Wiley (NYSE: WLY and WLYB), a global knowledge company and a
leader in research, publishing, and knowledge solutions today
reported results for the first quarter ended July 31, 2023.
- GAAP Results: Revenue of $451 million (-7%), Operating
loss of -$16 million (+4%), and EPS loss of -$1.67 (-$1.35). GAAP
earnings impacted by impairment charges totalling $103 million,
including non-cash goodwill and assets held-for-sale impairment and
loss on sale of a business.
- 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 $258 million was down 6%, or 7% 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 $77 million was down 18% at constant
currency due to the Hindawi publishing pause. Adjusted EBITDA
margin for the quarter was 29.8% compared to 33.8% in the prior
year period. Excluding Hindawi, Adjusted EBITDA was up
modestly.
Learning
- Revenue of $109 million was down 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 $21 million was up 19% as reported
and at constant currency mainly due to restructuring savings.
Adjusted EBITDA margin for the quarter was 19.4% compared to 14.9%
in the prior year period.
Businesses Held for Sale or Sold
- Revenue of $84 million was down 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 $6 million is up from
a $2 million loss in the prior year.
Corporate Expenses
- Corporate Expenses of $49 million declined 24% due to
restructuring savings and lower occupancy costs. Adjusted
Corporate Expenses (Adjusted EBITDA) of $38 million declined
15%.
EPS
- GAAP EPS loss of $1.67 compared to a loss of $0.32 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 $103 million.
- Adjusted EPS excluding businesses held for sale or sold
of $0.27 was down 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 $82
million compared to a use of $90 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.
- Free Cash Flow less Product Development Spending was a
use of $106 million compared to a use of $114 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.
- Returns to Shareholders: The Company raised its dividend
for the 30th consecutive year in June. For the quarter, Wiley
allocated $19 million toward dividends and $10 million toward
repurchasing 301,000 shares at an average cost per share of $33.25.
This compares to 212,000 shares repurchased in the prior year
period. There were no material acquisitions in the quarter.
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 $393 million of revenue, $43 million of
Adjusted EBITDA, and $0.36 of Adjusted EPS in Fiscal 2023.
Metric ($millions, except EPS)
Fiscal 2023 All
Company
Fiscal 2023
Ex-Divestitures
Fiscal 2024 Outlook
Ex-Divestitures
Adjusted Revenue*
$2,020
$1,627
$1,580 to $1,630
Research
$1,080
Flat (+3% ex-Hindawi)
Learning
$547
Down low single digits
Adjusted EBITDA*
$422
$379
$305 to $330
Adjusted EPS*
$3.84
$3.48
$2.05 to $2.40
*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 $0.42 of
non-operational items including a higher tax rate (-$0.21/share),
pension expense (-$0.11/share), and interest expense
(-$0.10/share). Wiley’s higher tax rate is primarily due to a less
favorable mix of earnings by country and an increase in the UK
statutory rate. Wiley froze its U.S. and U.K. pension programs in
2015, and they are approximately 90% 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. 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 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
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
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
-3.6%
-3.5%
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
13.5%
23.7%
Net loss
$
(92,264)
$
(17,835)
As a % of revenue
-20.5%
-3.7%
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 $11.4 million. After the realignment, we
concluded that the fair value of the CrossKnowledge 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
$15.3 million. In addition, these three businesses met the
held-for-sale criteria. We measured each business at the lower of
carrying value or fair value less cost to sell. We recorded a
pretax impairment of $40.6 million for University Services and
$33.3 million for CrossKnowledge in the three months ended July 31,
2023. 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 $2.0 million (net of tax loss of
$1.6 million).
(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
13.5%
23.7%
Non-GAAP Adjusted Effective Tax Rate
23.8%
22.4%
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 Russia, the Russia entity was deemed substantially
liquidated. In the three months ended July 31, 2023, we wrote off
an additional $0.9 million cumulative translation adjustment in
earnings. This amount is reflected in Foreign exchange transaction
losses on our Condensed Consolidated Statements of Net Loss.
(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 $40.6 million
for University Services and $33.3 million for CrossKnowledge in the
three months ended July 31, 2023.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 $2.0
million (net of tax loss of $1.6 million).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
16.3%
16.8%
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 Currency
Research: Revenue, net Research Publishing
$
223,000
$
239,523
-7%
-8%
Research Solutions
34,804
35,390
-2%
-2%
Total Revenue, net
$
257,804
$
274,913
-6%
-7%
Contribution to Profit
$
51,580
$
69,023
-25%
-26%
Adjustments: Restructuring charges
1,947
81
# #
Non-GAAP Adjusted Contribution to Profit
$
53,527
$
69,104
-23%
-23%
Depreciation and amortization
23,212
23,801
2%
3%
Non-GAAP Adjusted EBITDA
$
76,739
$
92,905
-17%
-18%
Adjusted EBITDA margin
29.8%
33.8%
Learning: Revenue, net Academic
$
48,292
$
58,748
-18%
-18%
Professional
61,028
60,899
0%
0%
Total Revenue, net
$
109,320
$
119,647
-9%
-9%
Contribution to Profit
$
7,408
$
610
# # Adjustments: Restructuring charges
218
3,131
93%
93%
Non-GAAP Adjusted Contribution to Profit
$
7,626
$
3,741
# # Depreciation and amortization
13,552
14,055
4%
4%
Non-GAAP Adjusted EBITDA
$
21,178
$
17,796
19%
19%
Adjusted EBITDA margin
19.4%
14.9%
Held for Sale or Sold: Total Revenue, net
$
83,889
$
93,009
-10%
-10%
Contribution to Profit
$
(26,234)
$
(22,194)
-18%
-19%
Adjustments: Restructuring charges
2,623
3,492
25%
25%
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
71%
70%
Non-GAAP Adjusted EBITDA
$
6,521
$
(2,435)
# # Adjusted EBITDA margin
7.8%
-2.6%
Corporate Expenses:
$
(49,109)
$
(64,404)
24%
24%
Adjustments: Restructuring charges
7,335
15,737
53%
53%
Non-GAAP Adjusted Contribution to Profit
$
(41,774)
$
(48,667)
14%
15%
Depreciation and amortization
3,527
4,156
15%
16%
Non-GAAP Adjusted EBITDA
$
(38,247)
$
(44,511)
14%
15%
Consolidated Results: Revenue, net
$
451,013
$
487,569
-7%
-8%
Less: Held for Sale or Sold Segment (5)
(83,889)
(93,009)
-10%
-10%
Adjusted Revenue, net
$
367,124
$
394,560
-7%
-8%
Operating Loss
$
(16,355)
$
(16,965)
-4%
-1%
Adjustments: Restructuring charges
12,123
22,441
46%
46%
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
-20%
-21%
Depreciation and amortization
43,728
53,685
19%
19%
Less: Held for Sale or Sold Segment depreciation and amortization
(5)
(3,437)
(11,673)
71%
71%
Non-GAAP Adjusted EBITDA
$
59,670
$
66,190
-10%
-10%
Adjusted EBITDA margin
16.3%
16.8%
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 $4.6 million
in the three months ended July 31, 2022. (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 100%
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 $40.6 million for University
Services and $33.3 million for CrossKnowledge in the three months
ended July 31, 2023 which is recorded as a contra asset account
within Non-current assets held for sale.
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 $32.1 million. (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.
Management uses these non-GAAP performance measures as
supplemental indicators of our operating performance and financial
position as 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 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 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 Contribution to Profit. We
present both Adjusted Contribution to Profit and Adjusted EBITDA
for each of our reportable segments as we believe Adjusted EBITDA
provides additional useful information to certain investors and
financial analysts for operational trends and comparisons over
time. It removes the impact of depreciation and amortization
expense, as well as presents a consistent basis to evaluate
operating profitability and compare our financial performance to
that of our peer companies and competitors.
For example: · Adjusted EPS, Adjusted Revenue, Adjusted
Contribution to Profit, Adjusted Operating Income, Adjusted Income
Before Taxes, Adjusted Income Tax Provision, Adjusted Effective Tax
Rate, Adjusted EBITDA, and 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
common stock dividends, and fund share repurchases and
acquisitions. · Results on a constant currency basis remove
distortion from the effects of foreign currency movements to
provide better comparability of our business trends from period to
period. We 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 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, 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 performance to our investors due to the comprehensive
nature of our disclosures. We have not provided our 2024 outlook
for the most directly comparable US GAAP financial measures, as
they are not available without unreasonable effort due to the high
variability, complexity, and low visibility with respect to certain
items, including restructuring charges and credits, gains and
losses on foreign currency, and other gains and losses. These items
are uncertain, depend on various factors, and could be material to
our consolidated results computed in accordance with US GAAP.
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 adjusted metrics have limitations as analytical
tools, and should not be 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
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.
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
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