Wiley Reports First Quarter Fiscal 2022 Results

SUMMARY

•	GAAP Results: Revenue of $488 million (+13%), Operating Income of $41 million (+36%), and EPS of $0.24 (-17%)

•	Adjusted Results (at constant currency):  Revenue of $488 million (+9%), Adjusted EBITDA of $95 million (+12%), and Adjusted EPS of $0.54 (+17%)

•	Dividend:  28th consecutive raise in annualized dividend to $1.38 per share

MANAGEMENT COMMENTARY

“Wiley’s steady execution of growth strategies in open research, online education, and talent development drove another quarter of strong revenue and profit gains,” said Brian Napack, President and CEO.  “Our strategies continue to be tightly aligned with accelerating long-term trends across academic and corporate markets, and we are well-positioned to drive social impact by enabling discovery, powering education and shaping workforces.”

FIRST QUARTER PERFORMANCE

Excluding acquisitions and currency impact, revenue rose 7% for the quarter.  Wiley recorded a favorable FX variance of $16.7 million in Revenue, $3.7 million in Adjusted EBITDA, and $0.05 in Adjusted EPS.

Revenue

•	Research Publishing & Platforms rose 14% as reported, 10% at constant currency and 5% excluding acquisitions, driven by strong growth in open research, platforms and corporate sales.

•	Academic & Professional Learning grew 10% as reported and 7% at constant currency, driven by strong growth in digital courseware and professional publishing, accompanied by further recovery in corporate training.

•	Education Services increased 16% as reported and 13% at constant currency, driven by growth in university services (formerly OPM) and talent development (formerly mthree).

Adjusted EBITDA

•	Research Publishing & Platforms rose 12% at constant currency primarily driven by revenue growth.

•	Academic & Professional Learning rose 37% at constant currency, reflecting revenue growth and continued business optimization gains.

•	Education Services declined 21% at constant currency due to higher marketing costs and investments in growth initiatives.

•	Adjusted Corporate Expenses were up 18% mainly due to higher unallocated benefit costs.

EPS

•	GAAP EPS was $0.24 as compared to $0.29 in the prior year period, primarily reflecting non-cash deferred tax expense of $21 million arising from an increase in the UK corporate income tax rate from 19% to 25% effective April 2023.

•	Adjusted EPS of $0.54 was up 17% at constant currency, driven by higher adjusted EBITDA and a lower adjusted effective tax rate.

Adjusted EPS Change

Going forward, Wiley’s Adjusted EPS metric will exclude the impact of certain non-cash items directly related to acquisitions, most notably the amortization of acquired intangible assets.  The Company does not consider these non-cash items to be indicative of its ongoing operating performance.  For the first quarter, under the new measurement, Adjusted EPS (excluding the impact of amortization of intangibles) was $0.85 compared to $0.67 in the prior year period.  See the Adjusted EPS reconciliation table toward the end of this release for more information.

Balance Sheet, Cash Flow, and Capital Allocation

•	Net debt-to-EBITDA ratio (trailing twelve months) at quarter-end was 2.0, even with the year-ago period.

•

Net Cash Used in Operating Activities was $85 million compared to $121 million in the prior year period, with the $36 million improvement driven by higher cash earnings and favorable changes in working capital.  Note, Wiley’s regular use of cash in the first half of the fiscal year is driven by the timing of cash collections for annual journal subscriptions, which are concentrated in the third and fourth fiscal quarters.

•	Free Cash Flow less Product Development Spending was a use of $108 million as compared to a use of $145 million in the prior year, an improvement of $37 million.

•	Dividends:  In June, Wiley raised its dividend for the 28th consecutive year.  The current quarterly dividend is equivalent to an annual dividend of $1.38 per share, an increase from $1.37 per share in Fiscal 2021.

•	Share Repurchases:  The Company utilized approximately $7.4 million to repurchase approximately 130,000 shares at an average cost per share of $56.88.

FISCAL YEAR 2022 OUTLOOK

The Company is reaffirming its full year outlook and adding the newly defined Adjusted EPS metric.  Going forward, Wiley will discontinue reporting on the former Adjusted EPS metric.

Metric ($millions, except EPS)		Fiscal 2021				Fiscal 2022 Outlook
Revenue		$	1,942			$	2,070 to $2,100
Adjusted EBITDA		$	419			$	415 to $435
Adjusted EPS - former		$	2.92			$	2.80 to $3.05
Adjusted EPS -newly defined		$	4.00			$	4.00 to $4.25
Free Cash Flow		$	257			$	200 to $220

EARNINGS CONFERENCE CALL

Scheduled for today, September 2 at 10:00 am (ET).  Access webcast at investors.wiley.com, or directly at https://event.on24.com/wcc/r/3384264/798549EF00EC73C2803C99A64C083AD2.  US callers, please dial (844) 418-0103 and enter the participant code 9996020#.  International callers, please dial (236) 714-3019 and enter the participant code 9996020#.

ABOUT WILEY

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

NON-GAAP FINANCIAL MEASURES

Wiley provides non-GAAP financial measures and performance results such as “Adjusted EPS,” “EBITDA”, “Adjusted EBITDA,” “Adjusted Contribution to Profit,” “Adjusted Income before Taxes,” “Adjusted Income Tax Provision,” “Adjusted Effective Tax Rate,” “Free Cash Flow less Product Development Spending,” “organic revenue,” and results on a Constant Currency basis to assess underlying business performance and trends.  Management believes non-GAAP financial measures, which exclude the impact of restructuring charges and credits and certain other items, and the impact of acquisitions provide a useful comparable basis to analyze operating results and earnings.  See the reconciliations of non-GAAP financial measures and explanations of the uses of non- GAAP measures in the supplementary information. We have not provided our 2022 outlook for the most directly comparable US GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain items, including restructuring charges and credits, gains and losses on foreign currency, and other gains and losses. These items are uncertain, depend on various factors, and could be material to our consolidated results computed in accordance with US GAAP.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements concerning the Company's operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company and are subject to change based on many important factors. Such factors include, but are not limited to: (i) the level of investment by Wiley in new technologies and products; (ii) subscriber renewal rates for the Company's journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key retailers; (vi) the seasonal nature of the Company's educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) the Company's ability to protect its copyrights and other intellectual property worldwide (ix) the ability of the Company to successfully integrate acquired operations and realize expected opportunities; (x) the Company’s ability to realize operating savings over time and in fiscal year 2022 in connection with our multi-year Business Optimization Program; (xi) the impact of COVID-19 on our operations, performance, and financial condition; and (xii) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

CATEGORY: ALL CORPORATE NEWS

CATEGORY: EARNINGS RELEASES

JOHN WILEY & SONS, INC.
SUPPLEMENTARY INFORMATION (1) (2)
RECONCILIATION OF US GAAP MEASURES to NON-GAAP MEASURES
(unaudited)
Reconciliation of US GAAP EPS to Non-GAAP Adjusted EPS
		Three Months Ended
		July 31,
		2021				2020
US GAAP Earnings Per Share - Diluted		$	0.24			$	0.29
Adjustments:
Restructuring and related (credits) charges			(0.01	)			0.03
Foreign exchange gains on intercompany transactions			(0.01	)			(0.02	)
Gain on sale of certain assets (A)			(0.05	)			-
Income tax adjustments (B)			0.37				0.12
Non-GAAP Adjusted Earnings Per Share - Diluted		$	0.54			$	0.42
Reconciliation of US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes
		Three Months Ended
(amounts in thousands)		July 31,
			2021				2020
US GAAP Income Before Taxes		$	44,002			$	29,734
Pretax Impact of Adjustments:
Restructuring and related (credits) charges			(276	)			2,218
Foreign exchange gains on intercompany transactions			(795	)			(1,569	)
Gain on sale of certain assets (A)			(3,750	)			-
Non-GAAP Adjusted Income Before Taxes		$	39,181			$	30,383
Reconciliation of US GAAP Income Tax Provision to Non-GAAP Adjusted Income Tax Provision, including our US GAAP Effective Tax Rate and our Non-GAAP Adjusted Effective Tax Rate
US GAAP Income Tax Provision		$	30,172			$	13,400
Income Tax Impact of Adjustments (C):
Restructuring and related (credits) charges			45				743
Foreign exchange gains on intercompany transactions			(101	)			(612	)
Gain on sale of certain assets (A)			(936	)			-
Income Tax Adjustments:
Impact of increase in UK statutory rate on deferred tax balances (B)			(20,726	)			(6,689	)
Non-GAAP Adjusted Income Tax Provision		$	8,454			$	6,842
US GAAP Effective Tax Rate			68.6	%			45.1	%
Non-GAAP Adjusted Effective Tax Rate			21.6	%			22.5	%
Notes:
(A) The gain on sale of certain assets is due to the sale of our world languages product portfolio which was included in our Academic & Professional Learning segment and resulted in a pretax gain of approximately $3.8 million during the three months ended July 31, 2021.
(B) On June 10, 2021, the UK officially increased its corporate tax rate from 19% to 25% effective April 1, 2023. This resulted in a $20.7 million non-cash deferred tax expense from the re-measurement of the Company’s applicable UK net deferred tax liabilities during the three months ended July 31, 2021. During the first quarter of fiscal 2021, the UK officially enacted legislation that increased its statutory rate from 17% to 19%. This resulted in a $6.7 million non-cash deferred tax expense from the re-measurement of the Company’s applicable UK net deferred tax liabilities during the three months ended July 31, 2020.
(C) For the three months ended July 31, 2021, substantially all of the tax impact was from deferred taxes. For the three months ended July 31, 2020, the tax impact was $0.2 million from current taxes offset by $0.1 million from deferred taxes.
(1) See Explanation of Usage of Non-GAAP Performance Measures included in this supplementary information for additional details on the reasons why management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three months ended July 31, 2021 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission.
(2) All amounts are approximate due to rounding.