John Wiley & Sons, Inc. · NYSE:WLY
John Wiley & Sons — Wiley John & Sons — Q4 FY2013 Earnings Presentation
32 slides from John Wiley & Sons's earnings presentation, Jun 18, 2013
Slide 1: Q4 and Fiscal Year 2013 Investor Update
WILEY Q4 and Fiscal Year 2013 Investor Update June 18, 2013
Slide 2: Safe Harbor
Safe Harbor 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 statements. Any
Slide 3: Agenda
Agenda Summary & Performance Segment Update Financial & Restructuring Update Business Outlook 7 WILEY
Slide 4: Year in Review
Year in Review Challenges + Sharp decline of print books; digital book growth not yet offsetting that decline * Confluence of timing issues in journals subscription business + Tight library budgets continue in southern Europe, but some growth elsewhere « Uncertainty around brick and mortar sales cha
Slide 5: Management Update
Management Update John Kritzmacher New Wiley CFO effective July 1 Former CFO of Lucent Technologies and Global Crossing Former COO of Alcatel-Lucent Services Division Responsible for finance, business development, M&A, and investor relations Ellis Cousens Retirement planned for June 2014 Wiley CFO a
Slide 6: Adjusted Fiscal Year Performance
Adjusted Fiscal Year Performance (millions) FY13 FY12 B/(W) el () Revenue $1,715 $1,710 0.3% 1% Operating Income $252.4 $272.3 (7%) (6%) EPS $2.92 $3.12 (6%) (5%) Guidance EPS $2.97 * Low revenue growth due to decline of print books in all three segments, which offset solid growth from acquisitions
Slide 7: Adjusted Quarterly Performance
Adjusted Quarterly Performance (mititons) Q4FY13 Q4FY12~—B/(W) Dek oll Revenue $440.7 $435.5 1% 3% Operating Income $59.0 $67.3 (12%) (9%) EPS $0.71 $0.77 (8%) (5%) Adjusted numbers exclude the restructuring and related impairment charges, operational results and unusual items of the divested consum
Slide 8: Agenda
Agenda Summary & Performance Segment Update Financial & Restructuring Update Business Outlook . WILEY
Slide 9: Research Fiscal Year Summary
Research Fiscal Year Summary Positives Negatives Expected improvement in CY13 journal subscription business (>=3%) Largest society win in our history Open access providing incremental revenue Solid growth in Asia-Pacific and the Americas Restructuring underway and on track Tight library budgets cont
Slide 10: Adjusted Research Performance
Adjusted Research Performance* (mitlions) Q4 FY13 B(W) FY13 Revenue $283.1 (1%) $1,009.8 (2%) Contribution to Profit $99.7 (4%) $302.3 (3%) Fiscal Year Revenue Growth by Product/Service** 45% Journal | Publishi Print Other % bonioti fa i = é nals Digital Books | Advertising | OpenAccess | (Backtiles
Slide 11: Journal Subscription Variance Analysis
Journal Subscription Variance Analysis Variance from 2% Expected Growth Prior Year Reported Revenue $ Expected Growth at 2% Report Revenue Fiscal Year 2013 Shortfall (24) Foreign Exchange Translation (9) Net new Society business - New society publication schedule (2) Price Increases/new subscription
Slide 12: Research Indicators
Research Indicators Licensed Subscriptions Society Journals Digital Transition * Calendar year 2013 journal 42 new contracts worth $31 Percent of book revenue subscriptions up 3% vs. million from digital was 24% vs. same time last year 21% for prior fiscal year 81 renewals worth $52 81% of journals
Slide 13: Professional Development
Professional Development Fiscal Year Summary Positives Negatives Consumer assets sold to multiple parties, generated $30 million in net proceeds Acquired businesses — workplace learning and test prep platforms - performing well Shift to digital content and services continues to favorably impact gros
Slide 14: Adjusted Professional Performance
Adjusted Professional Performance* (millions) Q4FY13 B(W) FY13 B(W) 2% $370.9 5% (4%) $21.5 28% Revenue Contribution to Profit ~ Fiscal Year Revenue Growth by Product/Service** a” 4 A a Print Books eBooks sessment) ournals Otter p Training (Translation, Advertising) % of Revenue 70% 11% 7% 3% 9% Num
Slide 15: Looking Ahead in Professional
Looking Ahead in Professional Fully focused on providing content and services across four verticals — business, technology, talent management and professional practice — and the career arc Bringing new products and services to market in test prep, certification, assessment and e-learning Leveraging
Slide 16: Education Summary
Education Summary Positives Negatives Acquisition of Deltak movesbusiness ° Print textbooks facing headwinds into high growth, educational due to lower-cost alternatives to services and opens up an new textbooks (eg. rental and institutional sales channel used books); fiscal year revenue from print
Slide 17: Adjusted Education Performance
Adjusted Education Performance* (millions) Q4 FY13 B(W) Revenue $62.6 25% $334.5 7% Contribution to Profit ($8.2) (14%) $52.0 (11%) cal Year Revenue Growth by Product/Service** Print Binder/ eBooks/ | Wirevpiys | Online Program Met | Published Textbooks | Custom Print | Digital Content v (sixmonths)
Slide 18: Deltak Update
Deltak Update A leader in Online Program Management (OPM) Approximately 200 schools work with OPM providers today; 500 more expected in next 2 years Average contract term is 7-10 years Revenue of $34 million in first six months with Wiley, up from $54 million full year prior to acquisition Five new
Slide 19: Looking Ahead in Education
Looking Ahead in Education Online Program Management to be a prime focus of business investment and resources, and a primary area of growth Print textbooks may continue to decline, but growth in lower cost print alternatives, digital and WileyPLUS should offset much of this Restructuring underway an
Slide 20: Agenda
Agenda Summary & Performance Segment Update Financial & Restructuring Update Business Outlook 20 WILEY
Slide 21: Adjusted Shared Services Costs
Adjusted Shared Services Costs (millions spent) pel Distribution $102.1 $109.1 6% Technology $159.1 $144.4 (11%) Finance $43.8 $45.1 2% Other Admin $87.2 $89.4 2% Total $392.2 $388.0 (2%) * Distribution expense reduction due to lower print volume and efficiency improvement * Technology expense incre
Slide 22: Balance Sheet
Balance Sheet (millions) As of 4/30/13 As of 4/30/12 Cash and Cash Equivalents $334.1 $259.8 Deferred Revenue 363.0 342.0 Long Term Debt 673.0 475.0 Accrued Pension Liability 204.4 145.8 Net Debt $338.9 $215.2 ° Deferred revenue a leading indicator of CY13 journal subscription growth ° Defined Benef
Slide 23: Cash Flow
Cash Flow (millions) Net Income Restructuring Charges Impairment Charges Net gain on sale of consumer One time tax benefit/charge German tax deposit Investment: Composition Spend Investment: Tech, Property, Equipment Free Cash Flow Adjusted Free Cash Flow* Adjusted Free Cash Flow/Share** Adjusted Fr
Slide 24: Free Cash Flow Allocation
Free Cash Flow Allocation (millions spent) Acquisitions, Net of Cash $263 $92 Share Repurchases $74 $87 Dividends $57 $48 * FY13 acquisitions include Deltak ($220m) and ELS ($24m). FY12 acquisitions include Inscape ($85 million). * Fiscal Year Repurchases = 1,846,873 shares @ $39.92/share ° Dividend
Slide 25: Restructuring Update
Restructuring Update $24.5 million restructuring charge taken in fourth quarter related to employee separation benefits, consulting costs and the termination of the US pension plan This activity is expected to yield $38 million in net ongoing savings towards the $80 million run-rate savings objectiv
Slide 26: Restructuring Recap
Restructuring Recap Key areas of focus * Consolidation of business activities and shared services from multiple locations and segments into one lower cost location, either through offshoring or outsourcing ° Elimination of low benefit activities * Management delayering * Termination of US defined be
Slide 27: Agenda
Agenda Summary & Performance Segment Update Financial Discussion and Restructuring Outlook aT WILEY
Slide 28: FY14 Outlook
FY14 Outlook FY14 is a transitional year, i.e. before we see significant earnings benefit from the restructuring, Deltak, or new businesses Expect low-single-digit revenue growth excluding foreign exchange impact and fiscal year 2013 revenue from the divested consumer businesses Adjusted EPS, exclud
Slide 29: Outlook for FY15 and Beyond
Outlook for FY15 and Beyond Expect a significant jump in earnings based on: ° Full-year impact of restructuring savings * Material earnings impact of recent acquisitions (Deltak, Inscape and ELS) ° Growing contribution from recently launched businesses (online training and assessment, test prep and
Slide 30: Directional EPS Outlook
Directional EPS Outlook FY15 FY16 FY17 ™@Core MRestructuring Acquisitions ™ New Businesses rint books, ebooks and journals Acquisitions: contributions from Deltak, ELS and Inscape (chart does notinclude any future acquisitions) New Businesses: test prep and certification, online training and assessm
Slide 31: Outlook Summary
° Outlook Summary Despite flat revenue in FY13, the underlying performance of the journals business is solid. Profitability and Cash Flow performance of the business remains strong FY14 earnings growth is negatively impacted by ongoing investments in enabling technology, the restoration of incentive
Slide 32: Upcoming Events
Upcoming Events (— ay Q1 Earnings Call on September 10 \ - ay Annual Meeting of Shareholders on September 19 < A (— »\ Investor and Analyst Day on September 27 Ns J 32 WILEY