Wolters Kluwer N.v. · EURONEXT:WKL
Wolters Kluwer — FY2022 Earnings Presentation
46 slides from Wolters Kluwer's earnings presentation, Feb 22, 2023
Slide 1: Wolters Kluwer 2022 Full-Year Results
Wolters Kluwer 2022 Full-Year Results Nancy McKinstry, CEO Kevin Entricken, CFO February 22, 2023 2022 Full-Year Results 1
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements. These statements may be identified by words such as "expect", "should", "could", "shall", and similar expressions. Wolters Kluwer cautions that such forward-looking statements are qualified by certain risks and uncerta
Slide 3: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2023 • Appendix: Corporate Performance & ESG – Pro forma revenues • Appendix: ESG Performance • Appendix: Supplementary Information 2022 Full-Year Results 3
Slide 4: Introduction
Introduction 2022: strong performance on strategic, financial, and ESG goals Financial Results Strategic and ESG Progress Accelerate Organic growth +6% Expert solutions organic Expert growth +9% Solutions Adjusted operating profit margin 26.1%, up 80 bps Cloud software organic growth +17% Diluted ad
Slide 5: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2023 • Appendix: Corporate Performance & ESG – Pro forma revenues • Appendix: ESG Performance • Appendix: Supplementary Information 2022 Full-Year Results 5
Slide 6: Full-year 2022 results
Full-year 2022 results Revenues up 6% organically; margin, free cash flow, and ROIC increased (€ million, unless otherwise stated) FY 2022 FY 2021 Δ Δ CC Δ OG Revenues 5,453 4,771 +14% +5% +6% Adjusted operating profit 1,424 1,205 +18% +7% +8% Adjusted operating profit margin 26.1% 25.3% Diluted adj
Slide 7: Revenues by division
Revenues by division All four divisions contributed to organic growth (€ million) FY 2022 FY 2021 Δ Δ CC Δ OG Health 1,448 1,234 +17% +5% +5% Tax & Accounting 1,758 1,510 +16% +9% +9% Governance, Risk & Compliance 1,333 1,139 +17% +5% +4% Legal & Regulatory 914 888 +3% +1% +5% Total revenues 5,453 4
Slide 8: Revenues by type
Revenues by type Digital & service subscription revenues up 8% organically for the year; non- recurring revenues faced challenging comparables in second half Organic Growth (%) Organic Growth (%) Recurring Revenue Types (80% of total) Non-recurring Revenue Types (20% of total) 30% 30% 72% of FY 2022
Slide 9: Adjusted operating profit by division
Adjusted operating profit by division Margin up 80 basis points, as favorable currency mix and operational gearing more than offset increased investment Margin (€ million) FY 2022 FY 2021 Δ Δ CC Δ OG FY 2022 FY 2021 Health 434 360 +20% +6% +6% 29.9% 29.2% Tax & Accounting 513 430 +20% +11% +11% 29.2
Slide 10: Adjusted net profit and EPS
Adjusted net profit and EPS Diluted adjusted EPS up 8% in constant currencies, with lower interest cost offset by higher benchmark tax rate (€ million, unless otherwise stated) FY 2022 FY 2021 ∆ ∆ CC Revenues 5,453 4,771 +14% +5% Adjusted operating profit 1,424 1,205 +18% +7% Adjusted operating prof
Slide 11: Adjusted free cash flow
Adjusted free cash flow Cash conversion declined to 107%; adjusted free cash flow up 7% in constant currencies (€ million, unless otherwise stated) FY 2022 FY 2021 ∆ ∆ CC Adjusted operating profit 1,424 1,205 +18% +7% Depreciation, amortization, and impairment of other intangibles 235 237 Depreciati
Slide 12: Movement in net debt
Movement in net debt Over 115% of adjusted free cash flow returned to shareholders; balance sheet remains strong (€ million, unless otherwise stated) FY 2022 FY 2021 Net debt at start of period (2,131) (2,383) Adjusted free cash flow 1,220 1,010 Dividends paid (424) (373) Acquisition spending, net o
Slide 13: Dividends and share buybacks
Dividends and share buybacks Proposing total dividend of €1.81 (+15%); Announcing intention to repurchase up to €1 billion in shares in 2023 Dividend per Share (€) Share Buybacks (€ million) 1.81 Total Completed Intended dividend 1,000 1,000 1.57 1.36 1.18 0.98 550 410 350 350 Interim 0.54 0.63 divi
Slide 14: Results summary
Results summary Delivered robust organic growth and an improvement in margin; substantial cash returns to shareholders Organic growth +6% Adjusted operating Diluted adjusted EPS profit margin 26.1% +8% up +80bps in constant currencies ROIC improved to 15.5% Adjusted FCF Strong balance sheet Substant
Slide 15: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2023 • Appendix: Corporate Performance & ESG – Pro forma revenues • Appendix: ESG Performance • Appendix: Supplementary Information 2022 Full-Year Results 15
Slide 16: Health
Health Organic growth +5%, led by Clinical Solutions; margin reflects operational gearing, growth in Clinical Solutions and favorable currency mix Clinical Solutions € million FY 2022 FY 2021 Δ Δ CC Δ OG • Revenues up +7% organically Revenues 1,448 1,234 +17% +5% +5% • UpToDate growth driven by stro
Slide 17: Tax & Accounting
Tax & Accounting Organic growth +9%; margin increase reflects operational gearing and favorable currency mix Corporate Performance2 € million FY 2022 FY 2021 Δ Δ CC Δ OG • Revenues up +15% organically, led by CCH Revenues 1,758 1,510 +16% +9% +9% Tagetik up +19% Adjusted operating Professional Tax &
Slide 18: Governance, Risk & Compliance
Governance, Risk & Compliance Organic growth +4%, driven by recurring revenues; margin reflects operational gearing and favorable currency mix Legal Services € million FY 2022 FY 2021 Δ Δ CC Δ OG • Revenues up +3% organically, supported by Revenues 1,333 1,139 +17% +5% +4% recurring subscription rev
Slide 19: Legal & Regulatory
Legal & Regulatory Organic growth +5%; margin decline reflects one-time items related to pension EHS/ORM & Legal Software2 € million FY 2022 FY 2021 Δ Δ CC Δ OG • Organic growth +16% Revenues 914 888 +3% +1% +5% • Enablon sustained double-digit organic growth Adjusted operating • Legal Software acqu
Slide 20: Strategic progress: Elevate Our Value
Strategic progress: Elevate Our Value Progress on all fronts in the first year of our current three-year plan Product development spend1 to be approximately 10% of Accelerate • Grew expert solutions revenues +9% organically revenues Expert • Grew cloud-based software revenues +17% organically Soluti
Slide 21: Advancing ESG
Advancing ESG Improved employee engagement and belonging; completed carbon footprint assessment and submitted near-term targets to SBTi • Improved employee • Completed assessment of our • Sustained top MSCI AAA engagement score by 1 point greenhouse gas footprint, rating for 4 years • Improved belon
Slide 22: Creating new division: Corporate Performance & ESG
Creating new division: Corporate Performance & ESG Bringing existing assets together to accelerate synergies and capitalize on growing ESG market opportunity • In March 2023, we intend to create a new Pro Forma FY 2022 Revenues by Division division, Corporate Performance & ESG • New division will be
Slide 23: Agenda
Agenda • Introduction • Financial Review • Operating and Strategic Review • Outlook 2023 • Appendix: Corporate Performance & ESG – Pro forma revenues • Appendix: ESG Performance • Appendix: Supplementary Information 2022 Full-Year Results 23
Slide 24: Guidance 2023
Guidance 2023 Expect high single-digit growth in diluted adjusted EPS in constant currencies Performance indicators 2023 Guidance 2022 Actual Adjusted operating profit margin* 26.1%-26.5% 26.1% Adjusted free cash flow** Around €1,200 million €1,220 million ROIC* 16.5%-17.0% 15.5% Diluted adjusted EP
Slide 25: Divisional outlook 2023
Divisional outlook 2023 Expect organic growth in line with 2022 and margin improvement Division Outlook • Organic growth to be in line with prior year Health • Adjusted operating profit margin to be stable year on year • Organic growth to be in line with prior year Tax & Accounting • Adjusted operat
Slide 26: Appendix: Corporate Performance & ESG – Pro forma revenues
Appendix: Corporate Performance & ESG – Pro forma revenues February 22, 2023 2022 Full-Year Results 26
Slide 27: Pro forma revenues new reporting structure
Pro forma revenues new reporting structure (€ million) FY 2022 FY 2021 Δ Δ CC Δ OG Health 1,448 1,234 +17% +5% +5% Tax & Accounting 1,394 1,208 +15% +8% +8% Financial & Corporate Compliance 1,056 893 +18% +5% +4% Legal & Regulatory 916 894 +2% -1% +4% Corporate Performance & ESG 639 542 +18% +12% +1
Slide 28: Appendix: ESG Performance
Appendix: ESG Performance February 22, 2023 2022 Full-Year Results 28
Slide 29: ESG Ratings
ESG Ratings MSCI ESG Rating Sustainalytics ESG Risk Rating 0 10 20 30 40 50 AAA AA Wolters Kluwer 15.6 A FactSet 18.5 BBB Intuit 16.2 BB Sage Group 17.7 B Constellation Software 27.6 CCC Dassault Systèmes 18.4 Aspen Technology 22.3 2018 2019 2020 2021 2022 MSCI: AAA is the highest quality score. Sus
Slide 30: Environmental
Environmental Cloud migration and on-premise server Scope 1 & 2 Emissions per FTE1 decommissioning program Metric tons CO2e emissions/FTE • 1,032 on-premise servers decommissioned in 2022 2.0 Real estate rationalization program 2.00 1.79 • Office footprint (m2) reduced by 5% organically in 1.70 1.67
Slide 31: Social: employee culture
Social: employee culture Employee Engagement Score1 Employee Participation in Learning Wolters Kluwer Glint Global Benchmark % of Employees with Access to Learning High-Performing Norm % of Employees Using Optional Learning 100% 100% 84% 77% 77% 76% 75% 76% 76% 80% 83% 71% 50% 56% 55% 60% 40% 0% 201
Slide 32: Social: diversity
Social: diversity Supervisory Board Members: % Female Total Workforce: % Female 80% 80% 57% 48% 47% 47% 46% 46% 43% 43% 43% 43% 40% 40% 0% 0% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Executive Board Members: % Female Belonging Score 2022 73 / 100 80% 50% 50% 50% 50% 50% The belonging score
Slide 33: Governance: stewardship
Governance: stewardship Product Development Spend Annual Compliance Training (includes operating expenses and capital expenditures) (includes ethics, data privacy, IT and cybersecurity) % of Total Revenues % of Employees Completed 12% 100% 99% 99% 99% 99% 99% 10% 50% 8% 6% 0% 2018 2019 2020 2021 202
Slide 34: Governance: board skills
Governance: board skills Supervisory Board Skills Experience & Competencies Additional Public Directorships Cybersecurity Technology & Independent Committees Development Organization, Social Policy, Management Marketing & Information Commercial Accounting, Company Member AC= Audit General Finance Ge
Slide 35: Appendix: Full-Year 2022 Supplementary Information
Appendix: Full-Year 2022 Supplementary Information February 22, 2023 2022 Full-Year Results 35
Slide 36: Strategy 2022-2024: Elevate Our Value
Strategy 2022-2024: Elevate Our Value Our strategic plan aims to deliver good organic growth, improved margins and returns, and advance sustainability over the coming three years Product development spend1 • Drive investment in cloud-based expert solutions to be approximately 10% of • Transform sele
Slide 37: Cloud-based expert solutions
Cloud-based expert solutions Cloud software revenues sustained +17% organic growth FY 2022 Revenues FY 2022 Software Organic growth FY 2022 (FY 2021): €5.5 billion Revenues €2.4 billion Total software: +9%(+6%) Split by Media Format Cloud software: +17% (+17%) Top software products Cloud 35% CCH Axc
Slide 38: Revenues by type
Revenues by type (€ million) FY 2022 FY 2021 ∆ ∆ CC ∆ OG Digital and services subscriptions 3,950 3,397 +16% +7% +8% Print subscriptions 157 157 0% -4% -4% Other recurring 281 256 +10% -1% +2% Recurring revenues 4,388 3,810 +15% +6% +7% Print books 129 146 -12% -17% -1% LS transactional 299 266 +13%
Slide 39: Revenues by media format
Revenues by media format (€ million) FY 2022 FY 2021 ∆ ∆ CC ∆ OG Software 2,375 2,022 +17% +9% +9% Other digital1 2,180 1,908 +14% +5% +6% Total Digital 4,555 3,930 +16% +7% +6% Services 533 460 +16% +3% +4% Print 365 381 -4% -10% -4% Total revenues 5,453 4,771 +14% +5% +6% ∆: % Change; ∆ CC: % Chan
Slide 40: Reconciliation: adjusted net financing costs to financing results
Reconciliation: adjusted net financing costs to financing results (€ million) FY 2022 FY 2021 Adjusted net financing costs (56) (78) Employee benefits financing component (1) (1) Change in fair value of financial assets 0 (5) Result on divestment of financial assets - - Divestment related results on
Slide 41: IFRS profit and diluted EPS
IFRS profit and diluted EPS (€ million, unless otherwise stated) FY 2022 FY 2021 ∆ Adjusted operating profit 1,424 1,205 +18% Amortization of acquired intangibles & impairment (160) (164) Results on divestments of operations 75 (20) Other non-benchmark items1 (6) (9) Operating profit 1,333 1,012 +32
Slide 42: Balance sheet
Balance sheet (€ million, unless otherwise stated) Dec. 31, 2022 Dec. 31, 2021 Goodwill and intangible assets 6,042 5,800 Property, plant and equipment 79 75 Right-of-use assets 283 301 Deferred tax and other non-current assets 129 114 Total non-current assets 6,533 6,290 Cash and cash equivalents 1
Slide 43: Debt maturity profile
Debt maturity profile Debt Maturity Profile – December 31, 2022 (€ million) Net debt breakdown: € million 1,364 Gross financial debt 3,304 Lease liabilities 313 Total gross debt 3,617 Less: Cash & cash equivalents and derivatives (1,364) Net debt 2,253 787 534 529 559 510 461 143 52 19 12 9 2 Cash &
Slide 44: Currency impact
Currency impact FY 2022 Revenues by Currency British pound 3% Other 7% Euro 23% U.S. dollar 67% Impact in € million on Adjusted operating Average rates Revenues profit 1 Euro FY 2022 FY 2021 FY 2022 FY 2022 U.S. dollar 1.05 1.18 405 131 British pound 0.85 0.86 1 0 Canadian dollar 1.37 1.48 7 3 Austr
Slide 45: Growth rates
Growth rates ∆ ∆ CC ∆ OG % % Change % Net Effect % % Currency in Constant Acquisitions Organic FY 2022 FY 2021 Change Impact Currencies & Disposals Growth Revenues Health 1,448 1,234 +17% +12% +5% 0% +5% Tax & Accounting 1,758 1,510 +16% +7% +9% 0% +9% Governance, Risk & Compliance 1,333 1,139 +17%
Slide 46: Q&A
Q&A 2022 Full-Year Results 46