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:JWa)(NYSE:JWb), a global research and learning company, today announced the following results for the third quarter of fiscal year 2017, ending January 31:
% Change |
||||||||
$ millions | FY17 | FY16 | Excluding FX | Including FX | ||||
Revenue: |
||||||||
Q3 | $436.5 | $436.4 | 3% | 0% | ||||
Nine Months | $1,266.3 | $1,292.7 | 1% | (2%) | ||||
GAAP EPS: |
|
|||||||
Q3 | $0.82 | $0.61 | 34% | |||||
Nine Months | $1.15 | $1.90 | (39%) | |||||
Adjusted EPS: |
||||||||
Q3 | $0.92 | $0.67 | 37% | 37% | ||||
Nine Months | $2.18 | $2.04 | 9% | 7% | ||||
Adjusted EPS exclude tax charges and credits, restructuring charges and credits, and pension settlement as more fully described in the attached financial schedules. |
Management Commentary
“Results were mixed this quarter,” said Mark Allin, Wiley’s President and CEO. “Research revenue and earnings were fully in line with our expectations, with steady performance from journal subscriptions and double-digit growth from author-funded access. The Solutions business continued to post double-digit revenue growth and very strong profit improvement. We are encouraged by the momentum in the Online Program Management business, with four new partners and nineteen new programs. Publishing revenue showed a significant decline due to market weakness in Books and Reference Material, particularly print.”
Fiscal Year 2017 Outlook
Wiley is reaffirming its fiscal year 2017 operational outlook of mid-single digit decline in adjusted EPS and lowering its operational revenue outlook from flat to a low-single digit decline due to further weakness in print book markets. Operationally speaking, revenue and adjusted EPS for the nine months were down 3% and 6%, respectively. Note, the adjusted full year outlook excludes foreign exchange, the favorable impact from shifting to time-based journal subscription agreements (+$34 million in revenue and +$0.38 in EPS), and the partial year revenue contribution (approximately +$20 million) and EPS dilution (approximately -$0.10) of recent acquisitions. Also note, the fiscal year 2017 impact of the shift to time-based journal agreements was projected to be +$37 million of revenue and +$0.42 of EPS; however, due to the prolonged weakness in the British Pound, the FY17 impact has lowered to+$34 million and +0.38 per share.
Foreign Exchange (FX)
Note that foreign exchange was adverse to third quarter revenue by $12.9 million, neutral to EPS and adverse to nine month revenue and adjusted EPS by $36.8 million and $0.05, respectively. Wiley generates approximately half of its revenue from outside the United States and is therefore exposed to foreign exchange rate fluctuations, particularly in relation to the euro and pound sterling. The weighted average rates for fiscal 2016 were 1.11 and 1.50, respectively. Throughout this report, references are made to variances “excluding foreign exchange” or “on a constant currency basis”; such amounts exclude both currency translation effects and transactional gains and losses.
Adjusted Results
The Company provides financial measures referred to as “adjusted” contribution to profit and EPS, which exclude a previously announced tax charge; restructuring charges; a pension settlement charge related to voluntary lump sum buyouts; and certain deferred tax benefits as more fully described in the attached financial schedules. Variances to adjusted contribution to profit and EPS are on a constant currency basis unless otherwise noted. Management believes the exclusion of such items provides additional information to facilitate the analysis of results. These non-GAAP measures are not intended to replace the financial results reported in accordance with GAAP.
Third Quarter Summary
RESEARCH (JOURNALS AND ATYPON)
PUBLISHING (BOOKS, COURSE WORKFLOW, ONLINE TEST PREPARATION)
SOLUTIONS (ONLINE PROGRAM MANAGEMENT, CORPORATE LEARNING AND ASSESSMENT)
Earnings Conference Call
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
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 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.
About Wiley
Wiley is a global research and learning company. Through the Research segment, the Company provides scientific, technical, medical, and scholarly journals, as well as related content and services, for academic, corporate, and government libraries, learned societies, and individual researchers and other professionals. The Publishing segment provides scientific (STM), professional development, and education books and related content, as well as test preparation services and course workflow tools, to libraries, corporations, students, professionals, and researchers. In Solutions, Wiley provides online program management services for higher education institutions, and learning, development, and assessment services for businesses and professionals.
JOHN WILEY & SONS, INC. | ||||||||||||||||||||||||||
UNAUDITED SUMMARY OF OPERATIONS | ||||||||||||||||||||||||||
FOR THE THIRD QUARTER AND NINE MONTHS ENDED | ||||||||||||||||||||||||||
JANUARY 31, 2017 AND 2016 | ||||||||||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||||||||
THIRD QUARTER ENDED JANUARY 31, |
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2017 | 2016 | % Change | ||||||||||||||||||||||||
US GAAP | Adjustments | Adjusted | US GAAP | Adjustments | Adjusted | US GAAP | Adjusted excl. FX | |||||||||||||||||||
Revenue | $ | 436,456 | - | 436,456 | 436,393 | - | 436,393 | 0 | % | 3 | % | |||||||||||||||
Costs and Expenses | ||||||||||||||||||||||||||
Cost of Sales | 116,405 | - | 116,405 | 120,215 | - | 120,215 | -3 | % | 0 | % | ||||||||||||||||
Operating and Administrative | 247,278 | - | 247,278 | 250,667 | - | 250,667 | -1 | % | 2 | % | ||||||||||||||||
Restructuring Charges (A) | 9,118 | (9,118 | ) | - | 13,713 | (13,713 | ) | - | ||||||||||||||||||
Amortization of Intangibles | 12,495 | - | 12,495 | 12,179 | - | 12,179 | 3 | % | 8 | % | ||||||||||||||||
Total Costs and Expenses | 385,296 | (9,118 | ) | 376,178 | 396,774 | (13,713 | ) | 383,061 | -3 | % | 1 | % | ||||||||||||||
Operating Income | 51,160 | 9,118 | 60,278 | 39,619 | 13,713 | 53,332 | 29 | % | 14 | % | ||||||||||||||||
Operating Margin | 11.7 | % | - | 13.8 | % | 9.1 | % | - | 12.2 | % | ||||||||||||||||
Interest Expense | (4,931 | ) | - | (4,931 | ) | (4,590 | ) | - | (4,590 | ) | 7 | % | 7 | % | ||||||||||||
Foreign Exchange Gain | 2,118 | - | 2,118 | 1,431 | - | 1,431 | ||||||||||||||||||||
Interest Income and Other | 637 | - | 637 | 786 | - | 786 | -19 | % | -16 | % | ||||||||||||||||
Income Before Taxes | 48,984 | 9,118 | 58,102 | 37,246 | 13,713 | 50,959 | 32 | % | 14 | % | ||||||||||||||||
Provision for Income Taxes (A) | 1,565 | 3,359 | 4,924 | 1,728 | 10,000 | 11,728 | -9 | % | -58 | % | ||||||||||||||||
Net Income | $ | 47,419 | 5,759 | 53,178 | 35,518 | 3,713 | 39,231 | 34 | % | 35 | % | |||||||||||||||
Earnings Per Share- Diluted (A) | $ | 0.82 | 0.10 | 0.92 | 0.61 | 0.06 | 0.67 | 34 | % | 37 | % | |||||||||||||||
Average Shares - Diluted | 58,012 | 58,012 | 58,012 | 58,204 | 58,204 | 58,204 | ||||||||||||||||||||
NINE MONTHS ENDED JANUARY 31, |
||||||||||||||||||||||||||
2017 | 2016 | % Change | ||||||||||||||||||||||||
US GAAP | Adjustments | Adjusted | US GAAP | Adjustments | Adjusted | US GAAP | Adjusted excl. FX | |||||||||||||||||||
Revenue | $ | 1,266,329 | - | 1,266,329 | 1,292,736 | - | 1,292,736 | -2 | % | 1 | % | |||||||||||||||
Costs and Expenses | ||||||||||||||||||||||||||
Cost of Sales | 341,457 | - | 341,457 | 356,357 | - | 356,357 | -4 | % | -1 | % | ||||||||||||||||
Operating and Administrative (B) | 729,775 | (8,842 | ) | 720,933 | 733,503 | - | 733,503 | -1 | % | 1 | % | |||||||||||||||
Restructuring Charges (A) | 15,045 | (15,045 | ) | - | 20,832 | (20,832 | ) | - | ||||||||||||||||||
Amortization of Intangibles | 37,321 | - | 37,321 | 37,251 | - | 37,251 | 0 | % | 5 | % | ||||||||||||||||
Total Costs and Expenses | 1,123,598 | (23,887 | ) | 1,099,711 | 1,147,943 | (20,832 | ) | 1,127,111 | -2 | % | 0 | % | ||||||||||||||
Operating Income | 142,731 | 23,887 | 166,618 | 144,793 | 20,832 | 165,625 | -1 | % | 3 | % | ||||||||||||||||
Operating Margin | 11.3 | % | - | 13.2 | % | 11.2 | % | - | 12.8 | % | ||||||||||||||||
Interest Expense | (13,362 | ) | - | (13,362 | ) | (12,487 | ) | - | (12,487 | ) | 7 | % | 7 | % | ||||||||||||
Foreign Exchange Gain | 1,979 | - | 1,979 | 1,389 | - | 1,389 | ||||||||||||||||||||
Interest Income and Other | 1,365 | - | 1,365 | 2,094 | - | 2,094 | -35 | % | -34 | % | ||||||||||||||||
Income Before Taxes | 132,713 | 23,887 | 156,600 | 135,789 | 20,832 | 156,621 | -2 | % | 3 | % | ||||||||||||||||
Provision for Income Taxes (C,D) | 65,745 | (36,244 | ) | 29,501 | 24,214 | 12,767 | 36,981 | 172 | % | -17 | % | |||||||||||||||
Net Income | $ | 66,968 | 60,131 | 127,099 | 111,575 | 8,065 | 119,640 | -40 | % | 9 | % | |||||||||||||||
Earnings Per Share- Diluted | $ | 1.15 | 1.03 | 2.18 | 1.90 | 0.14 | 2.04 | -39 | % | 9 | % | |||||||||||||||
Average Shares - Diluted | 58,181 | 58,181 | 58,181 | 58,711 | 58,711 | 58,711 | ||||||||||||||||||||
See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment. |
JOHN WILEY & SONS, INC. | ||||||||||||||||||
FOR THE THIRD QUARTER AND NINE MONTHS ENDED | ||||||||||||||||||
JANUARY 31, 2017 AND 2016 | ||||||||||||||||||
RECONCILIATION OF US GAAP TO ADJUSTED EPS - DILUTED (UNAUDITED) |
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Third Quarter Ended | Nine Months Ended | |||||||||||||||||
JANUARY 31, | JANUARY 31, | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
US GAAP Earnings Per Share - Diluted | $ | 0.82 | $ | 0.61 | $ | 1.15 | $ | 1.90 | ||||||||||
Adjusted to exclude the following: | ||||||||||||||||||
Restructuring Charges (A) | 0.10 | 0.16 | 0.17 | 0.24 | ||||||||||||||
One-time - Pension Settlement (B) | - | - | 0.09 | - | ||||||||||||||
Unfavorable Tax Settlement (C) | - | - | 0.82 | - | ||||||||||||||
Deferred Income Tax Benefit on UK Rate Change (D) | - | (0.10 | ) | (0.04 | ) | (0.10 | ) | |||||||||||
Adjusted Earnings Per Share - Diluted | $ | 0.92 | $ | 0.67 | $ | 2.18 | $ | 2.04 |
NOTES TO UNAUDITED FINANCIAL STATEMENTS |
||
Adjustments: | ||
A | Restructuring Charges: The adjusted results for the three and nine months ended January 31, 2017 exclude restructuring charges related to the Company's Restructuring and Reinvestment Program of $9.1 million or $0.10 per share, and $15.0 million or $0.17 per share, respectively. The adjusted results for the three and nine months ended January 31, 2016 exclude restructuring charges of $13.7 million or $0.16 per share and $20.8 million or $0.24 per share, respectively. | |
B |
In fiscal year 2017, the Company announced a voluntary, limited-time opportunity for terminated vested employees who were participants in the U.S. defined benefit retirement plan to elect a single lump sum payment of accumulated benefits. The aggregate amount of payments made under this one time election was $28.3 million. The total charge, recorded in the second quarter of fiscal year 2017, including a prorata portion of the unamortized net actuarial loss was $8.8 million or $0.09 per share. |
|
C |
As previously disclosed and as reported in the Company's SEC filings, the Company was appealing an unfavorable tax ruling in Germany related to tax benefits obtained through an increase in the tax deductible basis of certain merged German subsidiaries. In September 2016, the German Federal Fiscal Court issued an unfavorable final judgement in Wiley's longstanding tax appeal. As a consequence, the Company reported a $47.5 million charge, or $0.82 per share in the second quarter of fiscal year 2017. |
|
D | Deferred Income Tax Benefit on UK Rate Change: The adjusted results exclude deferred tax benefits of $2.6 million, or $0.04 per share, for the nine months ended January 31, 2017, and $5.9 million, or $0.10 per share for both the three and nine months ended January 31, 2016. The benefits in these periods are associated with changes in tax legislation enacted in the United Kingdom which reduced the U.K. corporate income tax rates. The benefits reflect the remeasurement of the Company's deferred tax balances to the new income tax rates and had no current cash tax impact. The fiscal year 2016 legislation reduced the U.K. income tax rates to 19% effective April 1, 2017 and 18% effective April 1, 2020, and the fiscal year 2017 legislation further reduced the April 1, 2020 statutory income tax rate to 17%. | |
Non-GAAP Financial Measures: |
||
In addition to providing financial results in accordance with GAAP, the Company has provided adjusted financial results that exclude the impact of other nonrecurring items described in more detail throughout this press release. These non-GAAP financial measures are labeled as "Adjusted" and are used for evaluating the results of operations for internal purposes. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP. Rather, the Company believes the exclusion of such items provides additional information to investors to facilitate the comparison of past and present operations. Unless otherwise noted, adjusted amounts in the attached schedules include foreign exchange. |
JOHN WILEY & SONS, INC. | ||||||||||||||||||||||||||||
UNAUDITED SEGMENT RESULTS | ||||||||||||||||||||||||||||
FOR THE THIRD QUARTER AND NINE MONTHS ENDED | ||||||||||||||||||||||||||||
JANUARY 31, 2017 AND 2016 | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
THIRD QUARTER ENDED JANUARY 31, |
||||||||||||||||||||||||||||
2017 | 2016 | % Change | ||||||||||||||||||||||||||
US GAAP | Adjustments (A,B) | Adjusted | US GAAP | Adjustments (A,B) | Adjusted | US GAAP | Adjusted excl. FX | |||||||||||||||||||||
Revenue |
||||||||||||||||||||||||||||
Research | $ | 205,769 | - | 205,769 | 183,568 | - | 183,568 | 12 | % | 17 | % | |||||||||||||||||
Publishing | 171,440 | - | 171,440 | 200,645 | - | 200,645 | -15 | % | -13 | % | ||||||||||||||||||
Solutions | 59,247 | - | 59,247 | 52,180 | - | 52,180 | 14 | % | 14 | % | ||||||||||||||||||
Total | $ | 436,456 | - | 436,456 | 436,393 | - | 436,393 | 0 | % | 3 | % | |||||||||||||||||
Direct Contribution to Profit |
||||||||||||||||||||||||||||
Research | $ | 89,182 | 517 | 89,699 | 74,876 | 2,497 | 77,373 | 19 | % | 19 | % | |||||||||||||||||
Publishing | 78,444 | 1,027 | 79,471 | 92,602 | 4,121 | 96,723 | -15 | % | -16 | % | ||||||||||||||||||
Solutions | 12,427 | 1,095 | 13,522 | 9,995 | 245 | 10,240 | 24 | % | 32 | % | ||||||||||||||||||
Total | $ | 180,053 | 2,639 | 182,692 | 177,473 | 6,863 | 184,336 | 1 | % | 1 | % | |||||||||||||||||
Contribution to Profit (After Allocated Shared Services |
|
|||||||||||||||||||||||||||
and Admin. Costs) |
||||||||||||||||||||||||||||
Research | $ | 52,508 | 517 | 53,025 | 43,944 | 2,497 | 46,441 | 19 | % | 17 | % | |||||||||||||||||
Publishing | 38,807 | 1,027 | 39,834 | 47,200 | 4,121 | 51,321 | -18 | % | -21 | % | ||||||||||||||||||
Solutions | 3,591 | 1,095 | 4,686 | 1,751 | 245 | 1,996 | 105 | % | 137 | % | ||||||||||||||||||
Total | $ | 94,906 | 2,639 | 97,545 | 92,895 | 6,863 | 99,758 | 2 | % | 0 | % | |||||||||||||||||
Unallocated Shared Services and Admin. Costs | (43,746 | ) | 6,479 | (37,267 | ) | (53,276 | ) | 6,850 | (46,426 | ) | -18 | % | -16 | % | ||||||||||||||
Operating Income | $ | 51,160 | 9,118 | 60,278 | 39,619 | 13,713 | 53,332 | 29 | % | 14 | % | |||||||||||||||||
Total Shared Services and Admin. Costs by Function |
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Distribution and Operation Services | $ | (23,415 | ) | 5,185 | (18,230 | ) | (22,430 | ) | 2,355 | (20,075 | ) | 4 | % | -5 | % | |||||||||||||
Technology and Content Management | (62,464 | ) | (71 | ) | (62,535 | ) | (69,633 | ) | 2,670 | (66,963 | ) | -10 | % | -5 | % | |||||||||||||
Finance | (11,163 | ) | 50 | (11,113 | ) | (14,208 | ) | 2,740 | (11,468 | ) | -21 | % | -1 | % | ||||||||||||||
Other Administration | (31,851 | ) | 1,315 | (30,536 | ) | (31,583 | ) | (915 | ) | (32,498 | ) | 1 | % | -4 | % | |||||||||||||
Total | $ | (128,893 | ) | 6,479 | (122,414 | ) | (137,854 | ) | 6,850 | (131,004 | ) | -7 | % | -4 | % | |||||||||||||
NINE MONTHS ENDED JANUARY 31, |
||||||||||||||||||||||||||||
2017 | 2016 | % Change | ||||||||||||||||||||||||||
US GAAP | Adjustments (A,B) | Adjusted | US GAAP | Adjustments (A,B) | Adjusted | US GAAP | Adjusted excl. FX | |||||||||||||||||||||
Revenue |
||||||||||||||||||||||||||||
Research | $ | 618,987 | - | 618,987 | 595,932 | - | 595,932 | 4 | % | 8 | % | |||||||||||||||||
Publishing | 479,701 | - | 479,701 | 548,656 | - | 548,656 | -13 | % | -11 | % | ||||||||||||||||||
Solutions | 167,641 | - | 167,641 | 148,148 | - | 148,148 | 13 | % | 13 | % | ||||||||||||||||||
Total | $ | 1,266,329 | - | 1,266,329 | 1,292,736 | - | 1,292,736 | -2 | % | 1 | % | |||||||||||||||||
Direct Contribution to Profit |
||||||||||||||||||||||||||||
Research | $ | 284,908 | 677 | 285,585 | 269,615 | 3,363 | 272,978 | 6 | % | 8 | % | |||||||||||||||||
Publishing | 214,454 | 1,596 | 216,050 | 242,620 | 4,380 | 247,000 | -12 | % | -11 | % | ||||||||||||||||||
Solutions | 34,862 | 1,619 | 36,481 | 24,854 | 385 | 25,239 | 40 | % | 44 | % | ||||||||||||||||||
Total | $ | 534,224 | 3,892 | 538,116 | 537,089 | 8,128 | 545,217 | -1 | % | 1 | % | |||||||||||||||||
Contribution to Profit (After Allocated Shared Services |
||||||||||||||||||||||||||||
and Admin. Costs) |
||||||||||||||||||||||||||||
Research | $ | 173,235 | 677 | 173,912 | 171,357 | 3,363 | 174,720 | 1 | % | 4 | % | |||||||||||||||||
Publishing | 94,639 | 1,596 | 96,235 | 111,345 | 4,380 | 115,725 | -15 | % | -15 | % | ||||||||||||||||||
Solutions | 9,097 | 1,619 | 10,716 | 160 | 385 | 545 | ||||||||||||||||||||||
Total | $ | 276,971 | 3,892 | 280,863 | 282,862 | 8,128 | 290,990 | -2 | % | 0 | % | |||||||||||||||||
Unallocated Shared Services and Admin. Costs | (134,240 | ) | 19,995 | (114,245 | ) | (138,069 | ) | 12,704 | (125,365 | ) | -3 | % | -5 | % | ||||||||||||||
Operating Income | $ | 142,731 | 23,887 | 166,618 | 144,793 | 20,832 | 165,625 | -1 | % | 3 | % | |||||||||||||||||
Total Shared Services and Admin. Costs by Function |
||||||||||||||||||||||||||||
Distribution and Operation Services | $ | (66,720 | ) | 9,781 | (56,939 | ) | (64,259 | ) | 4,320 | (59,939 | ) | 4 | % | -1 | % | |||||||||||||
Technology and Content Management | (201,420 | ) | 1,662 | (199,758 | ) | (194,022 | ) | 3,443 | (190,579 | ) | 4 | % | 7 | % | ||||||||||||||
Finance | (34,318 | ) | (296 | ) | (34,614 | ) | (37,093 | ) | 2,315 | (34,778 | ) | -7 | % | 2 | % | |||||||||||||
One-time Pension Settlement | (8,842 | ) | 8,842 | - | - | - | - | |||||||||||||||||||||
Other Administration | (80,193 | ) | 6 | (80,187 | ) | (96,922 | ) | 2,626 | (94,296 | ) | -17 | % | -13 | % | ||||||||||||||
Total | $ | (391,493 | ) | 19,995 | (371,498 | ) | (392,296 | ) | 12,704 | (379,592 | ) | 0 | % | 0 | % | |||||||||||||
(A) See the accompanying Notes to Unaudited Financial Statements for a description of the Adjustment. |
UNAUDITED ADJUSTED CONTRIBUTION TO PROFIT | |||||||||||||||||||||||||||||||||
INCLUDING ALLOCATED SHARED SERVICES AND ADMINISTRATIVE COSTS | |||||||||||||||||||||||||||||||||
FOR THE THIRD QUARTER AND NINE MONTHS ENDED | |||||||||||||||||||||||||||||||||
JANUARY 31, 2017 AND 2016 | |||||||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||
Third Quarter Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||
January 31, | January 31, | ||||||||||||||||||||||||||||||||
2017 | 2016 | % Change | % Change excl. FX | 2017 | 2016 | % Change | % Change excl. FX | ||||||||||||||||||||||||||
Research: |
|||||||||||||||||||||||||||||||||
Direct Contribution to Profit | $ | 89,182 | 74,876 | 19 | % | 22 | % |
|
$ |
284,908 | 269,615 | 6 | % | 9 | % | ||||||||||||||||||
Restructuring Charges (A) | 517 | 2,497 | 677 | 3,363 | |||||||||||||||||||||||||||||
Adjusted Direct Contribution to Profit | 89,699 | 77,373 | 16 | % | 19 | % | 285,585 | 272,978 | 5 | % | 8 | % | |||||||||||||||||||||
Allocated Shared Services and Admin. Costs: | (36,674 | ) | (30,932 | ) | 19 | % | 21 | % | (111,673 | ) | (98,258 | ) | 14 | % | 16 | % | |||||||||||||||||
Adjusted Contribution to Profit (after allocated | $ | 53,025 | 46,441 | 14 | % | 17 | % |
|
$ |
173,912 | 174,720 | 0 | % | 4 | % | ||||||||||||||||||
Shared Services and Admin. Costs) | |||||||||||||||||||||||||||||||||
Publishing: |
|||||||||||||||||||||||||||||||||
Direct Contribution to Profit | $ | 78,444 | 92,602 | -15 | % | -14 | % |
|
$ |
214,454 | 242,620 | -12 | % | -10 | % | ||||||||||||||||||
Restructuring Charges (A) | 1,027 | 4,121 | 1,596 | 4,380 | |||||||||||||||||||||||||||||
Adjusted Direct Contribution to Profit | 79,471 | 96,723 | -18 | % | -16 | % | 216,050 | 247,000 | -13 | % | -11 | % | |||||||||||||||||||||
Allocated Shared Services and Admin. Costs: | (39,637 | ) | (45,402 | ) | -13 | % | -11 | % | (119,815 | ) | (131,275 | ) | -9 | % | -7 | % | |||||||||||||||||
Adjusted Contribution to Profit (after allocated | $ | 39,834 | 51,321 | -22 | % | -21 | % |
|
$ |
96,235 | 115,725 | -17 | % | -15 | % | ||||||||||||||||||
Shared Services and Admin. Costs) | |||||||||||||||||||||||||||||||||
Solutions: |
|||||||||||||||||||||||||||||||||
Direct Contribution to Profit | $ | 12,427 | 9,995 | 24 | % | 25 | % |
|
$ |
34,862 | 24,854 | 40 | % | 40 | % | ||||||||||||||||||
Restructuring Charges (A) | 1,095 | 245 | 1,619 | 385 | |||||||||||||||||||||||||||||
Adjusted Direct Contribution to Profit | 13,522 | 10,240 | 32 | % | 32 | % | 36,481 | 25,239 | 45 | % | 44 | % | |||||||||||||||||||||
Allocated Shared Services and Admin. Costs: | (8,836 | ) | (8,244 | ) | 7 | % | 7 | % | (25,765 | ) | (24,694 | ) | 4 | % | 4 | % | |||||||||||||||||
Adjusted Contribution to Profit (after allocated | $ | 4,686 | 1,996 | 135 | % | 137 | % |
|
$ |
10,716 | 545 | ||||||||||||||||||||||
Shared Services and Admin. Costs) | |||||||||||||||||||||||||||||||||
Total Adjusted Contribution to Profit (after | $ | 97,545 | 99,758 | -2 | % | 0 | % |
|
$ |
280,863 | 290,990 | -3 | % | 0 | % | ||||||||||||||||||
allocated Shared Services and Admin. Costs) | |||||||||||||||||||||||||||||||||
Unallocated Shared Services and Admin. Costs: |
|||||||||||||||||||||||||||||||||
Unallocated Shared Services and Admin. Costs | $ | (43,746 | ) | (53,276 | ) | -18 | % | -15 | % |
|
$ |
(134,240 | ) | (138,069 | ) | -3 | % | 0 | % | ||||||||||||||
Restructuring Charges (A) | 6,479 | 6,850 | 11,153 | 12,704 | |||||||||||||||||||||||||||||
One-time - Pension Settlement (B) | - | - | 8,842 | - | |||||||||||||||||||||||||||||
Adjusted Unallocated Shared Services and Admin. Costs | $ | (37,267 | ) | (46,426 | ) | -20 | % | -16 | % |
|
$ |
(114,245 | ) | (125,365 | ) | -9 | % | -5 | % | ||||||||||||||
Adjusted Operating Income | $ | 60,278 | 53,332 | 13 | % | 14 | % |
|
$ |
166,618 | 165,625 | 1 | % | 3 | % | ||||||||||||||||||
(A) See the accompanying Notes to Unaudited Financial Statements for a description of the Adjustment. |
JOHN WILEY & SONS, INC. | |||||||||||||||||||||
SEGMENT REVENUE by PRODUCT/SERVICE | |||||||||||||||||||||
FOR THE THIRD QUARTER AND NINE MONTHS ENDED | |||||||||||||||||||||
JANUARY 31, 2017 AND 2016 | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||
Third Quarter | Nine Months | ||||||||||||||||||||
Ended January 31, | % of | % Change | Ended January 31, | % of | % Change | ||||||||||||||||
2017 | 2016 | Revenue | excl. FX | 2017 | 2016 | Revenue | excl. FX | ||||||||||||||
RESEARCH |
|||||||||||||||||||||
Journal Revenue | |||||||||||||||||||||
Journal Subscriptions | $ | 149,909 | 125,669 | 73% | 23% | $ | 472,401 | 450,970 | 76% | 9% | |||||||||||
Author-Funded Access | 6,915 | 6,429 | 3% | 15% | 21,851 | 18,301 | 4% | 27% | |||||||||||||
Licensing, Reprints, Backfiles, and Other | 40,983 | 51,470 | 20% | -14% | 114,295 | 126,661 | 18% | -5% | |||||||||||||
Total Journal Revenue | 197,807 | 183,568 | 96% | 12% | 608,547 | 595,932 | 98% | 6% | |||||||||||||
Platform Services (Atypon) | 7,962 | - | 4% | 10,440 | - | 2% | |||||||||||||||
Total Revenue | $ | 205,769 | # | 183,568 | 100% | 17% | $ | 618,987 | 595,932 | 100% | 8% | ||||||||||
Publishing |
|||||||||||||||||||||
STM and Professional Books | $ | 76,899 | 90,830 | 45% | -12% | $ | 215,734 | 251,742 | 45% | -12% | |||||||||||
Education Books | 50,343 | 69,502 | 29% | -27% | 162,669 | 203,333 | 34% | -19% | |||||||||||||
Total Books and Reference Material | 127,242 | 160,332 | 74% | -18% | 378,403 | 455,075 | 79% | -15% | |||||||||||||
Course Workflow (WileyPLUS) | 23,464 | 21,894 | 14% | 7% | 44,170 | 41,359 | 9% | 7% | |||||||||||||
Online Test Preparation and Certification | 8,508 | 6,627 | 5% | 29% | 25,585 | 21,472 | 5% | 20% | |||||||||||||
Licensing, Distribution, Advertising and Other | 12,226 | 11,792 | 7% | 7% | 31,543 | 30,750 | 7% | 6% | |||||||||||||
Total Revenue | $ | 171,440 | 200,645 | 100% | -13% | $ | 479,701 | 548,656 | 100% | -11% | |||||||||||
Solutions |
|||||||||||||||||||||
Online Program Management | 30,016 | 26,057 | 51% | 15% | 81,195 | 69,754 | 48% | 16% | |||||||||||||
Professional Assessment | 13,783 | 13,162 | 23% | 5% | 43,451 | 42,196 | 26% | 3% | |||||||||||||
Corporate Learning | 15,448 | 12,961 | 26% | 20% | 42,995 | 36,198 | 26% | 19% | |||||||||||||
Total Revenue | $ | 59,247 | 52,180 | 100% | 14% | $ | 167,641 | 148,148 | 100% | 13% | |||||||||||
Total | $ | 436,456 | 436,393 | 3% | $ | 1,266,329 | 1,292,736 | 1% |
JOHN WILEY & SONS, INC. | |||||||||||
UNAUDITED STATEMENTS OF FINANCIAL POSITION | |||||||||||
(in thousands) | |||||||||||
January 31, | April 30, | ||||||||||
2017 | 2016 | 2016 | |||||||||
Current Assets | |||||||||||
Cash & cash equivalents | $ | 482,321 | 535,859 | 363,806 | |||||||
Accounts receivable | 220,845 | 235,806 | 167,638 | ||||||||
Inventories | 49,247 | 53,747 | 57,779 | ||||||||
Prepaid and other | 124,058 | 71,529 | 81,456 | ||||||||
Total Current Assets | 876,471 | 896,941 | 670,679 | ||||||||
Product Development Assets | 90,267 | 73,906 | 72,126 | ||||||||
Technology, Property and Equipment | 241,385 | 207,515 | 214,770 | ||||||||
Intangible Assets | 834,252 | 872,224 | 877,007 | ||||||||
Goodwill | 981,453 | 938,796 | 951,663 | ||||||||
Income Tax Deposits | - | 59,591 | 62,912 | ||||||||
Other Assets | 79,210 | 65,435 | 71,939 | ||||||||
Total Assets | 3,103,038 | 3,114,408 | 2,921,096 | ||||||||
Current Liabilities | |||||||||||
Short-term debt | - | 150,000 | - | ||||||||
Accounts and royalties payable | 210,853 | 205,724 | 166,222 | ||||||||
Deferred revenue | 403,269 | 305,541 | 426,489 | ||||||||
Accrued employment costs | 83,276 | 82,400 | 97,902 | ||||||||
Accrued income taxes | 9,084 | 10,023 | 9,450 | ||||||||
Accrued pension liability | 5,458 | 4,590 | 5,492 | ||||||||
Other accrued liabilities | 78,094 | 68,658 | 76,252 | ||||||||
Total Current Liabilities | 790,034 | 826,936 | 781,807 | ||||||||
Long-Term Debt | 865,700 | 814,728 | 605,007 | ||||||||
Accrued Pension Liability | 178,023 | 185,976 | 224,170 | ||||||||
Deferred Income Tax Liabilities | 182,571 | 192,220 | 189,868 | ||||||||
Other Long-Term Liabilities | 75,250 | 78,465 | 83,138 | ||||||||
Shareholders' Equity | 1,011,460 | 1,016,083 | 1,037,106 | ||||||||
Total Liabilities & Shareholders' Equity | $ | 3,103,038 | 3,114,408 | 2,921,096 |
JOHN WILEY & SONS, INC. | |||||||||||
UNAUDITED STATEMENTS OF FREE CASH FLOW * | |||||||||||
(in thousands) | |||||||||||
Nine Months Ended | |||||||||||
January 31, | |||||||||||
2017 | 2016 | ||||||||||
Operating Activities: | |||||||||||
Net income | $ | 66,968 | 111,575 | ||||||||
Amortization of intangibles | 37,321 | 37,251 | |||||||||
Amortization of composition costs | 29,502 | 30,047 | |||||||||
Depreciation of technology, property and equipment | 50,520 | 50,820 | |||||||||
Restructuring charges | 15,045 | 20,832 | |||||||||
Restructuring payments | (15,740 | ) | (24,809 | ) | |||||||
Deferred tax benefit on UK Corporate Income Tax Rate Change | (2,575 | ) | (5,859 | ) | |||||||
Unfavorable Tax Settlement | 47,531 | - | |||||||||
One-time pension settlement | 8,842 | - | |||||||||
Share-based compensation expense | 10,187 | 12,292 | |||||||||
Excess tax benefits from share-based compensation | (227 | ) | (517 | ) | |||||||
Royalty advances | (79,804 | ) | (79,026 | ) | |||||||
Earned royalty advances | 77,554 | 71,761 | |||||||||
Other non-cash charges and credits | 26,096 | 15,492 | |||||||||
Change in deferred revenue | (7,733 | ) | (57,959 | ) | |||||||
Net change in operating assets and liabilities | (34,335 | ) | (65,289 | ) | |||||||
Cash Provided by Operating Activities | 229,152 | 116,611 | |||||||||
Investments in organic growth: | |||||||||||
Additions to technology, property and equipment | (82,257 | ) | (69,048 | ) | |||||||
Composition spending | (27,369 | ) | (28,627 | ) | |||||||
* | Free Cash Flow less Composition Spending | 119,526 | 18,936 | ||||||||
Other Investing and Financing Activities: | |||||||||||
Acquisitions, net of cash | (152,110 | ) | (17,972 | ) | |||||||
Repayment of long-term debt | (340,207 | ) | (158,861 | ) | |||||||
Borrowings of short-term debt | - | 50,000 | |||||||||
Borrowings of long-term debt | 600,900 | 323,500 | |||||||||
Change in book overdrafts | (8,866 | ) | (3,287 | ) | |||||||
Cash dividends | (53,638 | ) | (52,612 | ) | |||||||
Purchase of treasury shares | (35,362 | ) | (59,704 | ) | |||||||
Proceeds from exercise of stock options and other | 16,444 | 556 | |||||||||
Excess tax benefits from share-based compensation | 227 | 517 | |||||||||
Cash Provided by Investing and Financing Activities | 27,388 | 82,137 | |||||||||
Effects of Exchange Rate Changes on Cash | (28,399 | ) | (22,655 | ) | |||||||
Increase in Cash and Cash Equivalents for Period | $ | 118,515 | 78,418 | ||||||||
RECONCILIATION TO GAAP PRESENTATION | |||||||||||
Investing Activities: | |||||||||||
Additions to technology, property and equipment | $ | (82,257 | ) | (69,048 | ) | ||||||
Composition spending | (27,369 | ) | (28,627 | ) | |||||||
Acquisitions, net of cash | (152,110 | ) | (17,972 | ) | |||||||
Cash Used for Investing Activities | $ | (261,736 | ) | (115,647 | ) | ||||||
Financing Activities: | |||||||||||
Cash Used for Investing and Financing Activities | $ | 27,388 | 82,137 | ||||||||
Excluding: | |||||||||||
Acquisitions, net of cash | (152,110 | ) | (17,972 | ) | |||||||
Cash Provided by Financing Activities | $ | 179,498 | 100,109 |
Free Cash Flow less Composition Spending: |
||
The Company provides financial measures referred to as “Free Cash Flow less Composition Spending”. Free Cash Flow less Composition Spending is defined as “cash flow from operating activities, less composition and other capital spending”. Management believes this metric provides additional information to investors to facilitate the comparison of past and present results. This metric is also used internally by management in evaluating results. This non-GAAP measure is not intended to replace the financial results reported in accordance with US Generally Accepted Accounting Principles. |
Investors:
John Wiley & Sons, Inc.
Brian Campbell, 201-748-6874
VP, Investor Relations
brian.campbell@wiley.com
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