HOBOKEN, N.J.--(BUSINESS WIRE)--John Wiley and Sons Inc. (NYSE:JWA)(NYSE:JWB), a global research and learning company, today announced results for the second quarter ending October 31, 2017.
HIGHLIGHTS
- Revenue increased 6% to $452 million; +3% at constant currency
- Adjusted EPS increased 32% to $1.03; +22% at constant currency. EPS on a GAAP basis at $1.04, up from ($0.20)
- Free Cash Flow less Product Development Spending for six months improved by $38 million
- Brian A. Napack named as President and CEO
FINANCIAL SUMMARY
|
Unaudited ($millions except for EPS) |
||||||||
| GAAP Measures | Q2 2018 | Q2 2017 | Change |
Change Constant Currency |
||||
| Revenue | $451.7 | $425.6 | 6% | 3% | ||||
| Operating Income | $82.8 | $47.6 | 74% | |||||
| Diluted EPS | $1.04 | ($0.20) | +$1.24 | |||||
| Non-GAAP Measures | Q2 2018 | Q2 2017 | Change |
Change
Constant Currency |
||||
| Adjusted Operating Income | $81.4 | $63.3 | 16% | |||||
| Adjusted EPS | $1.03 | $0.78 | 22% | |||||
- Revenue increase was largely driven by growth in Research Journals (+3%), STM and Professional Publishing (+4%), and Education Services/Online Program Management (+6%), as well as growth from the Atypon acquisition (+$6 million).
- Adjusted Operating Income growth was mainly due to higher revenue and lower technology expenses, including ERP implementation costs. Adjusted Contribution to Profit (CTP) for Research, Publishing, and Solutions rose for all three segments. GAAP Operating Income increased 74% to $82.8 million, which also reflected the timing of restructuring charges and credits, as well as a settlement charge related to a pension distribution for terminated employees in the prior year.
- Adjusted EPS increase was due to higher operating income and lower interest expense. GAAP EPS growth (+$1.24) also reflected unfavorable items in the prior year, including an income tax settlement in Germany (-$0.83) and the pension settlement charge (-$0.10).
- Return to Shareholders: During the quarter, Wiley repurchased 285,599 shares for $15.2 million at an average cost of $53.37. Approximately 3.2 million shares remain in the repurchase program.
MANAGEMENT COMMENTARY
“The second quarter was highlighted by the announcement of Brian Napack as our new President and CEO and Ella Balagula as our new EVP of Publishing. We also realized improved growth in Research, better than expected results in Publishing, and significant progress in our operational excellence initiatives,” said Matthew Kissner, Chairman. “This month, we celebrate 210 years of enabling many of the world’s advances in research and learning. While we are immensely proud of our legacy, we are just as energized by the opportunities ahead of us.”
FISCAL YEAR 2018 OUTLOOK
|
The Company reaffirms its fiscal 2018 guidance. |
||||
| Metric ($M) | FY17 Actual |
FY18 Expectation
(at constant currency) |
||
| Revenue | $1,718.5 | Approximately even | ||
| Adjusted Operating Income | $228.4 | Approximately even | ||
| Adjusted EPS | $3.01 | Low-single digit % decline | ||
|
Cash from Operations |
$314.5 | $350 million or higher | ||
| Capex | $148.3 | Slightly lower | ||
Adjusted Results: The Company provides financial measures referred to as “adjusted,” which exclude unusual charges and credits as more fully described in the attached financial schedules. For the three and six month periods ended October 31, 2017, the Company excluded foreign exchange gains and losses on intercompany transactions in deriving adjusted earnings in the current and prior year periods. This change will also be reflected in subsequent periods. The Company believes these gains and losses, which result from transactions associated with tax planning efforts, do not reflect its underlying performance.
Foreign Exchange: Foreign exchange was beneficial to second quarter revenue and EPS by $14.5 million and $0.08, respectively, and first half revenue and EPS by $17.3 million and $0.15. If current rates were to hold through year-end, Wiley would record positive FX variances in the fiscal year of approximately $45 million in revenue, $25 million in operating income, and $0.35 in EPS due to changes in exchange rates and functional currency gains related to calendar year 2017 journal subscriptions in the UK.
Note: variances in this release are on a constant currency basis unless otherwise noted.
RESEARCH SEGMENT
- Revenue: $228.9 million (+11% GAAP; +5% constant currency). The increase was driven primarily by the contribution from the Atypon acquisition (+$6 million), strong Open Access growth (+25%), and higher Licensing, Reprints, Backfile and Other revenue (+11%).
- Adjusted Contribution to Profit: $70.8 million (+4% constant currency). Improved performance reflected higher revenue offset primarily by Atypon expenses and higher royalty costs. GAAP Contribution to Profit of $71.2 million (+18%) also reflected impacts from foreign exchange and the timing of restructuring charges and credits.
- Society Publishing Partnerships: Two new society contracts were signed in the quarter with combined annual revenue of $3.0 million and ten were renewed with combined annual revenue of $6.6 million. None were lost.
- Wiley Digital Archives: In October, Wiley launched a new program to enable institutional customers to purchase digital access to unique or rare historical primary sources, digitized from partner societies, libraries, and archives around the world.
PUBLISHING SEGMENT
- Revenue: $165.0 million (+1% GAAP; flat constant currency). Better than expected performance was driven by STM, Professional, and Educational Publishing (+2%) and growth in Test Preparation and Certification (+5%) and Licensing, Distribution, Advertising, and Other (+11%). Course Workflow (WileyPLUS) was down 18% in the quarter due to the timing of revenue recognition. Operationally, WileyPLUS sales (net of actual returns) rose 8% for the quarter and 4% for the six months. The timing differences for revenue recognition reflect longer sales amortization for subscription periods extending across two semesters.
- Adjusted Contribution to Profit: $42.5 million (+14% constant currency). Improved performance was primarily due to savings from operational excellence initiatives. GAAP Contribution to Profit of $42.5 million (+16%) also reflected impacts from foreign exchange and the timing of restructuring charges and credits.
- New Leadership: In October, Wiley announced Ella Balagula as the new Executive Vice President of Wiley’s Publishing segment. Prior to joining, Ms. Balagula was Senior Vice President and General Manager of Engineering Solutions at Elsevier, where she was responsible for commercial go-to-market, product management, software development and content acquisition and production in the engineering and academic segments.
- Partnership: In November, Wiley and Kortext, a digital textbook and personal study platform, announced a partnership with the Egyptian Knowledge Bank (EKB) to provide digital textbooks to every Egyptian citizen and all universities, empowering their students to learn anytime, anywhere.
SOLUTIONS SEGMENT
- Revenue: $57.9 million (+3% GAAP and +2% constant currency). Growth in Education Services/Online Program Management (+6%) more than offset a 4% decline in Corporate Learning (CrossKnowledge), where French government funding slowed for unemployment initiatives and blended learning programs, and a 2% decline in Professional Assessment, where our pre-hire assessment business has been shifting from enterprise direct sales to higher margin partner channels.
- Adjusted Contribution to Profit: Increased 14% to $6.7 million. Improvement driven by higher revenue and increased operating efficiency. GAAP Contribution to Profit of $7.3 million (+36%) also reflected impacts from foreign exchange and the timing of restructuring charges and credits.
- Education Services (OPM): Wiley signed four new programs and discontinued one this quarter. As of October 31, Wiley had 39 university partners and 254 programs under contract.
SIX MONTH RESULTS
|
Unaudited ($millions except for EPS) |
||||||||
| GAAP Measures | 1H 2018 | 1H 2017 | Change |
Change Constant Currency |
||||
| Revenue | $863.2 | $829.9 | 4% | 2% | ||||
| Operating Income | $97.3 | $91.6 | 6% | |||||
| Diluted EPS | $1.20 | $0.34 | +$0.86 | |||||
| Cash Flow Used For Operations | ($46,357) | ($86,094) | 46% | |||||
| Non-GAAP Measures | 1H 2018 | 1H 2017 | Change |
Change Constant Currency |
||||
| Adjusted Operating Income | $125.2 | $106.3 | 5% | |||||
| Adjusted EPS | $1.62 | $1.31 | 12% | |||||
| Free Cash Flow less Product Development Spending | (117,754) | ($155,426) | 24% | |||||
- Revenue growth for the first six months driven primarily by Research Journals (+2%), Education Services/Online Program Management (+10%), and Test Preparation and Certification (+14%), as well as growth from the Atypon acquisition (+$14 million GAAP). Research and Solutions revenue growth more than offset a 4% decline in Publishing revenue.
- Adjusted Operating Income growth for the first half was mainly due to the increase in revenue, which was partially offset by $6 million of one-time credits related to employee benefit plans in the prior year. GAAP Operating Income was up 6% to $97.3 million as higher restructuring charges were more than offset by the pension settlement charge in the prior year and the favourable impact of foreign exchange in the current year.
- Adjusted EPS growth in the first six months was due to higher operating income and lower interest expense. GAAP EPS growth (+$0.86) also reflected restructuring charges in both periods and an income tax settlement in Germany (-$0.82) in the prior year.
- Free Cash Flow less Product Development Spending improvement was mainly due to the timing of cash collections and payments as anticipated in the fourth quarter 2017 report. Free cash flow is seasonally negative in the first half of Wiley’s fiscal year principally due to the timing of collections for journal subscriptions.
EARNINGS CONFERENCE CALL
Scheduled for today, December 6 at 10:00 a.m. (ET). Access the webcast at www.wiley.com> Investor Relations> Events and Presentations, or http://www.wiley.com/WileyCDA/Section/id-370238.html. U.S. callers, please dial (800) 289-0438 and enter the participant code 3013070#. International callers, please dial (323) 994-2083 and enter the participant code 3013070#.
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 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.
| JOHN WILEY & SONS, INC. | |||||||||||||||||||||||||||
| UNAUDITED SUMMARY OF OPERATIONS | |||||||||||||||||||||||||||
| FOR THE SECOND QUARTER AND SIX MONTHS ENDED | |||||||||||||||||||||||||||
| OCTOBER 31, 2017 AND 2016 | |||||||||||||||||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||||||||||||||
|
SECOND QUARTER ENDED OCTOBER 31, |
|||||||||||||||||||||||||||
| 2017 | 2016 | % Change | |||||||||||||||||||||||||
| US GAAP |
Adjustments |
Adjusted | US GAAP |
Adjustments |
Adjusted | US GAAP |
Adjusted |
||||||||||||||||||||
| Revenue | $ | 451,731 | - | 451,731 | 425,588 | - | 425,588 | 6 | % | 3 | % | ||||||||||||||||
| Costs and Expenses | |||||||||||||||||||||||||||
| Cost of Sales | 119,865 | - | 119,865 | 111,574 | - | 111,574 | 7 | % | 4 | % | |||||||||||||||||
| Operating and Administrative | 239,318 | - | 239,318 | 247,270 | (8,842 | ) | 238,428 | -3 | % | -1 | % | ||||||||||||||||
| Restructuring and Related (Credits) Charges | (1,406 | ) | 1,406 | - | 6,847 | (6,847 | ) | - | NM | 0 | % | ||||||||||||||||
| Amortization of Intangibles | 11,183 | - | 11,183 | 12,253 | - | 12,253 | -9 | % | -10 | % | |||||||||||||||||
| Total Costs and Expenses | 368,960 | 1,406 | 370,366 | 377,944 | (15,689 | ) | 362,255 | -2 | % | 0 | % | ||||||||||||||||
| Operating Income | 82,771 | (1,406 | ) | 81,365 | 47,644 | 15,689 | 63,333 | 74 | % | 16 | % | ||||||||||||||||
| Operating Margin | 18.3 | % | 18.0 | % | 11.2 | % | 14.9 | % | |||||||||||||||||||
| Interest Expense | (3,455 | ) | - | (3,455 | ) | (4,360 | ) | - | (4,360 | ) | -21 | % | -21 | % | |||||||||||||
| Foreign Exchange (Losses) Gains | (416 | ) | 287 | (129 | ) | (360 | ) | 1,899 | 1,539 | 16 | % | NM | |||||||||||||||
| Interest Income and Other | 576 | - | 576 | 478 | - | 478 | 21 | % | 21 | % | |||||||||||||||||
| Income Before Taxes | 79,476 | (1,119 | ) | 78,357 | 43,402 | 17,588 | 60,990 | 83 | % | 19 | % | ||||||||||||||||
| Provision (Benefit) for Income Taxes | 19,428 | (391 | ) | 19,037 | 54,853 | (38,957 | ) | 15,896 | -65 | % | 12 | % | |||||||||||||||
| Net Income | $ | 60,048 | (728 | ) | 59,320 | (11,451 | ) | 56,545 | 45,094 | NM | 21 | % | |||||||||||||||
| Earnings Per Share- Diluted | $ | 1.04 | (0.01 | ) | 1.03 | (0.20 | ) | 0.98 | 0.78 | NM | 22 | % | |||||||||||||||
| Average Shares - Diluted | 57,554 | 57,554 | 57,554 | 57,538 | 57,538 | 57,538 | |||||||||||||||||||||
|
SIX MONTHS ENDED OCTOBER 31, |
|||||||||||||||||||||||||||
| 2017 | 2016 | % Change | |||||||||||||||||||||||||
| US GAAP |
Adjustments |
Adjusted | US GAAP |
Adjustments |
Adjusted | US GAAP |
Adjusted |
||||||||||||||||||||
| Revenue | $ | 863,175 | - | 863,175 | 829,873 | - | 829,873 | 4 | % | 2 | % | ||||||||||||||||
| Costs and Expenses | |||||||||||||||||||||||||||
| Cost of Sales | 234,653 | - | 234,653 | 225,052 | - | 225,052 | 4 | % | 3 | % | |||||||||||||||||
| Operating and Administrative | 483,126 | (3,600 | ) | 479,526 | 482,497 | (8,842 | ) | 473,655 | 0 | % | 1 | % | |||||||||||||||
| Restructuring and Related Charges (Credits) | 24,323 | (24,323 | ) | - | 5,927 | (5,927 | ) | - | NM | 0 | % | ||||||||||||||||
| Amortization of Intangibles | 23,802 | - | 23,802 | 24,826 | - | 24,826 | -4 | % | -4 | % | |||||||||||||||||
| Total Costs and Expenses | 765,904 | (27,923 | ) | 737,981 | 738,302 | (14,769 | ) | 723,533 | 4 | % | 2 | % | |||||||||||||||
| Operating Income | 97,271 | 27,923 | 125,194 | 91,571 | 14,769 | 106,340 | 6 | % | 5 | % | |||||||||||||||||
| Operating Margin | 11.3 | % | 14.5 | % | 11.0 | % | 12.8 | % | |||||||||||||||||||
| Interest Expense | (6,728 | ) | - | (6,728 | ) | (8,431 | ) | - | (8,431 | ) | -20 | % | -20 | % | |||||||||||||
| Foreign Exchange (Losses) Gains | (5,552 | ) | 6,304 | 752 | (139 | ) | 3,228 | 3,089 | NM | NM | |||||||||||||||||
| Interest Income and Other | 581 | - | 581 | 728 | - | 728 | -20 | % | -20 | % | |||||||||||||||||
| Income Before Taxes | 85,572 | 34,227 | 119,799 | 83,729 | 17,997 | 101,726 | 2 | % | 6 | % | |||||||||||||||||
| Provision (Benefit) for Income Taxes | 16,288 | 10,236 | 26,524 | 64,180 | (39,021 | ) | 25,159 | -75 | % | -5 | % | ||||||||||||||||
| Net Income | $ | 69,284 | 23,991 | 93,275 | 19,549 | 57,018 | 76,567 | NM | 10 | % | |||||||||||||||||
| Earnings Per Share- Diluted | $ | 1.20 | 0.42 | 1.62 | 0.34 | 0.98 | 1.31 | NM | 12 | % | |||||||||||||||||
| Average Shares - Diluted | 57,633 | 57,633 | 57,633 | 58,259 | 58,259 | 58,259 | |||||||||||||||||||||
| (A) See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment. | |||||||||||||||||||||||||||
| NM- Not Meaningful | |||||||||||||||||||||||||||
| JOHN WILEY & SONS, INC. | ||||||||||||||||
| FOR THE SECOND QUARTER AND SIX MONTHS ENDED | ||||||||||||||||
| OCTOBER 31, 2017 AND 2016 | ||||||||||||||||
|
RECONCILIATION OF US GAAP TO ADJUSTED EPS - DILUTED (UNAUDITED) |
||||||||||||||||
| Second Quarter Ended | Six Months Ended | |||||||||||||||
| October 31, | October 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| US GAAP Earnings Per Share - Diluted | $ | 1.04 | $ | (0.20 | ) | $ | 1.20 | $ | 0.34 | |||||||
| Adjusted to exclude the following: | ||||||||||||||||
| Restructuring and Related (Credits) Charges (A) | (0.02 | ) | 0.08 | 0.33 | 0.07 | |||||||||||
| Foreign Exchange Losses on Intercompany Transactions (B) | 0.01 | 0.01 | 0.09 | 0.04 | ||||||||||||
| One-time - Pension Settlement (C) | - | 0.10 | - | 0.09 | ||||||||||||
| Unfavorable Tax Settlement (D) | - | 0.83 | - | 0.82 | ||||||||||||
| Deferred Income Tax Benefit on UK Rate Change (E) | - | (0.04 | ) | - | (0.04 | ) | ||||||||||
| Adjusted Earnings Per Share - Diluted (F) | $ | 1.03 | $ | 0.78 | $ | 1.62 | $ | 1.31 | ||||||||
|
NOTES TO UNAUDITED FINANCIAL STATEMENTS |
|||
| Adjustments: | |||
| (A) | Adjusted results exclude restructuring (credits) charges and related items associated with the Company's Restructuring and Reinvestment Program. For the three months ended October 31, 2017 and 2016, there were credits of $1.4 million or $(0.02) per share and charges of $6.8 million or $0.08 per share, respectively. For the six months ended October 31, 2017 and 2016, there were charges of $27.9 million or $0.33 per share, and charges of $5.9 million or $0.07 per share, respectively. | ||
| (B) | In 2017, we adjusted results to exclude foreign exchange losses associated with intercompany transactions. The prior year adjusted earnings per share amounts have been recasted to conform to current year presentation. For the three months ended October 31, 2017 and 2016, there were gains of $0.3 million or $0.01 per share and gains of $1.9 million or $0.01 per share, respectively. For the six months ended October 31, 2017 and 2016, there were gains of $6.3 million or $0.09 per share, and gains of $3.2 million or $0.04 per share, respectively. | ||
| (C) | As previously disclosed and as reported in the Company's SEC filings, 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 election period closed on August 29, 2016. The total charge including a prorata portion of the unamortized net actuarial loss was $8.8 million or $0.10 per share for the quarter and, $0.09 per share for the six month period. The aggregate amount of payments under this one time election was $28.3 million, which was paid from Pension Plan assets in October 2016. | ||
| (D) | 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 result in 2016, the Company recorded a $47.5 million charge, $0.83 per share in the quarter, $0.82 per share for the six month period. | ||
| (E) | As previously disclosed and as reported in the Company's SEC filings, the adjusted results for the three and six months ended October 31, 2016 exclude deferred tax benefits of $2.6 million, or $0.04 per share, associated with tax legislation enacted in the second quarter of fiscal year 2017 in the United Kingdom that reduced the U.K. corporate income tax rates by 1 percentage point in 2020. The benefits reflect the remeasurement of the Company's deferred tax balances from 18% to the new income tax rate of 17% effective April 1, 2020 and had no current cash tax impact. | ||
| (F) | The Reconciliation of US GAAP to Adjusted EPS - Diluted table may not foot due to rounding. | ||
|
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 unusual or special 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 the impact of foreign exchange. | |||
| JOHN WILEY & SONS, INC. | ||||||||||||||||||||||||||
| UNAUDITED SEGMENT RESULTS | ||||||||||||||||||||||||||
| FOR THE SECOND QUARTER AND SIX MONTHS ENDED | ||||||||||||||||||||||||||
| OCTOBER 31, 2017 AND 2016 | ||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
|
SECOND QUARTER ENDED OCTOBER 31, |
||||||||||||||||||||||||||
| 2017 | 2016 | % Change | ||||||||||||||||||||||||
| US GAAP |
Adjustments |
Adjusted | US GAAP |
Adjustments |
Adjusted | US GAAP |
Adjusted |
|||||||||||||||||||
|
Research |
||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Journal Subscriptions | $ | 170,163 | - | 170,163 | 159,726 | - | 159,726 | 7 | % | 0 | % | |||||||||||||||
| Open Access | 9,350 | - | 9,350 | 7,423 | - | 7,423 | 26 | % | 25 | % | ||||||||||||||||
| Licensing, Reprints, Backfiles and Other | 41,329 | - | 41,329 | 36,367 | - | 36,367 | 14 | % | 11 | % | ||||||||||||||||
| Total Journal Revenue | 220,842 | - | 220,842 | 203,516 | - | 203,516 | 9 | % | 3 | % | ||||||||||||||||
| Publishing Technology Services (Atypon) | 8,028 | - | 8,028 | 2,478 | - | 2,478 | NM | NM | ||||||||||||||||||
| Total Revenue | 228,870 | - | 228,870 | 205,994 | - | 205,994 | 11 | % | 5 | % | ||||||||||||||||
| Contribution to Profit (A) | 71,163 | (388 | ) | 70,775 | 60,292 | 229 | 60,521 | 18 | % | 4 | % | |||||||||||||||
|
Publishing |
||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| STM and Professional Publishing | $ | 71,460 | - | 71,460 | 68,130 | - | 68,130 | 5 | % | 4 | % | |||||||||||||||
| Education Publishing | 57,711 | - | 57,711 | 57,472 | - | 57,472 | 0 | % | -1 | % | ||||||||||||||||
| Course Workflow (WileyPLUS) | 16,310 | - | 16,310 | 19,840 | - | 19,840 | -18 | % | -18 | % | ||||||||||||||||
| Test Preparation and Certification | 7,919 | - | 7,919 | 7,521 | - | 7,521 | 5 | % | 5 | % | ||||||||||||||||
| Licensing, Distribution, Advertising and Other | 11,585 | - | 11,585 | 10,337 | - | 10,337 | 12 | % | 11 | % | ||||||||||||||||
| Total Revenue | 164,985 | - | 164,985 | 163,300 | - | 163,300 | 1 | % | 0 | % | ||||||||||||||||
| Contribution to Profit (A) | 42,476 | 71 | 42,547 | 36,490 | 215 | 36,705 | 16 | % | 14 | % | ||||||||||||||||
|
Solutions |
||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Education Services (OPM) | $ | 29,737 | - | 29,737 | 28,007 | - | 28,007 | 6 | % | 6 | % | |||||||||||||||
| Professional Assessment | 15,821 | - | 15,821 | 16,146 | - | 16,146 | -2 | % | -2 | % | ||||||||||||||||
| Corporate Learning | 12,318 | - | 12,318 | 12,141 | - | 12,141 | 1 | % | -4 | % | ||||||||||||||||
| Total Revenue | 57,876 | - | 57,876 | 56,294 | - | 56,294 | 3 | % | 2 | % | ||||||||||||||||
| Contribution to Profit (A) | 7,309 | (625 | ) | 6,684 | 5,359 | 524 | 5,883 | 36 | % | 14 | % | |||||||||||||||
| Corporate Expenses (A) | (38,177 | ) | (464 | ) | (38,641 | ) | (54,497 | ) | 14,721 | (39,776 | ) | -30 | % | -4 | % | |||||||||||
| Operating Income | $ | 82,771 | (1,406 | ) | 81,365 | 47,644 | 15,689 | 63,333 | 74 | % | 16 | % | ||||||||||||||
| (A) See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment. | ||||||||||||||||||||||||||
| NM- Not Meaningful | ||||||||||||||||||||||||||
|
SIX MONTHS ENDED OCTOBER 31 , |
||||||||||||||||||||||||||
| 2017 | 2016 | % Change | ||||||||||||||||||||||||
| US GAAP |
Adjustments |
Adjusted | US GAAP |
Adjustments |
Adjusted | US GAAP |
Adjusted |
|||||||||||||||||||
|
Research |
||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Journal Subscriptions | $ | 338,488 | - | 338,488 | 322,410 | - | 322,410 | 5 | % | 0 | % | |||||||||||||||
| Open Access | 18,153 | - | 18,153 | 14,936 | - | 14,936 | 22 | % | 22 | % | ||||||||||||||||
| Licensing, Reprints, Backfiles and Other | 79,559 | - | 79,559 | 73,394 | - | 73,394 | 8 | % | 9 | % | ||||||||||||||||
| Total Journal Revenue | 436,200 | - | 436,200 | 410,740 | - | 410,740 | 6 | % | 2 | % | ||||||||||||||||
| Publishing Technology Services (Atypon) | 16,297 | - | 16,297 | 2,478 | - | 2,478 | NM | NM | ||||||||||||||||||
| Total Revenue | 452,497 | - | 452,497 | 413,218 | - | 413,218 | 10 | % | 6 | % | ||||||||||||||||
| Contribution to Profit (A) | 132,624 | 4,448 | 137,072 | 120,727 | 160 | 120,887 | 10 | % | 2 | % | ||||||||||||||||
|
Publishing |
||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| STM and Professional Publishing | $ | 135,060 | - | 135,060 | 138,835 | - | 138,835 | -3 | % | -3 | % | |||||||||||||||
| Education Publishing | 103,447 | - | 103,447 | 112,326 | - | 112,326 | -8 | % | -8 | % | ||||||||||||||||
| Course Workflow (WileyPLUS) | 17,520 | - | 17,520 | 20,706 | - | 20,706 | -15 | % | -16 | % | ||||||||||||||||
| Test Preparation and Certification | 19,409 | - | 19,409 | 17,077 | - | 17,077 | 14 | % | 14 | % | ||||||||||||||||
| Licensing, Distribution, Advertising and Other | 20,827 | - | 20,827 | 19,317 | - | 19,317 | 8 | % | 8 | % | ||||||||||||||||
| Total Revenue | 296,263 | - | 296,263 | 308,261 | - | 308,261 | -4 | % | -4 | % | ||||||||||||||||
| Contribution to Profit (A) | 47,485 | 10,925 | 58,410 | 55,832 | 569 | 56,401 | -15 | % | 3 | % | ||||||||||||||||
|
Solutions |
||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Education Services (OPM) | $ | 56,074 | - | 56,074 | 51,179 | - | 51,179 | 10 | % | 10 | % | |||||||||||||||
| Professional Assessment | 30,708 | - | 30,708 | 29,668 | - | 29,668 | 4 | % | 4 | % | ||||||||||||||||
| Corporate Learning | 27,633 | 27,633 | 27,547 | - | 27,547 | 0 | % | -2 | % | |||||||||||||||||
| Total Revenue | 114,415 | - | 114,415 | 108,394 | - | 108,394 | 6 | % | 5 | % | ||||||||||||||||
| Contribution to Profit (A) | 5,341 | 2,170 | 7,511 | 5,506 | 524 | 6,030 | -3 | % | 24 | % | ||||||||||||||||
| Corporate Expenses (A) | (88,179 | ) | 10,380 | (77,799 | ) | (90,494 | ) | 13,516 | (76,978 | ) | -3 | % | 1 | % | ||||||||||||
| Operating Income | $ | 97,271 | 27,923 | 125,194 | 91,571 | 14,769 | 106,340 | 6 | % | 5 | % | |||||||||||||||
| (A) See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment. | ||||||||||||||||||||||||||
| NM- Not Meaningful | ||||||||||||||||||||||||||
| JOHN WILEY & SONS, INC. | ||||||||||
| UNAUDITED CONDENSED STATEMENTS OF FINANCIAL POSITION | ||||||||||
| (in thousands) | ||||||||||
| October 31, | April 30, | |||||||||
| 2017 | 2016 | 2017 | ||||||||
| Current Assets | ||||||||||
| Cash and cash equivalents | $ | 72,871 | $ | 267,410 | $ | 58,516 | ||||
| Accounts receivable | 193,506 | 212,590 | 188,679 | |||||||
| Inventories | 43,540 | 51,779 | 47,852 | |||||||
| Prepaid and other | 54,092 | 147,753 | 64,688 | |||||||
| Total Current Assets | 364,009 | 679,532 | 359,735 | |||||||
| Product Development Assets | 68,124 | 38,574 | 70,955 | |||||||
| Royalty Advances | 12,500 | 10,353 | 28,320 | |||||||
| Technology, Property and Equipment | 274,624 | 248,281 | 252,488 | |||||||
| Intangible Assets | 828,524 | 822,962 | 828,099 | |||||||
| Goodwill | 999,546 | 974,068 | 982,101 | |||||||
| Other Assets | 85,503 | 79,684 | 84,519 | |||||||
| Total Assets | $ | 2,632,830 | $ | 2,853,454 | $ | 2,606,217 | ||||
| Current Liabilities | ||||||||||
| Accounts and royalties payable | $ | 150,888 | $ | 158,985 | $ | 139,206 | ||||
| Deferred revenue | 244,328 | 223,307 | 436,235 | |||||||
| Accrued employment costs | 79,827 | 69,072 | 98,185 | |||||||
| Accrued income taxes | 17,711 | 8,515 | 22,222 | |||||||
| Accrued pension liability | 5,826 | 5,459 | 5,776 | |||||||
| Other accrued liabilities | 83,615 | 77,484 | 86,232 | |||||||
| Total Current Liabilities | 582,195 | 542,822 | 787,856 | |||||||
| Long-Term Debt | 562,962 | 883,992 | 365,000 | |||||||
| Accrued Pension Liability | 208,382 | 181,735 | 214,597 | |||||||
| Deferred Income Tax Liabilities | 156,397 | 191,729 | 160,491 | |||||||
| Other Long-Term Liabilities | 75,844 | 71,675 | 75,136 | |||||||
| Shareholders' Equity | 1,047,050 | 981,501 | 1,003,137 | |||||||
| Total Liabilities & Shareholders' Equity | $ | 2,632,830 | $ | 2,853,454 | $ | 2,606,217 | ||||
| JOHN WILEY & SONS, INC. | ||||||||
| UNAUDITED CONDENSED STATEMENTS OF FREE CASH FLOW | ||||||||
| (in thousands) | ||||||||
| Six Months Ended | ||||||||
| October 31, | ||||||||
| 2017 | 2016 | |||||||
| Operating Activities: | ||||||||
| Net income | $ | 69,284 | 19,549 | |||||
| Amortization of intangibles | 23,802 | 24,826 | ||||||
| Amortization of product development spending | 20,246 | 18,701 | ||||||
| Depreciation of technology, property and equipment | 34,775 | 34,092 | ||||||
| Non-cash charges and credits | 56,225 | 113,852 | ||||||
| Net change in operating assets and liabilities | (250,689 | ) | (297,114 | ) | ||||
| Cash Used for Operating Activities | (46,357 | ) | (86,094 | ) | ||||
| Investments in organic growth: | ||||||||
| Additions to technology, property and equipment | (56,252 | ) | (52,728 | ) | ||||
| Product development spending | (15,145 | ) | (16,604 | ) | ||||
| Free Cash Flow less Product Development Spending | (117,754 | ) | (155,426 | ) | ||||
| Other Investing and Financing Activities: | ||||||||
| Acquisitions, net of cash | (6,097 | ) | (135,753 | ) | ||||
| Net debt borrowings | 196,589 | 278,985 | ||||||
| Change in book overdrafts | (2,629 | ) | (5,861 | ) | ||||
| Cash dividends | (36,699 | ) | (35,883 | ) | ||||
| Purchase of treasury shares | (29,257 | ) | (21,289 | ) | ||||
| Proceeds from exercise of stock options and other | 7,347 | 15,890 | ||||||
| Cash Provided by Investing and Financing Activities | 129,254 | 96,089 | ||||||
| Effects of Exchange Rate Changes on Cash | 2,855 | (37,059 | ) | |||||
| Increase (Decrease) in Cash and Cash Equivalents for Period | $ | 14,355 | (96,396 | ) | ||||
| RECONCILIATION TO GAAP PRESENTATION | ||||||||
| Investing Activities: | ||||||||
| Product development spending | $ | (15,145 | ) | (16,604 | ) | |||
| Additions to technology, property and equipment | (56,252 | ) | (52,728 | ) | ||||
| Acquisitions, net of cash | (6,097 | ) | (135,753 | ) | ||||
| Cash Used for Investing Activities | $ | (77,494 | ) | (205,085 | ) | |||
| Financing Activities: | ||||||||
| Cash Provided by Investing and Financing Activities | $ | 129,254 | 96,089 | |||||
| Excluding: | ||||||||
| Acquisitions, net of cash | (6,097 | ) | (135,753 | ) | ||||
| Cash Provided by Financing Activities | $ | 135,351 | 231,842 | |||||
|
Free Cash Flow less Product Development Spending: |
| The Company provides financial measures referred to as “Free Cash Flow less Product Development Spending.” Free Cash Flow less Product Development Spending is defined as “cash flow from operating activities, less book composition and other product development and 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. |
