Wiley Reports Fourth Quarter and Fiscal Year 2018 Results
HOBOKEN, N.J.--(BUSINESS WIRE)--Jun 12, 2018--John Wiley & Sons, Inc. (NYSE:JWA)(NYSE:JWB), a global research and education company, today announced results for the fourth quarter and fiscal year ended April 30, 2018.
FOURTH QUARTER 2018 HIGHLIGHTSReported results (GAAP) reflected growth in Revenue (+6%), Operating Income (+18%) and EPS (+16%), driven by strong operational performance and favorable impacts from foreign currency. At constant currency, growth in Revenue (+1%), Adjusted Operating Income (+15%) and Adjusted EPS (+6%) resulted from strong performance in Research, growth in Solutions, and broader operating efficiencies. A signature milestone was achieved with the launching of Wiley Online Library, one of the largest and most authoritative collections of online research journals, books, and resources, on Wiley’s industry-leading Atypon Literatum platform.
FISCAL YEAR 2018 HIGHLIGHTSReported results (GAAP) reflected growth in Revenue (+5%), Operating Income (+16%) and EPS (+70%), driven by strong operational performance, benefits from foreign currency, and a one-time benefit from US tax reform. At constant currency, growth in Revenue (+1%), Adjusted Operating Income (+7%) and Adjusted EPS (+3%) resulted from strong performance in Research, growth in Solutions, and broader operating efficiencies, partially offset by higher taxes. Cash Provided by Operating Activities (+19% to $374 million) and Free Cash Flow less Product Development Spending (+35% to $224 million) grew as a result of earnings performance and working capital improvements. The Company’s transformation to digital continues with revenue from digital products now 73% of total revenue, up from 68% in prior year.
“We are pleased with our team’s performance this year, which landed us ahead of guidance, and we are energized about the future,” said Brian Napack, President and CEO. “Wiley’s strong brands, publishing assets, technology platforms, market relationships and capacity to invest position us well to benefit from the ongoing transformations in research and education. We will continue to invest in the success of our customers in critical areas such as open access publishing, researcher and student productivity, classroom-to-career pathways and workforce reskilling and upskilling. We are also investing in business optimization and operational excellence across the organization, which will result in improved speed, agility, and effectiveness.”
Wiley provides non-GAAP financial measures such as “Adjusted EPS,” “Adjusted Operating Income,” “Adjusted CTP,” “Free Cash Flow less Product Development Spending,” 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, provide for a more comparable basis to analyze operating results and earnings. See the reconciliations of non-GAAP financials and explanations of the uses of non-GAAP measures in the supplementary information accompanying this press release.
Fourth Quarter Results
Wiley recorded favorable foreign currency variances in the quarter of approximately $21 million in revenue, $6 million in operating income, and $0.07 in EPS due to changes in exchange rates and functional currency gains related to calendar year 2017 journal subscriptions in the UK.Revenue increased due to growth in Research (+10% reported, +5% constant currency) and Solutions (+6% reported, +2% constant currency), which more than offset a decline in Publishing (-2% reported, -5% constant currency). Research growth was driven by Open Access (+59% reported, +51% constant currency) and Journal Subscriptions (+7% reported, +2% constant currency).Publishing performance reflected a decline in STM and Professional Publishing (-5% reported, -10% constant currency), which more than offset growth in Educational Publishing (+5% reported, +2% constant currency) and Course Workflow/WileyPLUS (+13% reported, +12% constant currency).Solutions businesses all exhibited growth with increases in Education Services (+1% reported and constant currency), Professional Assessment (+5% reported, +4% constant currency), and Corporate Learning (+15% reported, +2% at constant currency). GAAP Operating Income performance reflected favorable foreign exchange (+$6 million), which offset the impact of a $2.0 million restructuring charge and a $1.7 million restructuring credit in the prior year. Adjusted Operating Income growth was mainly due to savings from efficiency gains and higher revenue. Research Contribution to Profit (CTP) grew +6% on a reported basis, but declined -2% adjusted at constant currency. Revenue growth was offset by higher royalty costs in licensed society publishing.Publishing CTP declined -10% on a reported basis, -19% adjusted at constant currency due to lower revenue.Solutions CTP grew +81% on a reported basis, 80% adjusted at constant currency due to higher revenue and increased operating efficiency.Corporate Expenses reduced by 10% on a reported basis and 22% on an adjusted basis at constant currency largely due to the timing of charges in the prior year. GAAP EPS growth primarily reflected the fourth quarter impact of favorable foreign exchange (+$0.07 per share), which offset the impact of restructuring charges in 2018 and credits in 2017 (+0.04 per share). Adjusted EPS growth was due to higher adjusted operating income.
Full Year Results
Wiley recorded favorable foreign currency variances in the fiscal year of approximately $60 million in revenue, $28 million in operating income, and $0.34 in EPS due to changes in exchange rates and functional currency gains related to calendar year 2017 journal subscriptions in the UK.Revenue growth was driven primarily by Research (+9% reported, +4% constant currency) and Solutions (+5% reported, +3% constant currency), which more than offset a decline in Publishing (-2% reported, -4% constant currency). Research growth primarily reflected increases for Open Access (+37% reported, +34% constant currency) and Journal Subscriptions (+6% reported, flat constant currency), as well as the full-year results of Atypon, which was acquired in October 2016 (+73%, including $14 million due to full year contribution).Publishing revenue performance mainly reflected market conditions, with STM and Professional Publishing down 1% on a reported basis and 3% at constant currency, and Educational Publishing down 5% on a reported basis and 6% at constant currency.Solutions growth reflected increases in Education Services (+7% reported and constant currency) and Professional Assessment (+2% reported and constant currency). Corporate Learning rose 6% on a reported basis but declined 1% at constant currency. GAAP Operating Income growth was mainly due to higher revenue, as well as favorable foreign exchange (+$28 million). Adjusted Operating Income growth was primarily a result of savings from efficiency initiatives and restructuring actions, as well as higher revenue. Research CTP increased 9% on a reported basis, but was flat on an adjusted constant currency basis. Revenue growth was largely offset by higher royalty costs in licensed society publishing.Publishing CTP declined 1% on a reported basis but increased 2% on an adjusted constant currency basis. The improvement mainly reflected savings from efficiency initiatives and restructuring actions, which more than offset the revenue decline.Solutions CTP grew 49% on a reported basis and 56% on an adjusted constant currency basis, driven by increased operating efficiencies.Corporate Expenses reduced by 2% on a reported basis and on an adjusted basis at constant currency, driven by efficiency initiatives and restructuring actions. GAAP EPS growth primarily reflected the current year impact of the U.S. Tax Act (+$0.43 per share) and favorable foreign exchange (+$0.34 per share), as well as other net charges in the prior year, including an unfavorable ruling in a Germany income tax dispute ($0.85 per share) and a pension settlement ($0.09 per share). These offset higher restructuring charges and foreign exchange losses associated with intercompany transactions in the current fiscal year. Adjusted EPS growth was due to higher adjusted operating income and lower interest expense, which more than offset favorable tax credits in the prior year of $0.12 per share. Cash Provided by Operating Activities increased 19% to $374 million due to earnings performance and working capital improvements. Free Cash Flow less Product Development Spending growth (+35%) was primarily attributable to the increase in Cash Provided by Operating Activities. Capital expenditures, including Technology, Property, and Equipment and Product development spending, rose $1 million to $150 million. Shareholder Return: In June, Wiley raised its annual dividend for the 24 th consecutive year. The Company utilized $74 million of cash for dividends and $40 million for share repurchases with an average per share cost of $55.65. In the prior year, the Company utilized $72 million and $50 million for dividends and share repurchases, respectively.
FISCAL YEAR 2019 OUTLOOKWiley anticipates low-single digit Revenue growth in Research and Solutions offset by a low-single digit Revenue decline in Publishing. Adjusted EPS is expected to decline primarily due to increased investment in revenue growth initiatives, particularly in Research and Education Services. Cash Provided by Operating Activities reflects the impact of growth investments and substantially lower gains in working capital. Capital Expenditures are expected to decline modestly with the completion of the Company’s headquarters transformation. Increased investment is expected in areas of product development and business optimization.
EARNINGS CONFERENCE CALL
Scheduled for today, June 12 at 10:00 a.m. (ET). Access the webcast on Wiley.com, at https://www.wiley.com/en-us/investors. U.S. callers, please dial (888) 224-1005 and enter the participant code 8850169#. International callers, please dial (323) 994-2093 and enter the participant code 8850169#.
Wiley, a global research and education 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.
This release contains certain forward-looking statements concerning the Company’s Fiscal Year 2019 Outlook, 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.
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