0-11507
|
13-5593032
|
|
----------------------------------------------------
|
---------------------------------------------
|
|
Commission File Number
|
IRS Employer Identification Number
|
|
111 River Street, Hoboken NJ
|
07030
|
|
----------------------------------------------------
|
---------------------------------------------
|
|
Address of principal executive offices
|
Zip Code
|
|
Registrant's telephone number, including area code:
|
(201) 748-6000
|
|
---------------------------------------------
|
Ø
|
Revenue increased 2% to $411 million; +1% at constant currency
|
Ø
|
Adjusted EPS increased 9% to $0.59 per share; -5% at constant currency
|
Ø
|
Operational excellence initiatives resulted in $29 million of restructuring and related charges, expected to yield $45 million in gross run-rate savings beginning in fiscal 2019
|
Ø
|
Free Cash Flow less Product Development spending improved by $48 million
|
Ø
|
Quarterly dividend increased for 24th consecutive year to $0.32 per share
|
GAAP Measures
|
Q1 2018
|
Q1 2017
|
Change
|
Change
Constant Currency
|
Revenue
|
$411.4
|
$404.3
|
2%
|
1%
|
Operating Income
|
$14.5
|
$43.8
|
-67%
|
|
Diluted EPS
|
$0.16
|
$0.53
|
-70%
|
|
Cash from Operations
|
($81.8)
|
($136.7)
|
40%
|
|
Non-GAAP Measures
|
Q1 2018
|
Q1 2017
|
Change
|
Change
Constant Currency
|
Adjusted Operating Income
|
$43.8
|
$42.9
|
2%
|
-13%
|
Adjusted EPS
|
$0.59
|
$0.54
|
9%
|
-5%
|
Free Cash Flow less Product Development Spending
|
($117.8)
|
($165.5)
|
29%
|
·
|
Revenue increase was largely driven by the contribution from the Atypon acquisition, as print book declines in Publishing were offset by increases in Research and Solutions.
|
·
|
Adjusted Operating Income decline at constant currency was mainly due to $6 million in one-time credits in the prior year related to employee benefit plans. Cost of Sales and Operating and Administrative Costs were up 1% and 3% at constant currency, respectively. GAAP Operating Income additionally reflected $29.3 million in restructuring and related charges.
|
·
|
Adjusted EPS decline at constant currency was due to lower adjusted operating income. GAAP EPS also reflected restructuring and related charges as well as foreign exchange losses on intercompany transactions.
|
·
|
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.
|
·
|
Return to Shareholders: During the quarter, Wiley repurchased 265,158 shares for $14 million at an average cost of $52.86. Approximately 3.5 million shares remain in the repurchase program. In June, Wiley increased its quarterly dividend by 3% to $0.32 per share, marking the 24th consecutive annual increase and raising the annualized dividend payout to $1.28 per share.
|
Metric ($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
|
·
|
Revenue: $223.6 million (+8% GAAP; +6% constant currency). Growth was driven primarily by the contribution from the Atypon acquisition (+$8 million, acquired October 2016) and higher Open Access revenues (+20%).
|
·
|
Adjusted Contribution to Profit: $66.3 million (0% constant currency). Performance reflected higher revenues offset primarily by Atypon expenses and higher royalty costs. GAAP Contribution to Profit: $61.5 million (2%) included restructuring charges of $4.8 million in the current year.
|
·
|
Calendar Year 2017 Journal Subscriptions: As of the end of July, calendar year 2017 Journal Subscriptions were up 0.3% on a constant currency basis with 98% of expected business contracted.
|
·
|
Society Publishing Partnerships: Nine new society contracts were signed in the quarter with combined annual revenue of $6.6 million; nineteen were renewed with combined annual revenue of $11.6 million; four were not renewed totaling $0.9M.
|
·
|
Revenue: $131.3 million (-9% GAAP; -8% constant currency). Strong growth in Test Preparation and Certification (+20%) and Course Workflow (+40%) were not enough to offset market-driven declines and erosion of demand for print products in Education Publishing (-16% overall) and STM and Professional Publishing (-8% overall).
|
·
|
Adjusted Contribution to Profit: $15.9 million (-18% constant currency). Performance reflects lower revenues and the timing of development and licensing costs. GAAP Contribution to Profit of $5.0 million (-74%) included restructuring charges of $10.9 million in the current year.
|
·
|
Revenue: $56.5 million (+9% GAAP and constant currency). Growth in Education Services (+14%) and Assessment (+10%) offset a 1% decline in Corporate Learning.
|
·
|
Adjusted Contribution to Profit: Increased to $0.8 million from $0.1 million in the prior year. Improvement driven by revenue growth and increased operating efficiency. GAAP Contribution to Profit: -$2.0 million including restructuring charges of $2.8 million.
|
·
|
Education Services (formerly Online Program Management): In the quarter, Wiley signed one new partner (Winthrop University) and six new programs. One partner and five programs were retired. As of July 31, Wiley had 39 university partners and 251 programs under contract.
|
JOHN WILEY & SONS, INC.
|
||||||||||||||||||
UNAUDITED SUMMARY OF OPERATIONS
|
||||||||||||||||||
FOR THE FIRST QUARTER ENDED
|
||||||||||||||||||
JULY 31, 2017 AND 2016
|
||||||||||||||||||
(in thousands, except per share amounts)
|
||||||||||||||||||
FIRST QUARTER ENDED JULY 31,
|
||||||||||||||||||
2017
|
2016
|
% Change
|
||||||||||||||||
US GAAP |
Adjustments
|
Adjusted
|
US GAAP
|
Adjustments
|
Adjusted
|
US GAAP
|
Adjusted
excl. FX
|
|||||||||||
Revenue
|
$
|
411,444
|
-
|
411,444
|
404,285
|
-
|
404,285
|
2%
|
1%
|
|||||||||
Costs and Expenses
|
||||||||||||||||||
Cost of Sales
|
114,788
|
-
|
114,788
|
113,478
|
-
|
113,478
|
1%
|
1%
|
||||||||||
Operating and Administrative (A)
|
243,808
|
(3,600)
|
240,208
|
235,340
|
235,340
|
4%
|
3%
|
|||||||||||
Restructuring (Credits) Charges (A)
|
25,729
|
(25,729)
|
-
|
(920)
|
920
|
-
|
||||||||||||
Amortization of Intangibles
|
12,619
|
-
|
12,619
|
12,573
|
-
|
12,573
|
0%
|
3%
|
||||||||||
Total Costs and Expenses
|
396,944
|
(29,329)
|
367,615
|
360,471
|
920
|
361,391
|
10%
|
3%
|
||||||||||
Operating Income
|
14,500
|
29,329
|
43,829
|
43,814
|
(920)
|
42,894
|
-67%
|
-13%
|
||||||||||
Operating Margin
|
3.5%
|
10.7%
|
10.8%
|
10.6%
|
||||||||||||||
Interest Expense
|
(3,273)
|
-
|
(3,273)
|
(4,071)
|
-
|
(4,071)
|
-20%
|
-20%
|
||||||||||
Foreign Exchange (Loss) Gain (B)
|
(5,136)
|
6,017
|
881
|
221
|
1,329
|
1,550
|
||||||||||||
Interest Income and Other
|
5
|
-
|
5
|
377
|
-
|
377
|
-99%
|
-99%
|
||||||||||
Income Before Taxes
|
6,096
|
35,346
|
41,442
|
40,341
|
409
|
40,750
|
-85%
|
-12%
|
||||||||||
(Benefit) Provision for Income Taxes (A,B)
|
(3,140)
|
10,627
|
7,487
|
9,327
|
(65)
|
9,262
|
-134%
|
-33%
|
||||||||||
Net Income
|
$
|
9,236
|
24,719
|
33,955
|
31,014
|
474
|
31,488
|
-70%
|
-6%
|
|||||||||
Earnings Per Share- Diluted (A)
|
$
|
0.16
|
0.43
|
0.59
|
0.53
|
0.01
|
0.54
|
-70%
|
-5%
|
|||||||||
Average Shares - Diluted
|
57,709
|
57,709
|
57,709
|
58,176
|
58,176
|
58,176
|
||||||||||||
(A,B) See the accompanying Notes to Unaudited Financial Statements for a description of each adjustment.
|
JOHN WILEY & SONS, INC.
|
||||||
FOR THE FIRST QUARTER ENDED
|
||||||
JULY 31, 2017 AND 2016
|
||||||
RECONCILIATION OF US GAAP TO ADJUSTED EPS - DILUTED (UNAUDITED)
|
||||||
First Quarter Ended
|
||||||
July 31,
|
||||||
2017
|
2016
|
|||||
US GAAP Earnings Per Share - Diluted
|
$
|
0.16
|
$
|
0.53
|
||
Adjusted to exclude the following:
|
||||||
Restructuring and Related Charges (Credits) (A)
|
0.35
|
(0.01)
|
||||
FX Losses on Intercompany Transactions (B)
|
0.08
|
0.02
|
||||
Adjusted Earnings Per Share - Diluted
|
$
|
0.59
|
$
|
0.54
|
||
NOTES TO UNAUDITED FINANCIAL STATEMENTS
|
||||||
Adjustments:
|
||||||
A
|
Adjusted results for the three months ended July 31, 2017 and 2016 exclude restructuring and related charges (credits) associated with the Company's Restructuring and Reinvestment Program of $29.3 million, or $0.35 per share, and $(0.9) million, or $(0.01) per share, respectively. The first quarter of fiscal year 2017 credit reflects the true-up of facility lease reserves.
|
|||||
B
|
Adjusted results exclude foreign exchange gains and losses associated with intercompany transactions. For the three months ended July 31, 2017 and 2016, there were losses of $6.0 million, or $0.08 per share, and $1.3 million, or $0.02 per share, respectively.
|
|||||
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 FIRST QUARTER ENDED
|
||||||||||||||||||
JULY 31, 2017 AND 2016
|
||||||||||||||||||
(in thousands)
|
||||||||||||||||||
FIRST QUARTER ENDED JULY 31,
|
||||||||||||||||||
2017
|
2016
|
% Change
|
||||||||||||||||
US GAAP |
Adjustments
(A)
|
Adjusted | US GAAP |
Adjustments
(A)
|
Adjusted | US GAAP |
Adjusted
excl. FX
|
|||||||||||
Research
|
||||||||||||||||||
Revenue
|
||||||||||||||||||
Journal Subscriptions
|
$
|
168,325
|
-
|
168,325
|
162,684
|
-
|
162,684
|
3%
|
0%
|
|||||||||
Open Access
|
8,803
|
-
|
8,803
|
7,513
|
-
|
7,513
|
17%
|
20%
|
||||||||||
Licensing, Reprints, Backfiles and Other
|
38,230
|
-
|
38,230
|
37,026
|
-
|
37,026
|
3%
|
6%
|
||||||||||
Total Journal Revenue
|
215,358
|
-
|
215,358
|
207,223
|
-
|
207,223
|
4%
|
2%
|
||||||||||
Publishing Technology Services (Atypon)
|
8,269
|
-
|
8,269
|
-
|
-
|
-
|
||||||||||||
Total Research Revenue
|
223,627
|
-
|
223,627
|
207,223
|
-
|
207,223
|
8%
|
6%
|
||||||||||
Contribution to Profit
|
61,461
|
4,836
|
66,297
|
60,435
|
(69)
|
60,366
|
2%
|
0%
|
||||||||||
Publishing
|
||||||||||||||||||
Revenue
|
||||||||||||||||||
STM and Professional Publishing
|
$
|
63,600
|
-
|
63,600
|
70,697
|
-
|
70,697
|
-10%
|
-8%
|
|||||||||
Education Publishing
|
45,736
|
-
|
45,736
|
54,861
|
-
|
54,861
|
-17%
|
-16%
|
||||||||||
Course Workflow (WileyPLUS)
|
1,210
|
-
|
1,210
|
866
|
-
|
866
|
40%
|
40%
|
||||||||||
Test Preparation and Certification
|
11,490
|
-
|
11,490
|
9,558
|
-
|
9,558
|
20%
|
20%
|
||||||||||
Licensing, Distribution, Advertising and Other
|
9,242
|
-
|
9,242
|
8,980
|
-
|
8,980
|
3%
|
4%
|
||||||||||
Total Publishing Revenue
|
131,278
|
-
|
131,278
|
144,962
|
-
|
144,962
|
-9%
|
-8%
|
||||||||||
Contribution to Profit
|
5,009
|
10,854
|
15,863
|
19,320
|
353
|
19,673
|
-74%
|
-18%
|
||||||||||
Solutions
|
||||||||||||||||||
Revenue
|
||||||||||||||||||
Education Services (Online Program Management)
|
$
|
26,337
|
-
|
26,337
|
23,172
|
-
|
23,172
|
14%
|
14%
|
|||||||||
Professional Assessment
|
14,887
|
-
|
14,887
|
13,522
|
-
|
13,522
|
10%
|
10%
|
||||||||||
Corporate Learning
|
15,315
|
15,315
|
15,406
|
-
|
15,406
|
-1%
|
-1%
|
|||||||||||
Total Solutions Revenue
|
56,539
|
-
|
56,539
|
52,100
|
-
|
52,100
|
9%
|
9%
|
||||||||||
Contribution to Profit
|
(1,968)
|
2,795
|
827
|
146
|
-
|
146
|
N/M
|
N/M
|
||||||||||
Corporate Expenses
|
(50,002)
|
10,844
|
(39,158)
|
(36,087)
|
(1,204)
|
(37,291)
|
39%
|
6%
|
||||||||||
Operating Income
|
$
|
14,500
|
29,329
|
43,829
|
43,814
|
(920)
|
42,894
|
-67%
|
-13%
|
|||||||||
(A) See the accompanying Notes to Unaudited Financial Statements for a description of the adjustment.
|
||||||||||||||||||
N/M- Not Meaningful
|
JOHN WILEY & SONS, INC.
|
|||||||
UNAUDITED CONDENSED STATEMENTS OF FINANCIAL POSITION
|
|||||||
(in thousands)
|
|||||||
July 31,
|
April 30,
|
||||||
2017
|
2016
|
2017
|
|||||
Current Assets
|
|||||||
Cash and cash equivalents
|
$
|
84,113
|
185,894
|
58,516
|
|||
Accounts receivable
|
198,576
|
213,968
|
188,679
|
||||
Inventories
|
47,892
|
54,822
|
47,852
|
||||
Prepaid and other
|
66,177
|
119,392
|
64,688
|
||||
Total Current Assets
|
396,758
|
574,076
|
359,735
|
||||
Product Development Assets
|
68,773
|
39,239
|
70,955
|
||||
Royalty Advances
|
21,578
|
24,883
|
28,320
|
||||
Technology, Property and Equipment
|
265,291
|
214,740
|
252,488
|
||||
Intangible Assets
|
833,676
|
831,249
|
828,099
|
||||
Goodwill
|
996,000
|
916,690
|
982,101
|
||||
Income Tax Deposits
|
-
|
62,200
|
-
|
||||
Other Assets
|
85,028
|
80,185
|
84,519
|
||||
Total Assets
|
2,667,104
|
2,743,262
|
2,606,217
|
||||
Current Liabilities
|
|||||||
Accounts and royalties payable
|
141,034
|
138,397
|
139,206
|
||||
Deferred revenue
|
334,625
|
321,616
|
436,235
|
||||
Accrued employment costs
|
81,245
|
55,241
|
98,185
|
||||
Accrued income taxes
|
24,605
|
3,368
|
22,222
|
||||
Accrued pension liability
|
5,820
|
5,467
|
5,776
|
||||
Other accrued liabilities
|
83,509
|
69,042
|
86,232
|
||||
Total Current Liabilities
|
670,838
|
593,131
|
787,856
|
||||
Long-Term Debt
|
551,645
|
653,000
|
365,000
|
||||
Accrued Pension Liability
|
212,843
|
206,814
|
214,597
|
||||
Deferred Income Tax Liabilities
|
150,425
|
191,388
|
160,491
|
||||
Other Long-Term Liabilities
|
72,135
|
82,521
|
75,136
|
||||
Shareholders' Equity
|
1,009,218
|
1,016,408
|
1,003,137
|
||||
Total Liabilities & Shareholders' Equity
|
$
|
2,667,104
|
2,743,262
|
2,606,217
|
JOHN WILEY & SONS, INC.
|
|||||
UNAUDITED CONDENSED STATEMENTS OF FREE CASH FLOW
|
|||||
(in thousands)
|
|||||
Three Months Ended
|
|||||
July 31,
|
|||||
2017
|
2016
|
||||
Operating Activities:
|
|||||
Net income
|
$
|
9,236
|
31,014
|
||
Amortization of intangibles
|
12,619
|
12,573
|
|||
Amortization of product development spending
|
9,644
|
9,731
|
|||
Depreciation of technology, property and equipment
|
18,540
|
17,125
|
|||
Non-cash charges and credits
|
32,045
|
20,231
|
|||
Net change in operating assets and liabilities
|
(163,915)
|
(227,386)
|
|||
Cash Used for Operating Activities
|
(81,831)
|
(136,712)
|
|||
Investments in organic growth:
|
|||||
Additions to technology, property and equipment
|
(30,111)
|
(20,778)
|
|||
Product development spending
|
(5,907)
|
(7,989)
|
|||
Free Cash Flow less Product Development Spending
|
(117,849)
|
(165,479)
|
|||
Other Investing and Financing Activities:
|
|||||
Acquisitions, net of cash
|
(4,413)
|
(8,600)
|
|||
Net debt borrowings
|
185,964
|
47,993
|
|||
Change in book overdrafts
|
(13,977)
|
(12,261)
|
|||
Cash dividends
|
(18,382)
|
(17,914)
|
|||
Purchase of treasury shares
|
(14,016)
|
(11,289)
|
|||
Proceeds from exercise of stock options and other
|
5,599
|
13,689
|
|||
Cash Provided by Investing and Financing Activities
|
140,775
|
11,618
|
|||
Effects of Exchange Rate Changes on Cash
|
2,671
|
(24,051)
|
|||
Increase (Decrease) in Cash and Cash Equivalents for Period
|
$
|
25,597
|
(177,912)
|
||
RECONCILIATION TO GAAP PRESENTATION
|
|||||
Investing Activities:
|
|||||
Product development spending
|
$
|
(5,907)
|
(7,989)
|
||
Additions to technology, property and equipment
|
(30,111)
|
(20,778)
|
|||
Acquisitions, net of cash
|
(4,413)
|
(8,600)
|
|||
Cash Used for Investing Activities
|
$
|
(40,431)
|
(37,367)
|
||
Financing Activities:
|
|||||
Cash Provided by Investing and Financing Activities
|
$
|
140,775
|
11,618
|
||
Excluding:
|
|||||
Acquisitions, net of cash
|
(4,413)
|
(8,600)
|
|||
Cash Provided by Financing Activities
|
$
|
145,188
|
20,218
|
||
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.
|
JOHN WILEY & SONS, INC.
|
|
Registrant
|
By
|
/s/ Matthew S. Kissner
|
||
Matthew S. Kissner
|
|||
Interim Chief Executive Officer and
|
|||
Chairman of the Board
|
By
|
/s/ John A. Kritzmacher
|
||
John A. Kritzmacher
|
|||
Chief Financial Officer and
|
|||
Executive Vice President, Technology and Operations
|
|||
Dated: September 7, 2017
|