Wiley Reports Second Quarter Fiscal Year 2023 Results

HOBOKEN, N.J.–(BUSINESS WIRE)–
Wiley (NYSE: WLY), one of the world’s largest publishers and a global leader in scientific research and career-connected education, today announced results for the second quarter ended October 31, 2022.

  • GAAP Results: Revenue of $515 million (-3% vs. prior year), Operating Income of $57 million (-22% vs. prior year), and EPS of $0.68 (-31% vs. prior year)
  • Adjusted Results at constant currency: Revenue of $515 million (+1% vs. prior year), Adjusted EBITDA of $124 million (-4% vs. prior year), and Adjusted EPS of $1.20 (-13% vs. prior year)
  • Fiscal 2023 Outlook: Wiley is lowering its revenue outlook at constant currency due to consumer spending and enrollment headwinds in Academic & Professional Learning. Reaffirms full year outlook for Adjusted EBITDA and Free Cash Flow; Adjusted EPS trending to lower end of range mainly due to rising interest expense

MANAGEMENT COMMENTARY

“Despite the challenging economic environment, we continue to see good underlying momentum in our core growth areas of Research Publishing, Research Solutions, and Corporate Talent Development,” said Brian Napack, President and CEO. “This quarter’s results were weighed down by difficult market conditions in our publishing lines in Academic & Professional Learning. We are aggressively managing costs to offset these challenges while continuing to scale our growth offerings in line with favorable long-term trends.”

SECOND QUARTER PERFORMANCE

GAAP Measures

Unaudited ($millions except for EPS)

Q2 2023

Q2 2022

Change

Revenue

$514.8

$533.0

(3%)

Operating Income

$57.4

$73.9

(22%)

Diluted EPS

$0.68

$0.99

(31%)

Non-GAAP Measures

Q2 2023

Q2 2022

Change

Change

Constant Currency

Revenue

$514.8

$533.0

(3%)

+1%

Adjusted EBITDA

$123.8

$127.1

(3%)

(4%)

Adjusted EPS

$1.20

$1.29

(7%)

(13%)

Please see attached financial tables for results for three month and six month periods

Excluding acquisitions and currency impact, revenue was down 0.5% for the quarter

Unfavorable FX variance of $22 million in Revenue; favorable variance of $1.7 million in Adjusted EBITDA and $0.08 in Adjusted EPS

Revenue

  • Research was down 1% as reported, or up 3% at constant currency (+2% organic), driven by organic growth in Research Publishing and Research Solutions and contributions from Solutions acquisitions.
  • Academic & Professional Learning revenue declined 14% as reported and 10% at constant currency. Education Publishing performance saw a significant decline in print course material offsetting solid growth in digital content and courseware. Professional Learning saw a material decline in professional publishing from a pullback in consumer spending offsetting continued strong growth in corporate leadership training.
  • Education Services increased 12% as reported and 17% at constant currency (+13% organic), with strong double-digit growth in Talent Development offsetting a modest decline in University Services primarily from market-related enrollment challenges.

Adjusted EBITDA

  • Research was down 4% at constant currency with revenue growth offset by investment to optimize and scale publishing and solutions.
  • Academic & Professional Learning declined 12% at constant currency due to the revenue performance.
  • Education Services rose 69% at constant currency due to revenue flow-through in Talent Development and the timing of expenses in University Services
  • Adjusted Corporate Expenses were flat at constant currency with higher employee costs offset by the timing of certain expenses.

EPS

  • GAAP EPS was $0.68 as compared to $0.99 in the prior year period, primarily reflecting lower operating income and a $0.19/share ($14 million) restructuring charge related to workforce actions and real estate optimization.
  • Adjusted EPS of $1.20was down 13% at constant currency, driven by lower adjusted EBITDA and higher interest expense.

Balance Sheet, Cash Flow, and Capital Allocation

  • Net Debt-to-EBITDA ratio (trailing twelve months) at quarter-end was 2.1 compared to 2.0 in the year-ago period, and 1.6 at year end (April 30).
  • Financing: On November 30, Wiley entered into an amendment to its revolving credit agreement that provides for senior unsecured credit facilities comprised of (i) five-year credit commitments with the principal amount of $1.315 billion, extended to a maturity date in November 2027, and (ii) $185 million in existing credit commitments to remain through the existing maturity date in May 2024.
  • Net Cash Used in Operating Activities (YTD) was a use of $76 million on par with the prior year period. 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.
  • Free Cash Flow less Product Development Spending (YTD) was a use of $126 million on par with prior year period.
  • Share Repurchases (YTD):The Company utilized $17.5 million to repurchase approximately 382,000 shares at an average cost per share of $45.84.

FISCAL YEAR 2023 OUTLOOK

Wiley is reducing its revenue growth outlook at constant currency due to consumer spending and enrollment headwinds in Education. Based on leading indicators, Wiley is reaffirming its guidance for Adjusted EBITDA and Free Cash Flow. Adjusted EPS is reaffirmed but trending to the lower end of range mainly due to rising interest expense.

Metric

($millions, except EPS)

FY22 Actual*

FY23 Outlook*

Constant currency

Original

FY23 Outlook*

Constant currency

Update

FY23 Outlook*

Constant currency

Current

Revenue

$2,083

$2,175 – $2,215

Reduced

$2,110 – $2,150

Adjusted EBITDA

$433

$425 – $450

Reaffirmed

$425 – $450

Adjusted EPS

$4.16

$3.70 – $4.05

Reaffirmed

$3.70 – $4.05

Free Cash Flow

$223

$210 – $235

Reaffirmed

$210 – $235

*Based on Fiscal 2022 average rates of 1.15 euro and 1.36 British pound. FX impact to FY23 outlook based on YTD average rates of 1.00 euro and 1.16 British pound: $85M unfavorable to revenue; immaterial to Adjusted EBITDA, Adjusted EPS, and Free Cash Flow

EARNINGS CONFERENCE CALL

Scheduled for today, December 7 at 10:00 am (ET). Access webcast at investors.wiley.com. or directly at https://events.q4inc.com/attendee/570471412. US 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 scientific research and career-connected education. Founded in 1807, Wiley enables discovery, powers education, and shapes workforces. Through its industry-leading content, digital platforms, and knowledge networks, the company delivers on its timeless mission to unlock human potential. Visit us at Wiley.com.

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