Building
A better future
through education, skill development and research
Building
through education, skill development and research
Fourth Quarter
FY12 Outlook
Expect FX neutral outlook of mid-single-digit revenue growth and EPS in a range from ($3.15 to $3.20)
Change | ||||
$ millions | FY11 | FY10 | Excluding FX | Including FX |
Revenue: | ||||
Q4 | $445 | $436 | -0.50% | 2% |
Full Year | $1,743 | $1,699 | 4% | 3% |
Adjusted EPS (1): | ||||
Q4 | 0.46 | 0.47 | -7% | -2% |
Full Year (2): | 2.9 | 2.58 | 15% | 12% |
U.S. GAAP EPS: | ||||
Q4 | 0.46 | 0.46 | -5% | 0% |
Full Year | 2.8 | 2.41 | 19% | 16% |
John Wiley and Sons (NYSE: JWA and JWB), a global provider of content and workflow solutions in areas of scientific, technical, medical, and scholarly research; professional and personal development; and education, today announced results for the fourth quarter and fiscal year 2011.
Fiscal Year
Revenue advanced 3% to $1.74 billion, or 4% on a currency neutral basis. Adjusted EPS for the full year increased 12%, or 15% on a currency neutral basis, excluding a $0.10 third quarter bad debt charge related to Borders and $0.17 impairment and restructuring charges reported in the prior year. These growth rates include a $0.07 non-cash deferred tax benefit related to a reduction in the UK statutory corporate tax rate. Revenue growth in all segments, lower debt financing costs and lower income tax rates drove results.
On a US GAAP reported basis EPS grew 16%, to $2.80, or 19% excluding foreign exchange. For comparability to our full year guidance, adjusted EPS grew 10% excluding the charges in both years and the $0.07 per share first quarter UK statutory tax benefit.
Shared service and administrative costs grew 7% for the year, driven by a 23% increase in technology spending to support investments in digital products and infrastructure that support all our businesses such as content management initiatives including eBooks and customer data/relationship management initiatives, in addition to business-specific initiatives such as Wiley Online Library to further drive our online journals business, online books and advertising, and WileyPlus to support next-generation products and services.
Fourth Quarter
For the fourth quarter, revenue rose 2% to $445 million, but fell slightly (-0.5%) on a currency neutral basis. Scientific, Technical, Medical, and Scholarly (STMS) grew 3% or was flat on a currency neutral basis, primarily due to the acceleration of subscription contract agreements into the third quarter of fiscal year 2011 as reported previously. A strong performance in Higher Education (HE) was offset by softness in Professional/Trade (P/T) due to foregone sales related to Borders bankruptcy.
Earnings per share (EPS) was flat in the quarter, or down 5% on a currency neutral basis. Increased technology investment, professional fees, and operating costs were partially offset by lower accrued incentive costs, lower effective tax rate, and lower interest expense.
Management Commentary
"We are pleased to report another strong year," said Stephen Smith, President and CEO. "The shift to digital continues to enhance all of our businesses, resulting in new revenue models, new opportunities in emerging markets, and margin and working capital improvements."
Mr. Smith continued: "STMS continues to navigate well through a tight library and corporate budget environment, thanks to the outstanding quality of our content and relationships. Growth continues to come from new society partnerships, content licenses, emerging markets, and incremental business around our content."
Said Mr. Smith: "Even with the Borders disruption, Professional/Trade showed year-over-year growth and positive trends. Borders had been projected to account for approximately 5% of our fiscal year 2011 P/T sales. Our multi-channel strategy, providing our customers with flexibility and choice about where and how to purchase our products and our deep reservoir of quality content continues to serve us well. Ebooks continue to show outstanding growth."
"Higher Education had another strong year with growth and market share gains in all regions," said Mr. Smith. "Gross margin continued its upward trend, increasing to 66.7% through the full year from 65.5% a year ago, reflecting increased sales of high margin digital products such as WileyPLUS and eBooks."
Outlook
Mr. Smith concluded: "Moving forward, the ongoing shift to knowledge-based economies, robust demand for outcomes-based learning and worldwide investments in research and development are key drivers for us. Excluding foreign exchange, we expect mid-single digit revenue growth and EPS in a range from $3.15 to $3.20."
Foreign Exchange
The foregoing and following references to “currency neutral basis”, “excluding foreign exchange (FX)” and “performance basis” exclude the effect of foreign exchange transactions and translations. The weighted average foreign exchange translation rates reflected in Wiley’s income statement during fiscal year 2011 were approximately 1.56 Sterling and 1.33 Euro.
SCIENTIFIC, TECHNICAL, MEDICAL, AND SCHOLARLY (STMS)
STMS revenue for the quarter was up 3% to $287 million, or essentially flat excluding foreign exchange. The soft performance for the quarter was as expected as a result of approximately $10 million of accelerated billings reported in Wiley’s third quarter. Due to improved processes for journal subscription licensing implemented for calendar year 2011, revenue for published journals was accelerated into the third quarter of fiscal year 2011. Excluding the timing issue, new journal subscriptions and new society business, backfile sales and eBook revenue drove the results for the quarter.
Direct contribution to profit for the quarter grew 2% to $131 million, or fell 1% excluding foreign exchange and a prior year $0.8 million impairment/restructuring charge. Including the impairment and restructuring charge, direct contribution to profit for the quarter grew 3%, or was essentially flat excluding foreign exchange.
STMS revenue for the full year was up 1% to $999 million, or 4% excluding foreign exchange. Top-line results were driven by increased journal subscriptions, new journal society business and digital book growth. Through April 2011, subscription receipts for calendar year 2011 grew approximately 3% over calendar year 2010. Direct contribution to profit for the twelve months, excluding last year’s impairment/restructuring charges of $15 million, rose 1%, or 5% excluding FX. Revenue growth and margin improvement due to outsourcing journal production and fulfillment was partially offset by higher operating costs from business growth. Including the impairment/restructuring charges, direct contribution grew 5%, or 9% on a currency neutral basis.
Full Year Digital Revenue
Society Partnerships
Key New Contracts (Fourth Quarter)
Institutional Sales (Fourth Quarter)
Alliances
Other Initiatives
PROFESSIONAL/TRADE (P/T)
Fourth quarter P/T revenue fell 3% to $110 million, or 4% on a currency neutral basis primarily due to the disruption caused by the Borders bankruptcy. Ebook grew 145% over prior year to $9 million. Weakness in consumer titles mainly due to Border's issues and a strong fourth quarter of the prior year due to the initial publication of Office 2010 titles were partially offset by strong growth in the business/finance category.
Direct contribution to profit fell 1% to $24 million for the quarter, reflecting top line results mitigated by lower accrued incentive compensation.
P/T revenue for the full year grew 2% to $437 million, or 1% on a currency neutral basis. Growth in business/finance and professional education was offset by lower consumer sales due to the Borders disruption. Excluding the Borders bad debt charge of $9 million ($6 million after-tax) in the third quarter, fiscal year 2011 direct contribution to profit increased 5% to $105 million due to revenue growth and improved margins from higher eBook sales. On a reported basis, direct contribution to profit declined 5% to $95 million.
Results by Category (Fourth Quarter)
Digital Revenue
Other Digital Initiatives/Products
Alliances
New Books
HIGHER EDUCATION (HE)
Fourth quarter HE revenue grew 8% to $48 million, or 6% excluding foreign exchange. Non- traditional and digital revenue sales in North America and higher School sales in Australia drove results. Sales of non-traditional and digital products were up 44%. Non-traditional and digital revenue includes WileyPLUS, eBooks, digital content sold directly to institutions, binder editions and custom publishing.
Direct contribution to profit for the quarter improved by $2 million, reflecting top line results and higher gross margins due to increased sales of ebooks and other digital products.
For the full year, HE revenue advanced 9% to $307 million, or 7% excluding foreign exchange reflecting growth in all regions. The results were driven by increased student enrollment, strong back-list sales driven by 25% revenue growth in non-traditional and digital products and a strong front list in engineering/computer science and science categories. Direct contribution to profit increased 17% to $101 million, or 15% excluding foreign exchange. Top-line growth, improved gross margin from higher digital revenue and cost containment drove the results.
Global Revenue – Fourth Quarter
Category Sales (excluding FX)
Digital Products
Other Digital Initiatives
Note:
The Company provides cash flow and income measures referred to as adjusted EPS and free cash flow, which exclude certain items. 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.
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
Founded in 1807, John Wiley & Sons, Inc. has been a valued source of information and understanding for more than 200 years, helping people around the world meet their needs and fulfill their aspirations. Wiley and its acquired companies have published the works of more than 450 Nobel laureates in all categories: Literature, Economics, Physiology or Medicine, Physics, Chemistry, and Peace.
Our core businesses publish scientific, technical, medical, and scholarly journals, encyclopedias, books, and online products and services; professional/trade books, subscription products, training materials, and online applications and Web sites; and educational materials for undergraduate and graduate students and lifelong learners. Wiley's global headquarters are located in Hoboken, New Jersey, with operations in the U.S., Europe, Asia, Canada, and Australia. The Company's Web site can be accessed at http://www.wiley.com. The Company is listed on the New York Stock Exchange under the symbols JWa and JWb.
This website uses cookies to ensure you get the best experience on our website.Learn more