HOBOKEN, N.J.--(BUSINESS WIRE)-- Wiley (NYSE: WLY and WLYB), one of the world's largest publishers and a global leader in research and learning,today reported results for the second quarter ended October 31, 2023.
- GAAP Results: Revenue of $493 million (-4%), Operating income of $46 million (-19%), and EPS loss of -$0.35 (-$1.03). GAAP earnings impacted by impairment charges of $52 million related to our held for sale or sold assets and restructuring charges totalling $25 million related to our value creation plan.
- Adjusted Results at Constant Currency (excluding Held for Sale or Sold segment results): Adjusted Revenue of $407 million (-2%), Adjusted EBITDA of $92 million (-13%), and Adjusted EPS of $0.73 (-25%).
VALUE CREATION PLAN PROGRESS
- Intensify focus on core of Research & Learning: Reorganized from three business units to one market-facing Research & Learning team under one leader to drive scale, synergies, and capital efficiency; consolidated global operations under one leader to improve operating efficiency.
- Divest non-core assets: Recently announced sale of University Services business for total consideration of up to $150 million and a 10% share in acquiring company.
- Rightsize and optimize: Recently executed on restructuring actions that will yield $65 million of run rate savings, with approximately $30 million of that to be realized this fiscal year and already reflected in the Company's current guidance.
MANAGEMENT COMMENTARY
"Our second quarter and year-to-date overall performance was in line with our expectations as we execute on our value creation plan to make Wiley a stronger, leaner, and more profitable company focused on driving consistent growth in our core," said Matthew Kissner, Interim President and CEO. "We expect year-over-year revenue improvement in the second half and expect to exit the year with a stronger margin profile. Fiscal 2025 and 2026 is where we will realize the full benefits of our current actions."
FINANCIAL PERFORMANCE
See accompanying financial tables for the second quarter and year-to-date 2024. For GAAP purposes, Wiley's reporting structure consists of three segments: (1) Research, (2) Learning, and(3) Held for Sale or Sold.
Research
- Revenue of $258 million was down 5%, or 7% at constant currency, mainly due to the Hindawi publishing pause (-$18 million) and a soft market for recruiting. This offset continued growth in our core open access publishing program. Excluding Hindawi, revenue was flat.
- Adjusted EBITDA of $82 million was down 17% at constant currency due to revenue performance, namely Hindawi. Adjusted EBITDA margin for the quarter was 31.6%. Excluding Hindawi, Adjusted EBITDA was down 4% primarily due to higher employee costs.
Learning
- Revenue of $149 million was up 7% as reported or 6% at constant currency due to growth in both Academic (driven by zyBooks digital courseware and inclusive access) and Professional (driven by improved channel environment and fewer returns).
- Adjusted EBITDA of $54 million was up 14% as reported or 13% at constant currency mainly due to revenue growth and restructuring savings. Adjusted EBITDA margin for the quarter was 36.2%.
Businesses Held for Sale or Sold (HFS)
- Revenue of $86 million was down 17% on a reported basis or 18% at constant currency mainly due to declines in Wiley Edge. Adjusted EBITDA of $19 million was up from $18 million in the prior year with restructuring savings offsetting revenue performance.
- Wiley announced the sale of University Services during the quarter with an anticipated close in early calendar 2024. For details on the transaction, please see Wiley's 8K filing.
Corporate Expenses (Adjusted EBITDA)
- Adjusted Corporate Expenses (Adjusted EBITDA) of $43 million was up 8% over prior year on a constant currency basis, driven by a lower incentive compensation accrual in the prior year and higher executive severance costs.
EPS
- GAAP EPS loss of $0.35 compared to +$0.68 in the prior year period due to impairment of held-for-sale assets totalling $52 million and restructuring charges totalling $25 million.
- Adjusted EPS excluding businesses held for sale or sold of $0.73 was down 25% primarily due to lower Adjusted Operating Income from lower revenue, and higher interest expense.
Balance Sheet, Cash Flow, and Capital Allocation
- Net Debt-to-EBITDA Ratio (Trailing Twelve Months) at quarter end was 2.0x compared to 2.1x at prior year end.
- Net Cash Used in Operating Activities (Year-to-Date) was a use of $83 million compared to a use of $76 million in the prior year period due to lower cash earnings and higher restructuring payments partially offset by reduced incentive compensation. 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 Q3 and Q4.
- Free Cash Flow less Product Development Spending (Year-to-Date) was a use of $132 million compared to a use of $126 million due to lower cash earnings and higher restructuring payments. Capex of $48 million was moderately below prior year. Note, Wiley does not provide an adjusted free cash flow metric; results include held for sale or sold businesses.
- Returns to Shareholders (Year-to-Date): In June, the Company raised its annual dividend for the 30th consecutive year. Year-to-date, Wiley allocated $39 million toward dividends in line with prior year, and $23 million toward repurchasing 669,000 shares at an average cost per share of $33.64. This compares to 382,000 shares repurchased ($18 million) in the prior year period. The Company has $140 million remaining in its current share repurchase authorization program. There were no acquisitions of note in the quarter.
FISCAL YEAR 2024 TRANSITION YEAR OUTLOOK
Fiscal Year 2024 is a transition year for Wiley as it divests non-core assets and streamlines the organization. The Company is reaffirming its overall Fiscal 2024 outlook for Adjusted Revenue, Adjusted EBITDA, and Adjusted EPS.
| Metric ($millions, except EPS) |
Fiscal 2023 All Company |
Fiscal 2023 Ex-Divestitures |
Fiscal 2024 Outlook Ex-Divestitures |
| Adjusted Revenue* |
$2,020 |
$1,627 |
$1,580 to $1,630 |
| Research |
$1,080 |
Flat to low-single digit decline (+2% excluding Hindawi) |
|
| Learning |
$547 |
Flat to low-single digit increase |
|
| Adjusted EBITDA* |
$422 |
$379 |
$305 to $330 |
| Adjusted EPS* |
$3.84 |
$3.48 |
$2.05 to $2.40 |
*"Adjusted Revenue," "Adjusted EBITDA," and "Adjusted EPS" exclude businesses held for sale, including University Services, Wiley Edge (formerly Talent Development), and CrossKnowledge, as well as those sold in Fiscal 2023: Test Prep and Advancement Courses.
Fiscal Year 2024 Transition Year Outlook
- Adjusted Revenue - reaffirming overall with Research moderately below expectations and Learning ahead of expectations. The Company now expects Research growth excluding Hindawi of 2%, down from 3% originally. Note, Adjusted Revenue excludes businesses held for sale or sold.
- Adjusted EBITDA - reaffirming with projected revenue performance, incentive compensation resetting, and wage inflation offsetting expected restructuring savings.
- Adjusted EPS - reaffirming due to projected adjusted operating income performance and higher interest expense.
The Company is not providing a Free Cash Flow outlook due to the uncertainty around the timing of divestitures and the size and scope of restructuring payments.
EARNINGS CONFERENCE CALL
Scheduled for today, December 6 at 10:00 am (ET). Access webcast at Investor Relations at investors.wiley.com, or directly at https://events.q4inc.com/attendee/108195967 U.S. callers, please dial (888) 210-3346 and enter the participant code 2521217#. International callers, please dial (646) 960-0253 and enter the participant code 2521217#.
ABOUT WILEY
Wiley is one of the world's largest publishers and a global leader in research and learning. Dedicated to the creation and application of knowledge, Wiley serves the world's researchers, learners, innovators, and leaders, helping them achieve their goals and solve the world's most important challenges. For more than two centuries, Wiley has been delivering on its timeless mission to unlock human potential. Visit us at Wiley.com.
