John Wiley & Sons, Inc. · NYSE:WLY
John Wiley & Sons — Q3 2018 Earnings Presentation
16 slides from John Wiley & Sons's earnings presentation, Mar 6, 2018
Slide 1: Third Quarter 2018 Earnings Report
Third Quarter 2018 Earnings Report March 6, 2018 Speakers Brian Napack, President and CEO John Kritzmacher, CFO & EVP, Technology and Operations Third Quarter 2018 Earnings | March 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains certain forward-looking statements concerning the Company's 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 statem
Slide 3: Non-GAAP Measures
Non-GAAP Measures In this presentation, management provides the following non-GAAP measures: • Adjusted Earnings Per Share (“Adjusted EPS”) • Free Cash Flow less Product Development Spending • Adjusted Operating Income and margin • Adjusted Contribution to Profit (“Adjusted CTP”) • Results on a cons
Slide 4: Agenda
Agenda 1. First 90 Days 2. Performance Summary 3. Financial Position 4. Outlook 5. Looking Forward 6. Q&A Wiley Celebrates 210 Years! Third Quarter 2018 Earnings | March 2018 4
Slide 5: Takeaways
Takeaways • Fiscal year overall financial performance tracking well to guidance • GAAP EPS results up significantly primarily due to non- cash benefit from US Tax Act and favorable foreign currency • Operational excellence initiatives resulting in improved profitability, speed and agility Third Quar
Slide 6: Third Quarter Performance
Third Quarter Performance GAAP Q3 2018 Q3 2017 Change Change CC Revenue $455.7 $436.5 4% (1%) Operating Income $67.4 $51.2 32% Operating Margin 14.8% 11.7% Diluted EPS $1.19 $0.82 45% Non-GAAP Q3 2018 Q3 2017 Change CC Adjusted Operating Income $69.6 $60.3 2% Adjusted Operating Margin 15.3% 13.8% Ad
Slide 7: Nine Month Performance
Nine Month Performance GAAP YTD 2018 YTD 2017 Change Change CC Revenue $1,318.9 $1,266.3 4% 1% Operating Income $164.7 $142.7 15% Operating Margin 12.5% 11.3% Diluted EPS $2.39 $1.15 +$1.24 Non-GAAP YTD 2018 YTD 2017 Change Change CC Adjusted Operating Income $194.8 $166.6 3% Adjusted Operating Marg
Slide 8: Research
Research (millions) Q3 2018 Q3 2017 Change Change CC Journal Subscriptions $160.3 $150.0 7% (2%) Open Access $9.9 $6.9 43% 39% Licensing, Reprints, Backfiles, Other $45.0 $40.9 10% 5% Total Journal Revenue $215.2 $197.8 9% 1% Publishing Technology Services (Atypon) $8.3 $8.0 4% 4% TOTAL REVENUE $223
Slide 9: Publishing
Publishing (millions) Q3 2018 Q3 2017 Change Change CC STM and Professional Publishing $80.8 $76.9 5% 2% Education Publishing $48.4 $50.3 (4%) (6%) Course Workflow (WileyPLUS) $21.4 $23.5 (9%) (9%) Test Preparation and Certification $7.8 $8.5 (9%) (9%) Licensing, Distribution, Advertising, Other $11
Slide 10: Solutions
Solutions (millions) Q3 2018 Q3 2017 Change Change CC Education Services (Online Program Mgmt) $32.2 $30.0 7% 7% Professional Assessment $13.2 $13.8 (4%) (5%) Corporate Learning $16.5 $15.4 7% (4%) TOTAL REVENUE $61.9 $59.2 5% 2% CONTRIBUTION TO PROFIT (CTP) $6.4 $3.6 78% Restructuring charges $1.3
Slide 11: US Tax Act Impact
US Tax Act Impact • Estimated non-cash tax benefit this quarter of $25 million, or $0.43 per share • Benefit on a go-forward basis expected to be relatively modest • Majority of pre-tax income earned outside the US • Approximate one percentage point drop to effective tax rate starting in FY19 • Mode
Slide 12: Financial Position
Financial Position Balance Sheet (millions) As of 1/31/18 As of 4/30/17 Cash and Cash Equivalents $128.2 $58.5 Long Term Debt $428.2 $365.0 Net Debt $300.0 $306.5 Net-Debt-to-EBITDA* 0.8 1.0 *Net-Debt-to-EBITDA (ttm) – as defined in our Revolving Credit Facility Third Quarter 2018 Earnings | March 2
Slide 13: Cash Flow
Cash Flow Cash Flow Measures (millions) YTD 2018 YTD 2017 Cash Provided by Operating Activities (GAAP) $190.1 $229.2 Additions to Technology, Property, and Equipment ($79.0) ($77.7) Product Development Spending ($30.4) ($31.9) Free Cash Flow less Product Development Spending (Non-GAAP) $80.7 $119.5
Slide 14: Fiscal 2018 Outlook Reaffirmed
Fiscal 2018 Outlook Reaffirmed Metric ($M, except EPS) FY17 Actual YTD Change FY18 Expectation (at constant currency) (% at constant currency) Revenue $1,718.5 +1% Approximately even Adj. Operating Income $228.4 +3% Approximately even Adj. EPS $3.01 +1% Low-single digit % decline Cash Provided by Op
Slide 15: Looking Forward
Looking Forward • Strategic planning and development underway • Migration of Wiley Online Library to Atypon platform • Completion of HQ transformation • Next-generation WileyPLUS release • Operational excellence activities continuing • Fourth quarter earnings update and full year recap scheduled for
Slide 16: Appendix – Adjusted EPS reconciliation to GAAP
Appendix – Adjusted EPS reconciliation to GAAP Three Months Ended Nine Months Ended January 31, January 31, 2018 2017 2018 2017 GAAP Earnings Per Share - Diluted $ 1.19 $ 0.82 $ 2.39 $ 1.15 Adjustments: Restructuring and related charges 0.04 0.10 0.37 0.17 Foreign exchange losses (gains) on intercom