Wiley Reports Second Quarter Fiscal 2022 Results

Wiley (NYSE: JWA and JWB), a global leader in scientific research and career-connected education, today announced results for the second quarter ended October 31, 2021.

SUMMARY

  • GAAP Results: Revenue of $533 million (+9%), Operating Income of $74 million (+6%), and EPS of $0.99 (-19%)
  • Adjusted Results (at constant currency): Revenue of $533 million (+8%), Adjusted EBITDA of $127 million (+7%), and Adjusted EPS of $1.29 (+6%)
  • CFO Transition: John Kritzmacher retiring from Company after eight years of service; Christina Van Tassell joins Wiley as successor

MANAGEMENT COMMENTARY

“Wiley's strong performance reflects our continued effectiveness in helping the world’s leading universities and corporations to increase the impact of new scientific discoveries, improve the return on investment in education, and close critical skill and talent gaps,” said Brian Napack, President and CEO. “Our revenue growth in Research and Talent Development continues to be particularly noteworthy, driven by steady execution of our strategy and favorable market trends.”

SECOND QUARTER PERFORMANCE

GAAP Measures

Unaudited ($millions except for EPS)

Q2 2022

Q2 2021

Change

 

Revenue

$533.0

$491.0

+9%

Operating Income

$73.9

$69.9

+6%

Diluted EPS

$0.99

$1.22

(19%)

Non-GAAP Measures

Q2 2022

Q2 2021

Change

Constant Currency

Revenue

$533.0

$491.0

+8%

Adjusted EBITDA

$127.1

$120.3

+7%

Adjusted EPS*

$1.29

$1.25

+6%

Excluding acquisitions and currency impact, revenue rose 5% for the quarter. Wiley recorded a favorable FX variance of $2.8 million in Revenue and unfavorable FX variances of $2.1 million in Adjusted EBITDA and $0.03 in Adjusted EPS.

*Adjusted EPS: Wiley’s Adjusted EPS metric excludes the impact of certain non-cash items directly related to acquisitions, most notably the amortization of acquired intangible assets. The Company does not consider these non-cash items to be indicative of its ongoing operating performance.

Revenue

  • Research Publishing & Platforms rose 9% as reported and at constant currency and 4% excluding acquisitions, driven by strong growth in open access, corporate solutions, and research platforms.
  • Academic & Professional Learning grew 4% as reported and 3% at constant currency, driven by strong recovery in Professional Learning from prior-year COVID lockdown impacts. This more than offset a decline in Education Publishing due to softer US enrollment and some easing of prior-year COVID-related tailwinds in content and courseware.
  • Education Services increased 17% as reported and 15% at constant currency, driven by 3% growth in University Services (formerly OPM) and strong double-digit growth in Talent Development (formerly mthree).

Adjusted EBITDA

  • Research Publishing & Platforms rose 10% at constant currency, primarily driven by revenue growth.
  • Academic & Professional Learning rose 18% at constant currency, reflecting the Professional Learning recovery.
  • Education Services declined 35% at constant currency due to higher student acquisition costs in University Services and investments to accelerate growth in Talent Development.
  • Adjusted Corporate Expenses were up 12% mainly due to higher employee-related costs.

EPS

  • GAAP EPS was $0.99 as compared to $1.22 in the prior year period, which included a $0.25 discrete tax benefit related to the Coronavirus Aid, Relief, and Economic Security Act (CARES ACT).
  • Adjusted EPS of $1.29 was up 6% at constant currency driven by higher adjusted EBITDA offsetting higher interest expense.

Balance Sheet, Cash Flow, and Capital Allocation

  • Net Debt-to-EBITDA ratio (trailing twelve months) at quarter-end was 2.1 compared to 1.9 in the prior year period.
  • Net Cash Used in Operating Activities (six months) was $76 million compared to $77 million in the prior year period, with higher cash earnings offset by higher annual incentive payments related to Fiscal 2021 outperformance. Note, Wiley’s seasonal use of cash in the first half of the fiscal year is driven by the timing of cash collections for annual research journal subscriptions.
  • Free Cash Flow less Product Development Spending (six months) was a use of $126 million as compared to a use of $124 million in the prior year.
  • Acquisitions: During the quarter, Wiley acquired research editorial services provider, J&J Editorial, for $12 million.
  • Share Repurchases: During the quarter, the Company utilized approximately $10 million to repurchase approximately 183,000 shares at an average cost per share of $54.54.

FISCAL YEAR 2022 OUTLOOK

Given performance through six months and leading indicators, the Company is reaffirming its full year outlook.

Metric ($millions, except EPS)

Fiscal 2020

Fiscal 2021

Fiscal 2022 Outlook

Revenue

$1,831

$1,942

$2,070 to $2,100

Adjusted EBITDA

$356

$419

$415 to $435

Adjusted EPS

$3.30

$4.00

$4.00 to $4.25

Free Cash Flow

$173

$257

$200 to $220

EARNINGS CONFERENCE CALL

Scheduled for today, December 7 at 10:00 am (ET). Access webcast at investors.wiley.com, or directly at https://event.on24.com/wcc/r/3551395/01DAF1B2966C0BBB1AB1A59ED5F92CBB. US callers, please dial (844) 418-0103 and enter the participant code 4565599#. International callers, please dial (236) 714-3019 and enter the participant code 4565599#.

ABOUT WILEY

Wiley is a global leader in research and education, unlocking human potential by enabling discovery, powering education, and shaping workforces. For over 200 years, Wiley has fueled the world’s knowledge ecosystem. Today, our high-impact content, platforms, and services help researchers, learners, institutions, and corporations achieve their goals in an ever-changing world. Visit us at Wiley.com, Like us on Facebook and Follow us on Twitter and LinkedIn

NON-GAAP FINANCIAL MEASURES

Wiley provides non-GAAP financial measures and performance results such as “Adjusted EPS,” “EBITDA”, “Adjusted EBITDA,” “Adjusted Contribution to Profit,” “Adjusted Income before Taxes,” “Adjusted Income Tax Provision,” “Adjusted Effective Tax Rate,” “Free Cash Flow less Product Development Spending,” “organic revenue,” and results on a Constant Currency basis to assess underlying business performance and trends. Management believes non-GAAP financial measures, which exclude the impact of restructuring charges and credits and certain other items, and the impact of acquisitions provide a useful comparable basis to analyze operating results and earnings. See the reconciliations of non-GAAP financial measures and explanations of the uses of non-GAAP measures in the supplementary information. We have not provided our 2022 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.

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 by Wiley in new technologies and products; (ii) subscriber renewal rates for the Company's journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key retailers; (vi) the seasonal nature of the Company's educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) the Company's ability to protect its copyrights and other intellectual property worldwide (ix) the ability of the Company to successfully integrate acquired operations and realize expected opportunities; (x) the Company’s ability to realize operating savings over time and in fiscal year 2022 in connection with our multi-year Business Optimization Program; (xi) the impact of COVID-19 on our operations, performance, and financial condition; and (xii) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent circumstances.

CATEGORY: ALL CORPORATE NEWS

CATEGORY: EARNINGS RELEASES

JOHN WILEY & SONS, INC.
SUPPLEMENTARY INFORMATION (1)(2)
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
(Dollars in thousands, except per share information)
(unaudited)
 
Three Months Ended Six Months Ended
October 31, October 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue, net

 $

         533,003

 

 $

        491,011

 

 $

         1,021,391

 

 $

         922,337

 

Costs and expenses:
Cost of sales

 

            174,782

 

 

           154,853

 

 

               340,738

 

 

            299,662

 

Operating and administrative expenses

 

            264,190

 

 

           247,167

 

 

               524,779

 

 

            484,536

 

Restructuring and related (credits) charges

 

               (1,333

)

 

               1,920

 

 

                 (1,609

)

 

                4,138

 

Amortization of intangible assets

 

              21,476

 

 

             17,166

 

 

                 42,627

 

 

              34,057

 

Total costs and expenses

 

            459,115

 

 

           421,106

 

 

               906,535

 

 

            822,393

 

 
Operating income

 

              73,888

 

 

             69,905

 

 

               114,856

 

 

              99,944

 

As a % of revenue

 

13.9

%

 

14.2

%

 

11.2

%

 

10.8

%

 
Interest expense

 

               (4,997

)

 

             (4,461

)

 

                 (9,636

)

 

              (9,075

)

Foreign exchange transaction losses

 

               (1,370

)

 

                (697

)

 

                 (1,000

)

 

                 (779

)

(Loss) gain on sale of certain assets

 

                    (56

)

 

                    -

 

 

                   3,694

 

 

                      -

 

Other income, net

 

                3,150

 

 

               3,766

 

 

                   6,703

 

 

                8,157

 

 
Income before taxes

 

              70,615

 

 

             68,513

 

 

               114,617

 

 

              98,247

 

 
Provision for income taxes

 

              14,648

 

 

                    81

 

 

                 44,820

 

 

              13,481

 

Effective tax rate

 

20.7

%

 

0.1

%

 

39.1

%

 

13.7

%

Net income

 $

           55,967

 

 $

          68,432

 

 $

              69,797

 

 $

           84,766

 

As a % of revenue

 

10.5

%

 

13.9

%

 

6.8

%

 

9.2

%

 
Earnings per share
Basic

 $

               1.00

 

 $

              1.22

 

 $

                  1.25

 

 $

               1.51

 

Diluted

 $

               0.99

 

 $

              1.22

 

 $

                  1.24

 

 $

               1.51

 

 
Weighted average number of common shares outstanding
Basic

 

              55,806

 

 

             56,005

 

 

                 55,833

 

 

              55,959

 

Diluted

 

              56,388

 

 

             56,165

 

 

                 56,477

 

 

              56,182

 

 
 
 Notes:                 

(1) The supplementary information included in this press release for the three and six months ended October 31, 2021 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.

 

In the three months ended October 31, 2021, we completed the acquisition of J&J Editorial Services, LLC, which is included in our Research Publishing & Platforms segment results.

(2) All amounts are approximate due to rounding.
JOHN WILEY & SONS, INC.
SUPPLEMENTARY INFORMATION (1) (2)
RECONCILIATION OF US GAAP MEASURES to NON-GAAP MEASURES
(unaudited)
 
 Reconciliation of US GAAP EPS to Non-GAAP Adjusted EPS                   
Three Months Ended Six Months Ended
October 31, October 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 US GAAP Earnings Per Share - Diluted 

 $

                0.99

 

 $

               1.22

 

 $

                  1.24

 

 $

                 1.51

 

 Adjustments: 
 Restructuring and related (credits) charges 

 

                 (0.02

)

 

                  0.02

 

 

                    (0.02

)

 

                    0.05

 

 Foreign exchange losses (gains) on intercompany transactions  

 

                   0.01

 

 

                  0.01

 

 

                         -

 

 

                  (0.02

)

 Amortization of acquired intangible assets (3)

 

                   0.31

 

 

                  0.25

 

 

                     0.60

 

 

                    0.50

 

 Loss (gain) loss on sale of certain assets (4)

 

                       -

 

 

                      -

 

 

                    (0.05

)

 

                        -

 

 Income tax adjustments (5) (6)

 

                       -

 

 

                (0.25

)

 

                     0.37

 

 

                  (0.13

)

 Non-GAAP Adjusted Earnings Per Share - Diluted 

 $

                1.29

 

 $

               1.25

 

 $

                  2.14

 

 $

                 1.91

 

 
 Reconciliation of US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes  
Three Months Ended Six Months Ended
 (amounts in thousands)  October 31, October 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 US GAAP Income Before Taxes 

 $

            70,615

 

 $

           68,513

 

 $

            114,617

 

 $

             98,247

 

  Pretax Impact of Adjustments:
 Restructuring and related (credits) charges 

 

               (1,333

)

 

                1,920

 

 

                  (1,609

)

 

                  4,138

 

 Foreign exchange losses (gains) on intercompany transactions  

 

                    567

 

 

                   231

 

 

                     (228

)

 

                (1,338

)

 Amortization of acquired intangible assets 

 

               22,608

 

 

              18,381

 

 

                 44,892

 

 

                36,530

 

 Loss (gain) loss on sale of certain assets (4)

 

                      56

 

 

                      -

 

 

                  (3,694

)

 

                        -

 

 Non-GAAP Adjusted Income Before Taxes 

 $

            92,513

 

 $

           89,045

 

 $

            153,978

 

 $

           137,577

 

 
Reconciliation of US GAAP Income Tax Provision 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 Provision 

 $

            14,648

 

 $

                  81

 

 $

              44,820

 

 $

             13,481

 

 Income Tax Impact of Adjustments (7)
 Restructuring and related (credits) charges 

 

                  (277

)

 

                   654

 

 

                     (232

)

 

                  1,397

 

 Foreign exchange losses (gains) on intercompany transactions  

 

                    120

 

 

                   122

 

 

                        19

 

 

                   (490

)

 Amortization of acquired intangible assets 

 

                 5,420

 

 

                4,335

 

 

                 10,263

 

 

                  8,633

 

 Loss (gain) loss on sale of certain assets (4)

 

                      14

 

 

                      -

 

 

                     (922

)

 

                        -

 

  Income Tax Adjustments:
 Impact of increase in UK statutory rate on deferred tax balances (5)

 

                       -

 

 

                   (83

)

 

                (20,726

)

 

                (6,772

)

 Impact of US CARES Act (6)

 

                       -

 

 

              13,998

 

 

                         -

 

 

                13,998

 

 Non-GAAP Adjusted Income Tax Provision  

 $

            19,925

 

 $

           19,107

 

 $

              33,222

 

 $

             30,247

 

 
 US GAAP Effective Tax Rate 

 

20.7

%

 

0.1

%

 

39.1

%

 

13.7

%

 Non-GAAP Adjusted Effective Tax Rate 

 

21.5

%

 

21.5

%

 

21.6

%

 

22.0

%

 
 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 and six months ended October 31, 2021 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

)

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 Income. It also includes the amortization of acquired product development assets, which is reflected in "Cost of sales" in the Condensed Consolidated Statements of Net Income.
 

(4

)

The gain on sale of certain assets is due to the sale of our world languages product portfolio which was included in our Academic & Professional Learning segment and resulted in a pretax gain of approximately $3.7 million during the six months ended October 31, 2021.
 

(5

)

In the three months ended July 31, 2021, the UK enacted legislation that increased its statutory rate from 19% to 25% effective April 1, 2023. This resulted in a $20.7 million, or $0.37 per share non-cash deferred tax expense from the re-measurement of the Company’s applicable UK net deferred tax liabilities during the three months ended July 31, 2021. These adjustments impacted deferred taxes.

 

In the three months ended July 31, 2020, the UK enacted legislation that increased its statutory rate from 17% to 19%.  This resulted in a $6.7 million, or $0.12 per share non-cash deferred tax expense from the re-measurement of the Company’s applicable UK net deferred tax liabilities during the three months ended July 31, 2020. These adjustments impacted deferred taxes.

 

(6

)

In connection with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and certain regulations, we carried back our April 30, 2020 US net operating loss (NOL) to our year ended April 30, 2015 and claimed a $20.7 million refund.  The refund plus interest was received in February 2021.  The NOL was carried back to fiscal year 2015 when the US corporate tax rate was 35.0%.  The carryback to a year with a higher rate, plus certain additional net permanent deductions included in the carryback resulted in a $14.0 million tax benefit, or $(0.25) per share, $8.4 million from current taxes and $5.6 million from deferred taxes, for the three and six months ended October 31, 2020. 
 

(7

)

For the three and six months ended October 31, 2021 and 2020, substantially all of the tax impact was from deferred taxes.
JOHN WILEY & SONS, INC.
SUPPLEMENTARY INFORMATION (1)
RECONCILIATION OF US GAAP NET INCOME TO NON-GAAP EBITDA AND ADJUSTED EBITDA
(unaudited)
 
Three Months Ended Six Months Ended
October 31, October 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 Net Income 

 $

          55,967

 

 $

         68,432

 

 $

             69,797

 

 $

             84,766

 

Interest expense

 

               4,997

 

 

              4,461

 

 

                  9,636

 

 

                  9,075

 

Provision for income taxes

 

             14,648

 

 

                   81

 

 

                44,820

 

 

                13,481

 

Depreciation and amortization

 

             54,555

 

 

            48,430

 

 

              109,121

 

 

                97,937

 

 Non-GAAP EBITDA 

 

           130,167

 

 

          121,404

 

 

              233,374

 

 

              205,259

 

Restructuring and related (credits) charges

 

              (1,333

)

 

              1,920

 

 

                (1,609

)

 

                  4,138

 

Foreign exchange transaction losses

 

               1,370

 

 

                 697

 

 

                  1,000

 

 

                     779

 

Loss (gain) on sale of certain assets

 

                    56

 

 

                    -

 

 

                (3,694

)

 

                        -

 

Other income, net

 

              (3,150

)

 

             (3,766

)

 

                (6,703

)

 

                 (8,157

)

 Non-GAAP Adjusted EBITDA 

 $

        127,110

 

 $

       120,255

 

 $

           222,368

 

 $

           202,019

 

 Adjusted EBITDA Margin 

 

23.8

%

 

24.5

%

 

21.8

%

 

21.9

%

 
 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 and six months ended October 31, 2021 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)
 
% Change
Three Months Ended October 31, Favorable (Unfavorable)

 

2021

 

 

2020

 

Reported

Constant Currency

Research Publishing & Platforms:
Revenue, net
Research Publishing

 $

              262,873

 

 $

                240,691

 

9%

9%

Research Platforms

 

                   12,281

 

 

                     10,643

 

15%

15%

Total Revenue, net

 $

              275,154

 

 $

                251,334

 

9%

9%

 
Contribution to Profit

 $

                77,031

 

 $

                  74,088

 

4%

8%

Adjustments:
Restructuring charges (credits)

 

                          22

 

 

                         (238

)

#

#

Non-GAAP Adjusted Contribution to Profit 

 $

                77,053

 

 $

                  73,850

 

4%

8%

Depreciation and amortization

 

                   23,464

 

 

                     19,765

 

-19%

-18%

Non-GAAP Adjusted EBITDA

 $

              100,517

 

 $

                  93,615

 

7%

10%

Adjusted EBITDA margin

 

36.5

%

 

37.2

%

 
Academic & Professional Learning:
Revenue, net
Education Publishing (2)

 $

                98,581

 

 $

                102,428

 

-4%

-5%

Professional Learning

 

                   77,948

 

 

                     67,485

 

16%

15%

Total Revenue, net

 $

              176,529

 

 $

                169,913

 

4%

3%

 
Contribution to Profit 

 $

                41,071

 

 $

                  30,007

 

37%

36%

Adjustments:
Restructuring (credits) charges

 

                      (465

)

 

                       1,541

 

#

#

Non-GAAP Adjusted Contribution to Profit

 $

                40,606

 

 $

                  31,548

 

29%

28%

Depreciation and amortization

 

                   18,148

 

 

                     17,720

 

-2%

-2%

Non-GAAP Adjusted EBITDA

 $

                58,754

 

 $

                  49,268

 

19%

18%

Adjusted EBITDA margin

 

33.3

%

 

29.0

%

 
Education Services:
Revenue, net
University Services (3)

 $

                58,081

 

 $

                  56,261

 

3%

3%

Talent Development Services (2) (4)

 

                   23,239

 

 

                     13,503

 

72%

67%

Total Revenue, net

 $

                81,320

 

 $

                  69,764

 

17%

15%

 
Contribution to Profit

 $

                     721

 

 $

                    7,296

 

-90%

-91%

Adjustments:
Restructuring charges

 

                            6

 

 

                            84

 

93%

93%

Non-GAAP Adjusted Contribution to Profit

 $

                     727

 

 $

                    7,380

 

-90%

-91%

Depreciation and amortization

 

                     8,813

 

 

                       7,210

 

-22%

-22%

Non-GAAP Adjusted EBITDA

 $

                  9,540

 

 $

                  14,590

 

-35%

-35%

Adjusted EBITDA margin

 

11.7

%

 

20.9

%

 
Corporate Expenses:

 $

              (44,935

)

 $

                 (41,486

)

-8%

-8%

Adjustments:
Restructuring (credits) charges

 

                      (896

)

 

                          533

 

#

#

Non-GAAP Adjusted Contribution to Profit

 $

              (45,831

)

 $

                 (40,953

)

-12%

-12%

Depreciation and amortization

 

                     4,130

 

 

                       3,735

 

-11%

-11%

Non-GAAP Adjusted EBITDA

 $

              (41,701

)

 $

                 (37,218

)

-12%

-12%

                 
Consolidated Results:
Revenue, net

 $

              533,003

 

 $

                491,011

 

9%

8%

 
Operating Income

 $

                73,888

 

 $

                  69,905

 

6%

9%

Adjustments:
Restructuring (credits) charges

 

                   (1,333

)

 

                       1,920

 

#

#

Non-GAAP Adjusted Contribution to Profit 

 $

                72,555

 

 $

                  71,825

 

1%

4%

Depreciation and amortization

 

                   54,555

 

 

                     48,430

 

-13%

-12%

Non-GAAP Adjusted EBITDA

 $

              127,110

 

 $

                120,255

 

6%

7%

Adjusted EBITDA margin

 

23.8

%

 

24.5

%

 
 Notes:                 
(1) The supplementary information included in this press release for the three and six months ended October 31, 2021 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) In May 2021, we moved the WileyNXT product offering from Academic & Professional Learning – Education Publishing to Education Services – Talent Development Services. As a result, the prior period results related to the WileyNXT product offering have been included in Education Services - Talent Development Services. The Revenue, Adjusted Contribution to Profit and Adjusted EBITDA for WileyNXT was $0.7 million, $(0.1) million, and $(0.1) million, respectively, for the three months ended October 31, 2020. The Revenue, Adjusted Contribution to Profit and Adjusted EBITDA for WileyNXT was $1.2 million, $(0.2) million, and $(0.2) million, respectively, for the six months ended October 31, 2020. There were no changes to our total consolidated financial results.
 
(3) University Services was previously referred to as Education Services OPM. 
 
(4) Talent Development Services was previously referred to as mthree.
 
#Variance greater than 100%
JOHN WILEY & SONS, INC.
SUPPLEMENTARY INFORMATION (1)
SEGMENT RESULTS
(in thousands)
(unaudited)
% Change
Six Months Ended October 31, Favorable (Unfavorable)

 

2021

 

 

2020

 

Reported

 

Constant Currency

Research Publishing & Platforms:  
Revenue, net  
Research Publishing

 $

              526,231

 

 $

                471,155

 

12%

 

9%

Research Platforms

 

                   23,679

 

 

                     20,989

 

13%

 

13%

Total Revenue, net

 $

              549,910

 

 $

                492,144

 

12%

 

10%

   
Contribution to Profit

 $

              155,839

 

 $

                143,906

 

8%

 

9%

Adjustments:  
Restructuring charges (credits)

 

                        238

 

 

                         (435

)

#

 

#

Non-GAAP Adjusted Contribution to Profit 

 $

              156,077

 

 $

                143,471

 

9%

 

9%

Depreciation and amortization

 

                   47,226

 

 

                     39,466

 

-20%

 

-18%

Non-GAAP Adjusted EBITDA

 $

              203,303

 

 $

                182,937

 

11%

 

11%

Adjusted EBITDA margin

 

37.0

%

 

37.2

%

 
   
Academic & Professional Learning:  
Revenue, net  
Education Publishing (2)

 $

              164,961

 

 $

                166,031

 

-1%

 

-3%

Professional Learning

 

                 150,832

 

 

                   130,314

 

16%

 

14%

Total Revenue, net

 $

              315,793

 

 $

                296,345

 

7%

 

5%

   
Contribution to Profit

 $

                49,223

 

 $

                  29,729

 

66%

 

61%

Adjustments:  
Restructuring (credits) charges

 

                      (294

)

 

                       1,574

 

#

 

#

Non-GAAP Adjusted Contribution to Profit

 $

                48,929

 

 $

                  31,303

 

56%

 

52%

Depreciation and amortization

 

                   36,512

 

 

                     36,524

 

0%

 

1%

Non-GAAP Adjusted EBITDA

 $

                85,441

 

 $

                  67,827

 

26%

 

23%

Adjusted EBITDA margin

 

27.1

%

 

22.9

%

 
   
Education Services:  
Revenue, net  
University Services (3)

 $

              112,475

 

 $

                106,523

 

6%

 

5%

Talent Development Services (2)(4)

 

                   43,213

 

 

                     27,325

 

58%

 

50%

Total Revenue, net

 $

              155,688

 

 $

                133,848

 

16%

 

14%

   
Contribution to Profit

 $

                (1,106

)

 $

                    7,752

 

#

 

#

Adjustments:  
Restructuring (credits) charges

 

                        (28

)

 

                          223

 

#

 

#

Non-GAAP Adjusted Contribution to Profit

 $

                (1,134

)

 $

                    7,975

 

#

 

#

Depreciation and amortization

 

                   17,116

 

 

                     14,489

 

-18%

 

-17%

Non-GAAP Adjusted EBITDA

 $

                15,982

 

 $

                  22,464

 

-29%

 

-30%

Adjusted EBITDA margin

 

10.3

%

 

16.8

%

 
   
Corporate Expenses:

 $

              (89,100

)

 $

                 (81,443

)

-9%

 

-9%

Adjustments:  
Restructuring (credits) charges

 

                   (1,525

)

 

                       2,776

 

#

 

#

Non-GAAP Adjusted Contribution to Profit

 $

              (90,625

)

 $

                 (78,667

)

-15%

 

-14%

Depreciation and amortization

 

                     8,267

 

 

                       7,458

 

-11%

 

-11%

Non-GAAP Adjusted EBITDA

 $

              (82,358

)

 $

                 (71,209

)

-16%

 

-15%

                   
Consolidated Results:  
Revenue, net

 $

           1,021,391

 

 $

                922,337

 

11%

 

9%

   
Operating Income

 $

              114,856

 

 $

                  99,944

 

15%

 

15%

Adjustments:  
Restructuring (credits) charges

 

                   (1,609

)

 

                       4,138

 

#

 

#

Non-GAAP Adjusted Contribution to Profit 

 $

              113,247

 

 $

                104,082

 

9%

 

9%

Depreciation and amortization

 

                 109,121

 

 

                     97,937

 

-11%

 

-10%

Non-GAAP Adjusted EBITDA

 $

              222,368

 

 $

                202,019

 

10%

 

9%

Adjusted EBITDA margin

 

21.8

%

 

21.9

%

 
   
#Variance greater than 100%  
JOHN WILEY & SONS, INC.
SUPPLEMENTARY INFORMATION (1)
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands)
(unaudited)
 
October 31, April 30,

2021

2021

Assets:
Current assets
Cash and cash equivalents

 $

        100,898

 $

        93,795

Accounts receivable, net 

 

           291,891

 

         311,571

Inventories, net

 

             39,725

 

           42,538

Prepaid expenses and other current assets

 

             67,952

 

           78,393

Total current assets

 

           500,466

 

         526,297

 
Product development assets, net

 

             46,274

 

           49,517

Royalty advances, net

 

             15,260

 

           39,582

Technology, property and equipment, net

 

           271,774

 

         282,270

Intangible assets, net

 

           970,036

 

      1,015,302

Goodwill

 

        1,302,234

 

      1,304,340

Operating lease right-of-use assets

 

           121,708

 

         121,430

Other non-current assets

 

           118,279

 

         107,701

Total assets

 $

     3,346,031

 $

   3,446,439

 
Liabilities and shareholders' equity:
Current liabilities
Accounts payable

 $

          51,271

 $

        95,791

Accrued royalties

 

           102,137

 

           78,582

Short-term portion of long-term debt

 

             12,500

 

           12,500

Contract liabilities

 

           267,890

 

         545,425

Accrued employment costs

 

             85,890

 

         144,744

Accrued income taxes

 

             12,862

 

             8,590

Short-term portion of operating lease liabilities

 

             22,353

 

           22,440

Other accrued liabilities

 

             89,606

 

           80,900

Total current liabilities

 

           644,509

 

         988,972

Long-term debt

 

        1,032,505

 

         809,088

Accrued pension liability

 

           126,198

 

         146,247

Deferred income tax liabilities

 

           187,931

 

         172,903

Operating lease liabilities

 

           143,638

 

         145,832

Other long-term liabilities

 

           104,585

 

           92,106

Total liabilities

 

        2,239,366

 

      2,355,148

Shareholders' equity

 

        1,106,665

 

      1,091,291

Total liabilities and shareholders' equity

 $

     3,346,031

 $

   3,446,439

   
 Notes:         
(1) The supplementary information included in this press release for October 31, 2021 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)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Six Months Ended
October 31,

 

2021

 

 

2020

 

Operating activities:
Net income

 $

          69,797

 

 

              84,766

 

Amortization of intangible assets

 

             42,627

 

 

              34,057

 

Amortization of product development assets

 

             18,088

 

 

              17,448

 

Depreciation and amortization of technology, property, and equipment

 

             48,406

 

 

              46,432

 

Other noncash charges

 

             56,311

 

 

              51,624

 

Net change in operating assets and liabilities

 

          (310,851

)

 

          (310,949

)

Net cash used in operating activities

 

            (75,622

)

 

            (76,622

)

 
Investing activities:
Additions to technology, property, and equipment

 

            (37,676

)

 

            (36,430

)

Product development spending

 

            (13,001

)

 

            (10,999

)

Businesses acquired in purchase transactions, net of cash acquired

 

            (13,615

)

 

                 (229

)

Proceeds related to the sale of certain assets

 

               3,375

 

 

                     -

 

Acquisitions of publication rights and other

 

              (1,654

)

 

            (14,021

)

Net cash used in investing activities

 

            (62,571

)

 

            (61,679

)

 
Financing activities:
Net debt borrowings

 

           227,476

 

 

              59,590

 

Cash dividends

 

            (38,619

)

 

            (38,480

)

Purchases of treasury shares

 

            (17,367

)

 

                     -

 

Other

 

            (24,444

)

 

              (2,511

)

Net cash provided by financing activities

 

           147,046

 

 

              18,599

 

 
Effects of exchange rate changes on cash, cash equivalents and restricted cash

 

              (1,742

)

 

                3,301

 

 
Change in cash, cash equivalents and restricted cash for period

 

               7,111

 

 

          (116,401

)

 
Cash, cash equivalents and restricted cash - beginning

 

             94,359

 

 

            203,047

 

Cash, cash equivalents and restricted cash - ending

 $

        101,470

 

 $

           86,646

 

 
CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT DEVELOPMENT SPENDING (2)
 
 Six Months Ended 
 October 31, 

 

2021

 

 

2020

 

Net cash used in operating activities

 $

         (75,622

)

 $

         (76,622

)

Less: Additions to technology, property, and equipment

 

            (37,676

)

 

            (36,430

)

Less: Product development spending

 

            (13,001

)

 

            (10,999

)

Free cash flow less product development spending

 $

       (126,299

)

 $

       (124,051

)

 
 Notes:          
(1) The supplementary information included in this press release for the six months ended October 31, 2021 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) See Explanation of Usage of Non-GAAP Performance Measures included in this supplemental information.
JOHN WILEY & SONS, INC.
EXPLANATION OF USAGE OF NON-GAAP PERFORMANCE MEASURES
In this earnings release and supplemental information, management may present the following non-GAAP performance measures:
·        Adjusted Earnings Per Share (Adjusted EPS);
·        Free Cash Flow less Product Development Spending;
·        Adjusted Contribution to Profit and margin;
·        Adjusted 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 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 since we believe Adjusted EBITDA provides additional useful information to certain investors and financial analysts for operational trends and comparisons over time as it removes the impact of depreciation and amortization expense, as well as a consistent basis to evaluate operating profitability and comparing our financial performance to that of our peer companies and competitors.  
For example:
  • Adjusted EPS, Adjusted Contribution to Profit, 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 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 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 2022 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.

 

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