition
(closed on November 1). For fiscal 2019, we anticipate The
Learning House to contribute approximately $30 million in Revenue and be
dilutive to EPS by approximately $0.10.
-
Wiley anticipates low-single digit Revenue growth in Research and
Solutions offset by a low-single digit Revenue decline in Publishing.
-
Adjusted EPS is expected to decline primarily due to increased
investment in growth initiatives, including publishing more in
Research and driving enrollment growth in Education Services
-
Cash Provided by Operating Activities reflects the impact of growth
investments and substantially lower gains in working capital. In
addition, implementation of ASC 606 will move approximately $10
million of spending from Capital Expenditures to Cash from Operating
Activities.
-
Capital Expenditures are expected to be lower by $30 million primarily
due to the completion of the Company’s headquarters transformation. In
addition, implementation of ASC 606 will move approximately $10
million of spending from Capital Expenditures to Cash from Operating
Activities.
-
Non-GAAP effective tax rate for the year is expected to be
approximately 23-24%.
EARNINGS CONFERENCE CALL
Scheduled for today, December 5 at 10:00 a.m. (ET). Access the webcast
at https://edge.media-server.com/m6/p/mm9am8gc,
or on Wiley.com at https://www.wiley.com/en-us/investors.
U.S. callers, please dial 866-548-4713 and enter the participant code
3834926#. International callers, please dial 866-548-4713 and enter the
participant code 3834926#.
ABOUT WILEY
Wiley, a global research and education company, helps people and
organizations develop the skills and knowledge they need to succeed. Our
online scientific, technical, medical, and scholarly journals, combined
with our digital learning, assessment and certification solutions help
universities, academic societies, businesses, governments and
individuals increase the academic and professional impact of their work.
For more than 200 years, we have delivered consistent performance to our
stakeholders. The Company's website can be accessed at www.wiley.com.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements concerning the
Company's Fiscal Year 2019 Outlook, 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) achievement
of targeted run rate savings through restructuring actions; and (xi)
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.
|
JOHN WILEY & SONS, INC.
|
|
SUPPLEMENTARY INFORMATION (1)(2)(3)
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
October 31,
|
|
October 31,
|
|
|
|
2018
|
|
2017 (4)
|
|
2018
|
|
2017 (4)
|
|
Revenue, net
|
|
$
|
448,622
|
|
|
$
|
451,731
|
|
|
$
|
859,523
|
|
|
$
|
863,175
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
120,157
|
|
|
|
119,865
|
|
|
|
234,548
|
|
|
|
234,653
|
|
|
Operating and administrative expenses (4)
|
|
|
248,627
|
|
|
|
241,301
|
|
|
|
502,400
|
|
|
|
487,039
|
|
|
Restructuring and related charges (credits)
|
|
|
9,996
|
|
|
|
(1,406
|
)
|
|
|
3,910
|
|
|
|
24,323
|
|
|
Amortization of intangibles
|
|
|
12,367
|
|
|
|
11,183
|
|
|
|
25,050
|
|
|
|
23,802
|
|
|
Total Costs and Expenses
|
|
|
391,147
|
|
|
|
370,943
|
|
|
|
765,908
|
|
|
|
769,817
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
57,475
|
|
|
|
80,788
|
|
|
|
93,615
|
|
|
|
93,358
|
|
|
As a % of revenue
|
|
|
12.8
|
%
|
|
|
17.9
|
%
|
|
|
10.9
|
%
|
|
|
10.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(3,608
|
)
|
|
|
(3,455
|
)
|
|
|
(6,404
|
)
|
|
|
(6,728
|
)
|
|
Foreign exchange transaction losses
|
|
|
(54
|
)
|
|
|
(416
|
)
|
|
|
(1,783
|
)
|
|
|
(5,552
|
)
|
|
Interest and other income (4)
|
|
|
2,509
|
|
|
|
2,559
|
|
|
|
4,975
|
|
|
|
4,494
|
|
|
Income Before Taxes
|
|
|
56,322
|
|
|
|
79,476
|
|
|
|
90,403
|
|
|
|
85,572
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
12,538
|
|
|
|
19,428
|
|
|
|
20,324
|
|
|
|
16,288
|
|
|
Effective tax rate
|
|
|
22.3
|
%
|
|
|
24.4
|
%
|
|
|
22.5
|
%
|
|
|
19.0
|
%
|
|
Net Income
|
|
$
|
43,784
|
|
|
$
|
60,048
|
|
|
$
|
70,079
|
|
|
$
|
69,284
|
|
|
As a % of revenue
|
|
|
9.8
|
%
|
|
|
13.3
|
%
|
|
|
8.2
|
%
|
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average Shares - Diluted
|
|
|
57,870
|
|
|
|
57,554
|
|
|
|
57,955
|
|
|
|
57,633
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - Diluted
|
|
$
|
0.76
|
|
|
$
|
1.04
|
|
|
$
|
1.21
|
|
|
$
|
1.20
|
|
|
(1) The supplementary information included in this press release for
the three and six months ended October 31, 2018 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) On May 1, 2018, we adopted the U.S. accounting standard
regarding revenue recognition ("Topic 606," or "ASC 606"). The
adoption of Topic 606 did not have a material impact to our
consolidated results of operations. Refer to our upcoming Quarterly
Report on Form 10-Q for further details.
|
|
(4) Due to the retrospective adoption of ASU 2017-07, total net
benefits of $2.0 million and $3.9 million related to defined benefit
and other post-employment benefit plans were reclassified from
operating and administrative expenses to interest and other income
for the three and six months ended October 31, 2017, respectively.
Total net benefits were $2.1 million and $4.5 million for the three
and six months ended October 31, 2018, respectively.
|
|
|
|
JOHN WILEY & SONS, INC.
|
|
SUPPLEMENTARY INFORMATION (1)
|
|
RECONCILIATION OF GAAP EPS to NON-GAAP ADJUSTED EPS - DILUTED
|
|
(unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
October 31,
|
|
October 31,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
GAAP Earnings Per Share - Diluted
|
|
$
|
0.76
|
|
|
$
|
1.04
|
|
|
$
|
1.21
|
|
|
$
|
1.20
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring and related charges (credits) (A)
|
|
|
0.13
|
|
|
|
(0.02
|
)
|
|
|
0.05
|
|
|
|
0.33
|
|
|
Foreign exchange (gains) losses on intercompany transactions (B)
|
|
|
-
|
|
|
|
0.01
|
|
|
|
0.05
|
|
|
|
0.09
|
|
|
Non-GAAP Adjusted Earnings Per Share - Diluted
|
|
$
|
0.89
|
|
|
$
|
1.03
|
|
|
$
|
1.31
|
|
|
$
|
1.62
|
|
|
Notes:
|
|
(A)
|
Adjusted results exclude restructuring and related charges (credits)
associated with the Company's Restructuring and Reinvestment
Program. For the three months ended October 31, 2018 and 2017, there
were charges of $10.0 million or $0.13 per share and credits of $1.4
million or $(0.02) per share, respectively. For the six months ended
October 31, 2018 and 2017, there were charges of $3.9 million or
$0.05 per share, and charges of $27.9 million or $0.33 per share,
respectively.
|
|
(B)
|
Adjusted results exclude foreign exchange (gains) losses associated
with intercompany transactions. For the three months ended October
31, 2018 and 2017, there were gains of $0.2 million or no impact per
share and losses of $0.3 million or $0.01 per share, respectively.
For the six months ended October 31, 2018 and 2017, there were
losses of $3.8 million or $0.05 per share, and losses of $6.3
million or $0.09 per share, respectively.
|
|
(1) See Explanation of Usage of Non-GAAP performance measures
included in this supplementary information for additional details on
the reasons why management believes presentation of each non-GAAP
performance measure provides useful information to investors. The
supplementary information included in this press release for the
three and six months ended October 31, 2018 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.
|
|
|
|
JOHN WILEY & SONS, INC.
|
|
SUPPLEMENTARY INFORMATION (1)
|
|
SEGMENT RESULTS
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
Three Months Ended October 31,
|
|
% Change
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
2018
|
|
2017 (2)
|
|
Reported
|
|
Currency
|
|
Research:
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
|
|
|
|
|
|
|
|
Journal Subscriptions
|
|
$
|
163,751
|
|
|
$
|
170,163
|
|
|
-4
|
%
|
|
0
|
%
|
|
Open Access
|
|
|
13,780
|
|
|
|
9,350
|
|
|
47
|
%
|
|
50
|
%
|
|
Licensing, Reprints, Backfiles, and Other
|
|
|
41,749
|
|
|
|
41,329
|
|
|
1
|
%
|
|
2
|
%
|
|
Total Journal Revenue
|
|
|
219,280
|
|
|
|
220,842
|
|
|
-1
|
%
|
|
2
|
%
|
|
Publishing Technology Services (Atypon)
|
|
|
9,365
|
|
|
|
8,028
|
|
|
17
|
%
|
|
17
|
%
|
|
Total Revenue, net
|
|
$
|
228,645
|
|
|
$
|
228,870
|
|
|
0
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to Profit (2)
|
|
$
|
58,907
|
|
|
$
|
70,146
|
|
|
-16
|
%
|
|
-11
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring charges (credits)
|
|
|
2,282
|
|
|
|
(388
|
)
|
|
|
|
|
|
Non-GAAP Adjusted Contribution to Profit
|
|
$
|
61,189
|
|
|
$
|
69,758
|
|
|
-12
|
%
|
|
-7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Publishing:
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
|
|
|
|
|
|
|
|
STM and Professional Publishing
|
|
$
|
66,902
|
|
|
$
|
71,460
|
|
|
-6
|
%
|
|
-5
|
%
|
|
Education Publishing
|
|
|
52,068
|
|
|
|
57,711
|
|
|
-10
|
%
|
|
-8
|
%
|
|
Course Workflow (WileyPLUS)
|
|
|
18,429
|
|
|
|
16,310
|
|
|
13
|
%
|
|
14
|
%
|
|
Test Preparation and Certification
|
|
|
8,377
|
|
|
|
7,919
|
|
|
6
|
%
|
|
7
|
%
|
|
Licensing, Distribution, Advertising and Other
|
|
|
11,723
|
|
|
|
11,585
|
|
|
1
|
%
|
|
2
|
%
|
|
Total Revenue, net
|
|
$
|
157,499
|
|
|
$
|
164,985
|
|
|
-5
|
%
|
|
-3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to Profit (2)
|
|
$
|
39,455
|
|
|
$
|
41,913
|
|
|
-6
|
%
|
|
-5
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
1,407
|
|
|
|
71
|
|
|
|
|
|
|
Non-GAAP Adjusted Contribution to Profit
|
|
$
|
40,862
|
|
|
$
|
41,984
|
|
|
-3
|
%
|
|
-2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Solutions:
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
|
|
|
|
|
|
|
|
Education Services (OPM)
|
|
$
|
29,877
|
|
|
$
|
29,737
|
|
|
0
|
%
|
|
1
|
%
|
|
Professional Assessment
|
|
|
17,268
|
|
|
|
15,821
|
|
|
9
|
%
|
|
9
|
%
|
|
Corporate Learning
|
|
|
15,333
|
|
|
|
12,318
|
|
|
24
|
%
|
|
28
|
%
|
|
Total Revenue, net
|
|
$
|
62,478
|
|
|
$
|
57,876
|
|
|
8
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to Profit
|
|
$
|
7,049
|
|
|
$
|
7,309
|
|
|
-4
|
%
|
|
-4
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring charges (credits)
|
|
|
1,097
|
|
|
|
(625
|
)
|
|
|
|
|
|
Non-GAAP Adjusted Contribution to Profit
|
|
$
|
8,146
|
|
|
$
|
6,684
|
|
|
22
|
%
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Expenses (2):
|
|
$
|
(47,936
|
)
|
|
$
|
(38,580
|
)
|
|
24
|
%
|
|
25
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring charges (credits)
|
|
|
5,210
|
|
|
|
(464
|
)
|
|
|
|
|
|
Non-GAAP Adjusted Corporate Expenses
|
|
$
|
(42,726
|
)
|
|
$
|
(39,044
|
)
|
|
9
|
%
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated Revenue, net
|
|
$
|
448,622
|
|
|
$
|
451,731
|
|
|
-1
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Operating Income (2)
|
|
$
|
57,475
|
|
|
$
|
80,788
|
|
|
-29
|
%
|
|
-24
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring charges (credits)
|
|
|
9,996
|
|
|
|
(1,406
|
)
|
|
|
|
|
|
Non-GAAP Adjusted Operating Income
|
|
$
|
67,471
|
|
|
$
|
79,382
|
|
|
-15
|
%
|
|
-10
|
%
|
|
As a % of revenue
|
|
|
15.0
|
%
|
|
|
17.6
|
%
|
|
|
|
|
|
(1) The supplementary information included in this press release for
the three months ended October 31, 2018 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) Due to the retrospective adoption of ASU 2017-07, total net
benefits of $2.0 million related to defined benefit and other
post-employment benefit plans were reclassified from Operating and
Administrative Expenses to Interest and Other Income for the three
months ended October 31, 2017. The impact of the reclassification on
Contribution to Profit by segment for the three months ended October
31, 2017 was $1.0 million in Research, $0.6 million in Publishing,
and $0.4 million in Corporate Expenses.
|
|
|
|
JOHN WILEY & SONS, INC.
|
|
SUPPLEMENTARY INFORMATION (1)
|
|
SEGMENT RESULTS
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
Six Months Ended October 31,
|
|
% Change
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
2018
|
|
2017 (2)
|
|
Reported
|
|
Currency
|
|
Research:
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
|
|
|
|
|
|
|
|
Journal Subscriptions
|
|
$
|
329,709
|
|
|
$
|
338,488
|
|
|
-3
|
%
|
|
-1
|
%
|
|
Open Access
|
|
|
24,723
|
|
|
|
18,153
|
|
|
36
|
%
|
|
36
|
%
|
|
Licensing, Reprints, Backfiles, and Other
|
|
|
81,237
|
|
|
|
79,559
|
|
|
2
|
%
|
|
2
|
%
|
|
Total Journal Revenue
|
|
|
435,669
|
|
|
|
436,200
|
|
|
0
|
%
|
|
1
|
%
|
|
Publishing Technology Services (Atypon)
|
|
|
17,968
|
|
|
|
16,297
|
|
|
10
|
%
|
|
10
|
%
|
|
Total Revenue, net
|
|
$
|
453,637
|
|
|
$
|
452,497
|
|
|
0
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to Profit (2)
|
|
$
|
116,033
|
|
|
$
|
130,608
|
|
|
-11
|
%
|
|
-8
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
1,302
|
|
|
|
4,448
|
|
|
|
|
|
|
Non-GAAP Adjusted Contribution to Profit
|
|
$
|
117,335
|
|
|
$
|
135,056
|
|
|
-13
|
%
|
|
-10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Publishing:
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
|
|
|
|
|
|
|
|
STM and Professional Publishing
|
|
$
|
132,966
|
|
|
$
|
135,060
|
|
|
-2
|
%
|
|
-1
|
%
|
|
Education Publishing
|
|
|
90,299
|
|
|
|
103,447
|
|
|
-13
|
%
|
|
-12
|
%
|
|
Course Workflow (WileyPLUS)
|
|
|
19,207
|
|
|
|
17,520
|
|
|
10
|
%
|
|
11
|
%
|
|
Test Preparation and Certification
|
|
|
19,783
|
|
|
|
19,409
|
|
|
2
|
%
|
|
3
|
%
|
|
Licensing, Distribution, Advertising and Other
|
|
|
20,165
|
|
|
|
20,827
|
|
|
-3
|
%
|
|
-3
|
%
|
|
Total Revenue, net
|
|
$
|
282,420
|
|
|
$
|
296,263
|
|
|
-5
|
%
|
|
-4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to Profit (2)
|
|
$
|
53,175
|
|
|
$
|
46,383
|
|
|
15
|
%
|
|
15
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
739
|
|
|
|
7,325
|
|
|
|
|
|
|
Publishing brand impairment charge
|
|
|
-
|
|
|
|
3,600
|
|
|
|
|
|
|
Non-GAAP Adjusted Contribution to Profit
|
|
$
|
53,914
|
|
|
$
|
57,308
|
|
|
-6
|
%
|
|
-6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Solutions:
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
|
|
|
|
|
|
|
|
Education Services (OPM)
|
|
$
|
59,037
|
|
|
$
|
56,074
|
|
|
5
|
%
|
|
5
|
%
|
|
Professional Assessment
|
|
|
33,067
|
|
|
|
30,708
|
|
|
8
|
%
|
|
8
|
%
|
|
Corporate Learning
|
|
|
31,362
|
|
|
|
27,633
|
|
|
13
|
%
|
|
13
|
%
|
|
Total Revenue, net
|
|
$
|
123,466
|
|
|
$
|
114,415
|
|
|
8
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Contribution to Profit
|
|
$
|
10,273
|
|
|
$
|
5,341
|
|
|
92
|
%
|
|
91
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
840
|
|
|
|
2,170
|
|
|
|
|
|
|
Non-GAAP Adjusted Contribution to Profit
|
|
$
|
11,113
|
|
|
$
|
7,511
|
|
|
48
|
%
|
|
47
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Expenses (2):
|
|
$
|
(85,866
|
)
|
|
$
|
(88,974
|
)
|
|
-3
|
%
|
|
-3
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
1,029
|
|
|
|
10,380
|
|
|
|
|
|
|
Non-GAAP Adjusted Corporate Expenses
|
|
$
|
(84,837
|
)
|
|
$
|
(78,594
|
)
|
|
8
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated Revenue, net
|
|
$
|
859,523
|
|
|
$
|
863,175
|
|
|
0
|
%
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Operating Income (2)
|
|
$
|
93,615
|
|
|
$
|
93,358
|
|
|
0
|
%
|
|
5
|
%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
3,910
|
|
|
|
24,323
|
|
|
|
|
|
|
Publishing brand impairment charge
|
|
|
-
|
|
|
|
3,600
|
|
|
|
|
|
|
Non-GAAP Adjusted Operating Income
|
|
$
|
97,525
|
|
|
$
|
121,281
|
|
|
-20
|
%
|
|
-16
|
%
|
|
As a % of revenue
|
|
|
11.3
|
%
|
|
|
14.1
|
%
|
|
|
|
|
|
(1) The supplementary information included in this press release for
the six months ended October 31, 2018 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) Due to the retrospective adoption of ASU 2017-07, total net
benefits of $3.9 million related to defined benefit and other
post-employment benefit plans were reclassified from Operating and
Administrative Expenses to Interest and Other Income. The impact of
the reclassification on Contribution to Profit by segment for the
six months ended October 31, 2017 was $2.0 million in Research, $1.1
million in Publishing, and $0.8 million in Corporate Expenses.
|
|
|
|
JOHN WILEY & SONS, INC.
|
|
SUPPLEMENTARY INFORMATION (1)(2)
|
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
October 31,
|
|
April 30,
|
|
|
|
2018
|
|
2018
|
|
Current Assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
115,603
|
|
|
$
|
169,773
|
|
|
Accounts receivable, net (2)
|
|
|
236,207
|
|
|
|
212,377
|
|
|
Inventories, net
|
|
|
35,084
|
|
|
|
39,489
|
|
|
Prepaid expenses and other current assets
|
|
|
61,973
|
|
|
|
58,332
|
|
|
Total Current Assets
|
|
|
448,867
|
|
|
|
479,971
|
|
|
Product Development Assets
|
|
|
64,716
|
|
|
|
78,814
|
|
|
Royalty Advances, net
|
|
|
15,331
|
|
|
|
37,058
|
|
|
Technology, Property and Equipment, net
|
|
|
286,308
|
|
|
|
289,934
|
|
|
Intangible Assets, net
|
|
|
787,629
|
|
|
|
848,071
|
|
|
Goodwill
|
|
|
986,248
|
|
|
|
1,019,801
|
|
|
Other Non-Current Assets
|
|
|
91,732
|
|
|
|
85,802
|
|
|
Total Assets
|
|
$
|
2,680,831
|
|
|
$
|
2,839,451
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
Accounts payable
|
|
$
|
71,555
|
|
|
$
|
90,097
|
|
|
Accrued royalties
|
|
|
94,438
|
|
|
|
73,007
|
|
|
Contract liability (Deferred revenue) (2)
|
|
|
237,184
|
|
|
|
486,353
|
|
|
Accrued employment costs
|
|
|
69,792
|
|
|
|
116,179
|
|
|
Accrued income taxes
|
|
|
18,436
|
|
|
|
13,927
|
|
|
Other accrued liabilities
|
|
|
78,651
|
|
|
|
94,748
|
|
|
Total Current Liabilities
|
|
|
570,056
|
|
|
|
874,311
|
|
|
Long-Term Debt
|
|
|
537,306
|
|
|
|
360,000
|
|
|
Accrued Pension Liability
|
|
|
167,722
|
|
|
|
190,301
|
|
|
Deferred Income Tax Liabilities
|
|
|
140,338
|
|
|
|
143,518
|
|
|
Other Long-Term Liabilities
|
|
|
96,017
|
|
|
|
80,764
|
|
|
Total Liabilities
|
|
|
1,511,439
|
|
|
|
1,648,894
|
|
|
Shareholders' Equity
|
|
|
1,169,392
|
|
|
|
1,190,557
|
|
|
Total Liabilities and Shareholders' Equity
|
|
$
|
2,680,831
|
|
|
$
|
2,839,451
|
|
|
(1) The supplementary information included in this press release for
October 31, 2018 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) On May 1, 2018, we adopted Topic 606. The impact to the
Condensed Consolidated Statements of Financial Position was not
material by line item, except for the amount related to the
discontinuance of netting down the accounts receivable and contract
liability (deferred revenue) of $59.5 million as previously
disclosed in our Fiscal Year 2018 Annual Report on Form 10-K. In
addition, upon adoption we reclassified the sales return reserve to
contract liability from accounts receivable of $28.3 million. As of
October 31, 2018, the amount that would have been netted down from
accounts receivable and deferred revenue prior to the adoption of
Topic 606 would have been $5.8 million and the sales return reserve
amount is $31.1 million. Refer to our upcoming Quarterly Report on
Form 10-Q for the quarterly period ended October 31, 2018 for
further details.
|
|
|
|
JOHN WILEY & SONS, INC.
|
|
SUPPLEMENTARY INFORMATION (1)
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
Six Months Ended
|
|
|
|
October 31,
|
|
|
|
2018
|
|
2017 (2)
|
|
Operating Activities:
|
|
|
|
|
|
Net income
|
|
$
|
70,079
|
|
|
$
|
69,284
|
|
|
Amortization of intangibles
|
|
|
25,050
|
|
|
|
23,802
|
|
|
Amortization of product development spending
|
|
|
20,093
|
|
|
|
20,246
|
|
|
Depreciation of technology, property, and equipment
|
|
|
35,845
|
|
|
|
34,775
|
|
|
Non-cash charges and credits
|
|
|
41,446
|
|
|
|
56,226
|
|
|
Net change in operating assets and liabilities
|
|
|
(313,610
|
)
|
|
|
(250,145
|
)
|
|
Net Cash Used In Operating Activities
|
|
|
(121,097
|
)
|
|
|
(45,812
|
)
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
Additions to technology, property, and equipment
|
|
|
(34,560
|
)
|
|
|
(53,469
|
)
|
|
Product development spending
|
|
|
(7,815
|
)
|
|
|
(17,927
|
)
|
|
Acquisitions of publication rights and other
|
|
|
(2,795
|
)
|
|
|
(6,097
|
)
|
|
Net Cash Used in Investing Activities
|
|
|
(45,170
|
)
|
|
|
(77,493
|
)
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
Net debt borrowings
|
|
|
179,275
|
|
|
|
196,589
|
|
|
Cash dividends
|
|
|
(38,033
|
)
|
|
|
(36,699
|
)
|
|
Purchase of treasury shares
|
|
|
(24,994
|
)
|
|
|
(29,257
|
)
|
|
Other
|
|
|
4,217
|
|
|
|
4,718
|
|
|
Net Cash Provided By Financing Activities
|
|
|
120,465
|
|
|
|
135,351
|
|
|
|
|
|
|
|
|
Effects of Exchange Rate Changes on Cash, Cash Equivalents and
Restricted Cash
|
|
|
(8,368
|
)
|
|
|
2,855
|
|
|
|
|
|
|
|
|
Change in Cash, Cash Equivalents and Restricted Cash for Period
|
|
|
(54,170
|
)
|
|
|
14,901
|
|
|
|
|
|
|
|
|
Cash, Cash Equivalents and Restricted Cash - Beginning
|
|
|
170,257
|
|
|
|
58,516
|
|
|
Cash, Cash Equivalents and Restricted Cash - Ending
|
|
$
|
116,087
|
|
|
$
|
73,417
|
|
|
|
|
CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT DEVELOPMENT
SPENDING
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
October 31,
|
|
|
|
2018
|
|
2017
|
|
Net Cash Used In Operating Activities
|
|
$
|
(121,097
|
)
|
|
$
|
(45,812
|
)
|
|
Less:Additions to technology, property, and equipment
|
|
|
(34,560
|
)
|
|
|
(53,469
|
)
|
|
Less:Product development spending (3)
|
|
|
(7,815
|
)
|
|
|
(17,927
|
)
|
|
Free Cash Flow less Product Development Spending
|
|
$
|
(163,472
|
)
|
|
$
|
(117,208
|
)
|
|
|
|
See Explanation of Usage of Non-GAAP Measures included in this
supplemental information.
|
|
(1) The supplementary information included in this press release for
the six months ended October 31, 2018 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) Due to the retrospective adoption of ASU 2016-18, we are now
required to include restricted cash as part of the change in cash,
cash equivalents and restricted cash. As a result, amounts which
were previously classified as cash flows from operating activities
have been reclassified as they are recognized in the total change in
cash, cash equivalents and restricted cash. Restricted cash was $0.5
million as of October 31, 2018 and April 30, 2018 and is included in
Prepaid and Other Current Assets.
|
|
(3) Due to the adoption of Topic 606, certain costs to fulfill
contracts, which were previously included in product development
spending are now included in cash flow from operating activities.
|
|
|
JOHN WILEY & SONS, INC.
Explanation of Usage of
NON-GAAP Performance Measures
In this earnings release and supplemental information, management
presents the following non-GAAP performance measures:
-
Adjusted Earnings Per Share (“Adjusted EPS”);
-
Free Cash Flow less product development spending;
-
Adjusted Operating Income and margin;
-
Adjusted Contribution to Profit ("CTP") and margin; and
-
Results on a constant currency basis.
Management uses these non-GAAP performance measures as supplemental
indicators of our operating performance and financial position as well
for internal reporting and forecasting purposes, when publicly providing
its outlook, to evaluate the Company's performance and to evaluate and
calculate incentive compensation. Non-GAAP performance measures do not
have standardized meanings prescribed by US GAAP and therefore may not
be comparable to the calculation of similar measures used by other
companies, and should not be viewed as alternatives to measures of
financial results under US GAAP.
The Company presents these non-GAAP performance measures in addition to
GAAP financial results because it believes that these non-GAAP
performance measures provide useful information to certain investors and
financial analysts for operational trends and comparisons across
accounting periods. The use of these non-GAAP performance measures
provides a consistent basis to evaluate operating profitability and
performance trends by excluding items that we do not consider to be
controllable activities for this purpose. For example:
-
Adjusted EPS, Adjusted Operating Profit, Adjusted Contribution to
Profit provide a more comparable basis to analyze operating results
and earnings and are measures commonly used by shareholders to measure
our performance.
-
Free Cash Flow less product development spending helps assess our
ability, over the long term, to create value for our shareholders as
it represents cash available to repay debt, pay common dividends and
fund share repurchases and new 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 measure our
performance before the impact of foreign currency (or at “constant
currency”), which means that we apply the same foreign currency
exchange rates for the current and equivalent prior period.
In addition, the Company has historically provided these or similar
non-GAAP performance measures and understands that some investors and
financial analysts find this information helpful in analyzing the
Company's operating margins, and net income and comparing the Company's
financial performance to that of its peer companies and competitors.
Based on interactions with investors, we also believe that our non-GAAP
performance measures are regarded as useful to our investors as
supplemental to our GAAP financial results, and that there is no
confusion regarding the adjustments or our operating performance to our
investors due to the comprehensive nature of our disclosures.
Brian Campbell, Investor Relations
201.748.6874
brian.campbell@wiley.com