Building
A better future
through education, skill development and research
Building
through education, skill development and research
HOBOKEN, N.J.--(BUSINESS WIRE)--John Wiley & Sons, Inc. (NYSE: JW-A and JW-B), a global research and learning company, today announced results for the third quarter ending January 31, 2018.
MANAGEMENT COMMENTARY
“We continue to see good momentum in
the business, with steady year-to-date growth in Research, improved
profitability in Solutions, and better-than-expected results in
Publishing,” said Brian Napack, Wiley’s President and CEO. “We are
realizing operating margin and earnings growth while also making great
progress in how we operate, invest, and innovate, positioning us to
drive more value from our existing businesses and exploit new market
opportunities.”
FINANCIAL SUMMARY
Wiley provides non-GAAP financial measures
such as “Adjusted EPS,” “Adjusted Operating Income,” “Adjusted CTP,”
“Free Cash Flow less Product Development Spending,” 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,
provide for a more comparable basis to analyze operating results and
earnings. See the reconciliations of non-GAAP financials and
explanations of the uses of non-GAAP measures in the supplementary
information accompanying this press release.
GAAP Measures
|
Q3 2018 | Q3 2017 | Change |
Change
|
||||||||||||
Revenue | $455.7 | $436.5 | 4% | (1%) | ||||||||||||
Operating Income | $67.4 | $51.2 | 32% | |||||||||||||
Diluted EPS | $1.19 | $0.82 | 45% | |||||||||||||
Non-GAAP Measures | Q3 2018 | Q3 2017 |
Change
|
|||||||||||||
Adjusted Operating Income | $69.6 | $60.3 | 2% | |||||||||||||
Adjusted EPS | $0.87 | $0.89 | (14%) | |||||||||||||
RESEARCH SEGMENT
Metric ($M) | Q3 2018 | Q3 2017 | Change |
Change
|
||||||||||||
Revenue | $223.5 | $205.8 | 9% | 1% | ||||||||||||
GAAP CTP | $59.3 | $52.5 | 13% | |||||||||||||
Adjusted CTP | $60.0 | $53.0 | (2%) | |||||||||||||
CTP – Contribution to Profit.
PUBLISHING SEGMENT
Metric ($M) | Q3 2018 | Q3 2017 | Change |
Change
|
||||||||||||
Revenue | $170.2 | $171.4 | (1%) | (3%) | ||||||||||||
GAAP CTP | $48.5 | $38.8 | 25% | |||||||||||||
Adjusted CTP | $48.1 | $39.8 | 16% | |||||||||||||
SOLUTIONS SEGMENT
Metric ($M) | Q3 2018 | Q3 2017 | Change |
Change
|
||||||||||||
Revenue | $61.9 | $59.2 | 5% | 2% | ||||||||||||
GAAP CTP | $6.4 | $3.6 | 78% | |||||||||||||
Adjusted CTP | $7.7 | $4.7 | 67% | |||||||||||||
NINE MONTH RESULTS
GAAP Measures
|
YTD 2018 | YTD 2017 | Change |
Change
|
||||||||||||
Revenue | $1,318.9 | $1,266.3 | 4% | 1% | ||||||||||||
Operating Income | $164.7 | $142.7 | 15% | |||||||||||||
Diluted EPS | $2.39 | $1.15 | ||||||||||||||
Cash Provided by Operations | $190.1 | $229.2 | (17%) | |||||||||||||
Non-GAAP Measures | YTD 2018 | YTD 2017 |
Change
|
|||||||||||||
Adjusted Operating Income | $194.8 | $166.6 | 3% | |||||||||||||
Adjusted EPS | $2.49 | $2.20 | 1% | |||||||||||||
Free Cash Flow less Product Development Spending | $80.7 | $119.5 | (32%) | |||||||||||||
FISCAL YEAR 2018 OUTLOOK
The Company reaffirms its fiscal
2018 guidance:
Metric ($M, except EPS) | FY17 Actual |
FY18 Expectation
|
||||||
Revenue | $1,718.5 | Approximately even | ||||||
Adjusted Operating Income | $228.4 | Approximately even | ||||||
Adjusted EPS | $3.01 | Low-single digit % decline | ||||||
Cash Provided by Operations | $314.5 | $350 million or higher | ||||||
Capital Expenditures | $148.3 | Slightly lower | ||||||
If current rates were to hold through year-end, Wiley would record favorable foreign currency variances in the fiscal year of approximately $49 million in revenue, $27 million in operating income, and $0.34 in EPS due to changes in exchange rates and functional currency gains related to calendar year 2017 journal subscriptions in the UK.
EARNINGS CONFERENCE CALL
Scheduled for today, March 6 at
10:00 a.m. (ET). Access the webcast on Wiley.com,
or https://www.wiley.com/en-us/investors.
U.S. callers, please dial (800) 239-9838 and enter the participant code
1581251#. International callers, please dial (323) 794-2551 and enter
the participant code 1581251#.
ABOUT WILEY
Wiley, a global research and learning 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 2018
Outlook, operations, performance, and financial condition and the
Company’s anticipation of cash tax benefits from the Tax Act. 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 and (x) 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.
(in thousands, except per share data)
(unaudited) |
|||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
January 31, | January 31, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Revenue |
$455,675 |
$436,456 |
$1,318,850 |
$1,266,329 |
|||||||
Costs and expenses: | |||||||||||
Cost of sales | 125,127 | 116,405 | 359,780 | 341,457 | |||||||
Operating and administrative expenses | 248,746 | 247,278 | 731,872 | 729,775 | |||||||
Restructuring and related charges | 2,208 | 9,118 | 26,531 | 15,045 | |||||||
Amortization of intangibles | 12,163 | 12,495 | 35,965 | 37,321 | |||||||
Total Costs and Expenses |
388,244 |
385,296 |
1,154,148 |
1,123,598 |
|||||||
Operating Income | 67,431 | 51,160 | 164,702 | 142,731 | |||||||
As a % of net sales | 14.8% | 11.7% | 12.5% | 11.3% | |||||||
Interest expense | (3,295) | (4,931) | (10,023) | (13,362) | |||||||
Foreign exchange transaction (losses) gains | (6,032) | 2,118 | (11,584) | 1,979 | |||||||
Interest income and other | 163 | 637 | 744 | 1,365 | |||||||
Income Before Taxes | 58,267 | 48,984 | 143,839 | 132,713 | |||||||
(Benefit) provision for income taxes | (10,575) | 1,565 | 5,713 | 65,745 | |||||||
Effective tax rate | -18.1% | 3.2% | 4.0% | 49.5% | |||||||
Net Income |
$68,842 |
$47,419 |
$138,126 |
$ 66,968 | |||||||
As a % of net sales | 15.1% | 10.9% | 10.5% | 5.3% | |||||||
Weighted-Average Shares - Diluted | 57,871 | 58,012 | 57,736 | 58,181 | |||||||
Earnings per share - Diluted | $ 1.19 | $ 0.82 | $ 2.39 | $ 1.15 | |||||||
(1) The supplementary information included in this press
release for 2018 is preliminary and subject to change prior to |
|||||||||||
(2) All amounts are approximate due to rounding. |
|||||||||||
JOHN WILEY & SONS, INC.
|
||||||||||||
|
||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
January 31, | January 31, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
GAAP Earnings Per Share - Diluted | $ 1.19 | $ 0.82 | $ 2.39 | $ 1.15 | ||||||||
Adjustments: | ||||||||||||
Restructuring and related charges (A) | 0.04 | 0.10 | 0.37 | 0.17 | ||||||||
Foreign exchange losses (gains) on intercompany transactions (B) | 0.07 | (0.03) | 0.16 | 0.01 | ||||||||
Estimated impact of Tax Cuts and Jobs Act (C) | (0.43) | (0.43) | - | |||||||||
Pension settlement (D) | - | - | - | 0.09 | ||||||||
Unfavorable tax settlement (E) | - | - | - | 0.82 | ||||||||
Deferred income tax benefit on UK tax rate change (F) | - | - | - | (0.04) | ||||||||
Non-GAAP Adjusted Earnings Per Share - Diluted | $ 0.87 | $ 0.89 | $ 2.49 | $ 2.20 | ||||||||
Notes: | ||||||||||||
(A) Adjusted results exclude restructuring (credits) charges
and other related charges associated with the Company's
Restructuring and Reinvestment Program. For |
||||||||||||
(B) In 2017, we adjusted results to exclude foreign exchange
gains and losses associated with intercompany transactions. The
prior year adjusted earnings per share |
||||||||||||
(C) In connection with the Tax Cuts and Jobs Act enacted on
December 22, 2017, for the three and nine months ended January 31,
2018, the Company recorded an |
||||||||||||
(D) As previously disclosed and as reported in the Company's
SEC filings, the Company announced a voluntary, limited-time
opportunity for terminated vested |
||||||||||||
(E) As previously disclosed in the Company's SEC filings, the
Company was appealing an unfavorable tax ruling in Germany related
to tax benefits obtained through an |
||||||||||||
(F) As previously disclosed in the Company's SEC filings, the
adjusted results for the nine months ended January 31, 2017
exclude deferred tax benefits of $2.6 million, |
||||||||||||
(1) See Explanation of Usage of Non-GAAP performance measures
included in this supplementary information for additional details
on the reasons why management |
||||||||||||
JOHN WILEY & SONS, INC.
|
|||||||||||||
Three Months Ended January 31, | % Change | ||||||||||||
2018 | 2017 |
Reported |
Constant
|
||||||||||
Research: | |||||||||||||
Revenue | |||||||||||||
Journal Subscriptions | $ 160,287 | $ 149,991 | 7% | -2% | |||||||||
Open Access | 9,905 | 6,915 | 43% | 39% | |||||||||
Licensing, Reprints, Backfiles and Other | 45,035 | 40,901 | 10% | 5% | |||||||||
|
Total Journal Revenue |
215,227 | 197,807 | 9% | 1% | ||||||||
Publishing Technology Services (Atypon) | 8,262 | 7,962 | 4% | 4% | |||||||||
Total Revenue | $ 223,489 | $ 205,769 | 9% | 1% | |||||||||
Contribution to Profit | $ 59,299 | $ 52,508 | 13% | -2% | |||||||||
Adjustments: | |||||||||||||
Restructuring charges | 690 | 517 | |||||||||||
Non-GAAP Adjusted Contribution to Profit | $ 59,989 | $ 53,025 | 13% | -2% | |||||||||
Publishing: | |||||||||||||
Revenue | |||||||||||||
STM and Professional Publishing | 80,775 | 76,899 | 5% | 2% | |||||||||
Education Publishing | 48,446 | 50,343 | -4% | -6% | |||||||||
Course Workflow (WileyPLUS) | 21,406 | 23,464 | -9% | -9% | |||||||||
Test Preparation and Certification | 7,758 | 8,508 | -9% | -9% | |||||||||
Licensing, Distribution, Advertising and Other | 11,859 | 12,226 | -3% | -6% | |||||||||
Total Revenue | $ 170,244 | $ 171,440 | -1% | -3% | |||||||||
Contribution to Profit | $ 48,472 | $ 38,807 | 25% | 21% | |||||||||
Adjustments: | |||||||||||||
Restructuring (credits) charges | (392) | 1,027 | |||||||||||
Non-GAAP Adjusted Contribution to Profit | $ 48,080 | $ 39,834 | 21% | 16% | |||||||||
Solutions: | |||||||||||||
Revenue | |||||||||||||
Education Services (OPM) | 32,242 | 30,016 | 7% | 7% | |||||||||
Professional Assessment | 13,228 | 13,783 | -4% | -5% | |||||||||
Corporate Learning | 16,472 | 15,448 | 7% | -4% | |||||||||
Total Revenue | $ 61,942 | $ 59,247 | 5% | 2% | |||||||||
Contribution to Profit | $ 6,403 | $ 3,591 | 78% | 82% | |||||||||
Adjustments: | |||||||||||||
Restructuring charges | 1,277 | 1,095 | |||||||||||
Non-GAAP Adjusted Contribution to Profit | $ 7,680 | $ 4,686 | 64% | 67% | |||||||||
Corporate Expenses: | $ (46,743) | $ (43,746) | 7% | 4% | |||||||||
Adjustments: | |||||||||||||
Restructuring charges | 633 | 6,479 | |||||||||||
Non-GAAP Adjusted Corporate Expenses | $ (46,110) | $ (37,267) | 24% | 21% | |||||||||
Total Consolidated Revenue | $ 455,675 | $ 436,456 | 4% | -1% | |||||||||
Consolidated Operating Income | $ 67,431 | $ 51,160 | 32% | 15% | |||||||||
Adjustments: | |||||||||||||
Restructuring charges | $ 2,208 | $ 9,118 | |||||||||||
Non-GAAP Adjusted Operating Income | $ 69,639 | $ 60,278 | 16% | 2% | |||||||||
As a % of sales | 15.3% | 13.8% | |||||||||||
(1) The supplementary information included in this press
release for 2018 is preliminary and subject to change prior to the
filing of our |
|||||||||||||
JOHN WILEY & SONS, INC. |
|||||||||||||
Nine Months Ended January 31, | % Change | ||||||||||||
2018 | 2017 |
Reported |
Constant
|
||||||||||
Research: | |||||||||||||
Revenue | |||||||||||||
Journal Subscriptions | $ 498,775 | $ 472,401 | 6% | -1% | |||||||||
Open Access | 28,058 | 21,851 | 28% | 27% | |||||||||
Licensing, Reprints, Backfiles and Other | 124,594 | 114,295 | 9% | 7% | |||||||||
Total Journal Revenue | 651,427 | 608,547 | 7% | 2% | |||||||||
Publishing Technology Services (Atypon) | 24,559 | 10,440 | 135% | 135% | |||||||||
Total Revenue | $ 675,986 | $ 618,987 | 9% | 4% | |||||||||
Contribution to Profit | $ 191,923 | $ 173,235 | 11% | -2% | |||||||||
Adjustments: | |||||||||||||
Restructuring charges | 5,138 | 677 | |||||||||||
Non-GAAP Adjusted Contribution to Profit | $ 197,061 | $ 173,912 | 13% | 1% | |||||||||
Publishing: | |||||||||||||
Revenue | |||||||||||||
STM and Professional Publishing | $ 215,835 | $ 215,734 | 0% | -1% | |||||||||
Education Publishing | 151,893 | 162,669 | -7% | -8% | |||||||||
Course Workflow (WileyPLUS) | 38,926 | 44,170 | -12% | -12% | |||||||||
Test Preparation and Certification | 27,167 | 25,585 | 6% | 6% | |||||||||
Licensing, Distribution, Advertising and Other | 32,686 | 31,543 | 4% | 2% | |||||||||
Total Revenue | $ 466,507 | $ 479,701 | -3% | -4% | |||||||||
Contribution to Profit | $ 95,957 | $ 94,639 | 1% | -1% | |||||||||
Adjustments: | |||||||||||||
Restructuring charges | 6,933 | 1,596 | |||||||||||
Publishing brand impairment charge | 3,600 | - | |||||||||||
Non-GAAP Adjusted Contribution to Profit | $ 106,490 | $ 96,235 | 11% | 8% | |||||||||
Solutions: | |||||||||||||
Revenue | |||||||||||||
Education Services (OPM) | $ 88,316 | $ 81,195 | 9% | 9% | |||||||||
Professional Assessment | 43,936 | 43,451 | 1% | 1% | |||||||||
Corporate Learning | 44,105 | 42,995 | 3% | -3% | |||||||||
Total Revenue | $ 176,357 | $ 167,641 | 5% | 4% | |||||||||
Contribution to Profit | $ 11,744 | $ 9,097 | 29% | 30% | |||||||||
Adjustments: | |||||||||||||
Restructuring charges | $ 3,447 | $ 1,619 | |||||||||||
Non-GAAP Adjusted Contribution to Profit | $ 15,191 | $ 10,716 | 42% | 43% | |||||||||
Corporate Expenses: | $ (134,922) | $ (134,240) | 1% | 0% | |||||||||
Adjustments: | |||||||||||||
Restructuring charges | 11,013 | 11,153 | |||||||||||
Pension settlement | - | 8,842 | |||||||||||
Non-GAAP Adjusted Corporate Expenses | $ (123,909) | $ (114,245) | 8% | 7% | |||||||||
Total Consolidated Revenue | $ 1,318,850 | $ 1,266,329 | 4% | 1% | |||||||||
Consolidated Operating Income | $ 164,702 | $ 142,731 | 15% | 0% | |||||||||
Adjustments: | |||||||||||||
Restructuring charges | 26,531 | 15,045 | |||||||||||
Publishing brand impairment charge | 3,600 | - | |||||||||||
Pension settlement | - | 8,842 | |||||||||||
Non-GAAP Adjusted Operating Income | $ 194,833 | $ 166,618 | 17% | 3% | |||||||||
As a % of sales | 14.8% | 13.2% | |||||||||||
(1) The supplementary information included in this press
release for 2018 is preliminary and subject to change prior to the
filing of our |
|||||||||||||
JOHN WILEY & SONS, INC.
|
||||||||
January 31, | April 30, | |||||||
2018 | 2017 | |||||||
Current Assets | ||||||||
Cash and cash equivalents | $ 128,217 | $ 58,516 | ||||||
Accounts receivable | 239,637 | 188,679 | ||||||
Inventories | 43,800 | 47,852 | ||||||
Prepaid and other current assets | 64,001 | 64,688 | ||||||
Total Current Assets | 475,655 | 359,735 | ||||||
Product Development Assets | 85,028 | 80,385 | ||||||
Royalty Advances | 37,177 | 28,320 | ||||||
Technology, Property and Equipment | 273,634 | 243,058 | ||||||
Intangible Assets | 868,631 | 828,099 | ||||||
Goodwill | 1,028,395 | 982,101 | ||||||
Other Non-Current Assets | 90,325 | 84,519 | ||||||
Total Assets | $ 2,858,845 | $ 2,606,217 | ||||||
Current Liabilities | ||||||||
Accounts and royalties payable | $ 204,606 | $ 139,206 | ||||||
Deferred revenue | 409,011 | 436,235 | ||||||
Accrued employment costs | 99,317 | 98,185 | ||||||
Accrued income taxes | 18,726 | 22,222 | ||||||
Accrued pension liability | 5,875 | 5,776 | ||||||
Other accrued liabilities | 95,479 | 86,232 | ||||||
Total Current Liabilities | 833,014 | 787,856 | ||||||
Long-Term Debt | 428,200 | 365,000 | ||||||
Accrued Pension Liability | 210,639 | 214,597 | ||||||
Deferred Income Tax Liabilities | 140,395 | 160,491 | ||||||
Other Long-Term Liabilities | 78,271 | 75,136 | ||||||
Shareholders' Equity | 1,168,326 | 1,003,137 | ||||||
Total Liabilities & Shareholders' Equity | $ 2,858,845 | $ 2,606,217 | ||||||
(1) The supplementary information included in this press
release for 2018 is preliminary and subject to change |
||||||||
JOHN WILEY & SONS, INC.
|
||||||||
Nine Months Ended | ||||||||
January 31, | ||||||||
2018 | 2017 | |||||||
Operating Activities: | ||||||||
Net income | $ 138,126 | $ 66,968 | ||||||
Amortization of intangibles | 35,965 | 37,321 | ||||||
Amortization of product development spending | 30,314 | 29,502 | ||||||
Depreciation of technology, property and equipment | 48,471 | 50,520 | ||||||
Non-cash charges and credits | (58,335) | 79,176 | ||||||
Net change in operating assets and liabilities | (4,419) | (34,335) | ||||||
Cash Provided by Operating Activities | 190,122 | 229,152 | ||||||
Investing Activities: | ||||||||
Additions to technology, property and equipment | (78,958) | (77,722) | ||||||
Product development spending | (30,426) | (31,904) | ||||||
Acquisitions, net of cash acquired | (25,227) | (152,110) | ||||||
Cash Used in Investing Activities | (134,611) | (261,736) | ||||||
Financing Activities: | ||||||||
Net debt borrowings | 66,803 | 260,693 | ||||||
Cash dividends | (55,093) | (53,638) | ||||||
Purchase of treasury shares | (29,257) | (35,362) | ||||||
Other | 21,722 | 7,805 | ||||||
Cash Provided by Financing Activities | 4,175 | 179,498 | ||||||
Effects of Exchange Rate Changes on Cash | 10,015 | (28,399) | ||||||
Change in Cash and Cash Equivalents for Period | 69,701 | 118,515 | ||||||
Cash and Cash Equivalents - Beginning | 58,516 | 363,806 | ||||||
Cash and Cash Equivalents - Ending | $ 128,217 | $ 482,321 | ||||||
CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT DEVELOPMENT SPENDING | ||||||||
Nine Months Ended | ||||||||
January 31, | ||||||||
2018 | 2017 | |||||||
Cash Used in Operating Activities | $ 190,122 | $ 229,152 | ||||||
Less: | Additions to technology, property and equipment | (78,958) | (77,722) | |||||
Less: | Product development spending | (30,426) | (31,904) | |||||
Free Cash Flow less Product Development Spending | $ 80,738 | $ 119,526 | ||||||
See Explanation of Usage of Non-GAAP Measures included in this supplemental information. |
||||||||
(1) The supplementary information included in this press
release for 2018 is preliminary and |
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:
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:
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.
John Wiley & Sons, Inc.
Investor Relations
Brian Campbell, 201-748-6874
brian.campbell@wiley.com
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