Cengage Learning Hldgs Ii Inc · OTC:CNGO
Cengage Learning Hldgs Ii — Cengage Learning Holdings II — Q4 2024 Earnings Presentation
29 slides from Cengage Learning Hldgs Ii's earnings presentation, Jun 6, 2024
Slide 1: Fourth Quarter & Fiscal Year 2024 Investor Update
Fourth Quarter & Fiscal Year 2024 Investor Update June 6, 2024
Slide 2: Agenda
Agenda • Introduction Richard Veith, SVP, Treasurer • Business Update Michael Hansen, Chief Executive Officer • Financial Update Bob Munro, Chief Financial Officer Pooja R. Cengage Work • Q&A Takeyce W. Cengage Academic Michael C. Cengage Select
Slide 3: Safe Harbor / Forward-Looking Statements
Safe Harbor / Forward-Looking Statements Cautionary Note Regarding Forward-Looking Statements • The following slides and related discussion contain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-look
Slide 4: Business Update
Business Update Michael Hansen, Chief Executive Officer
Slide 5: Q4 Business Update
Q4 Business Update FY24: Delivered guidance; 3rd year of strong revenue growth; accelerated EBITDA margin expansion - Adjusted Cash Revenue $1,535M/+5%; Adjusted Cash EBITDA $461M/+10%, EBITDA margin 30%/+122bps US Higher Ed reached inflection point and returned to growth, driven by digital strategy
Slide 6: Financial Update
Financial Update Bob Munro, Chief Financial Officer
Slide 7: Financial Highlights
Financial Highlights Strong fourth quarter drives full year performance ahead of guidance Quarter Ended March 31 • FY24 Adjusted Cash Revenue $1,535M, up +5%; ∆ ∆ $M FY23 FY24 − Academic +2%: US HED +3% - long term digital strategy underpinning return to growth; Secondary +7% - strategic focus on mi
Slide 8: Full Year Segment Performance
Full Year Segment Performance1 Adj. Cash Revenue ($M) FY23 FY24 % Growth US Higher Ed $597 $613 3% International Higher Ed 122 111 (9%) Secondary $184 $197 7% Cengage Academic $903 $922 2% Cengage Work $106 $126 19% Research 212 217 2% English Language Teaching 139 164 18% Other 76 80 4% Cengage Sel
Slide 9: Cengage Academic
Cengage Academic Adjusted cash revenues +2%: US Higher Ed returned to growth; market outperformance in Secondary US Higher Ed Full Year- Academic Full Year- Net Sales • US HED returned to growth; Adjusted cash revenues up +3% against Print Net Sales Print US Higher Ed prior year, with net sales up +
Slide 10: Cengage Work
Cengage Work Adjusted Cash Revenues +19%: Continuing high growth momentum and accelerating profit contribution ed2go Full Year- Work Full Year- Net Sales • FY24 net sales up +23%, outperforming strong end market ed2go Net Sales ed2go demand fundamentals; 23% Infosec 19% • Propelled by high enrollmen
Slide 11: Cengage Select
Cengage Select1 Adjusted cash revenues +8% , EBITDA +11%: Driven by high growth and margin expansion in ELT Research Full Year- Select Full Year-Net Sales • Research delivered strong Q4 reversing Q3 YTD timing effects and Net Sales Research Print delivering another year of top line growth 6% 2% Digi
Slide 12: Summary of Cash Flows
Summary of Cash Flows $M FY23 FY24 Change Unlevered Free Cash flow of $317M, $65M ahead of prior year Adj Cash EBITDA1 $ 421 $ 461 $ 40 • Strong performance driven by accelerating EBITDA growth and working capital efficiencies from ongoing global Less: Prepublication Costs (74) (80) (6) optimization
Slide 13: Liquidity & Debt
Liquidity & Debt Strong liquidity position • Business highly cash generative, $M Mar 31, 2023 Mar 31, 2024 sustaining strong cash and liquidity position, further enhanced Cash and Cash Equivalents $ 269 $ 265 by new $200M revolving credit facility Available under Revolving Credit Facilities1 $ 128 $
Slide 14: FY25 Full Year Outlook
FY25 Full Year Outlook Adjusted Cash Revenue: Adjusted Cash EBITDA: Unlevered Free Cash Flow: Expecting another year of Anticipating acceleration in Anticipated EBITDA growth solid growth for Cengage EBITDA growth and margin and improving working capital Group expansion over FY24 dynamics expected t
Slide 15: Q&A
Q&A Matt N., Cengage Select
Slide 16: Appendix
Appendix Rya C., Cengage Work
Slide 17: Definitions: Non-GAAP Financial Measures
Definitions: Non-GAAP Financial Measures We believe that certain non-GAAP financial measures provide useful information for evaluating our business performance. These non-GAAP measures are on a constant currency basis whereby we convert current period and prior period amounts from local currency to
Slide 18: Cengage is a largely Digital Business
Cengage is a largely Digital Business: FY24 full year digital sales of $1.1B represent 75% of total Net Sales • Cengage Group – FY24 digital sales at 75%, with strong compound growth of Total Cengage Group Net Sales1 ($M) ~7% over past 3 years significantly outpacing print (~2%) 1,260 1,327 1,436 1,
Slide 19: Segment Performance - FY23-FY24 Q4
Segment Performance1 - FY23-FY24 Q4 Adj. Cash Revenue ($M) Q4 FY23 Q4 FY24 % Growth US Higher Ed $190 $204 7% International Higher Ed 34 30 (11%) Secondary $13 $17 33% Cengage Academic $237 $252 6% Cengage Work $31 $36 18% Research 49 56 14% English Language Teaching 40 44 11% Other 21 20 (6%) Cenga
Slide 20: Quarterly Segment Performance FY22 – FY24 Q4
Quarterly Segment Performance1 FY22 – FY24 Q4 Adj. Cash Revenue ($M) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 US Higher Ed $85 $252 $111 $181 $77 $224 $105 $190 $73 $226 $110 $204 International Higher Ed 21 37 24 33 22 38 28 34 21 34 26 30 Secon
Slide 21: GAAP Results - Consolidated Statements of Operations
GAAP Results - Consolidated Statements of Operations Fiscal Year Ended March 31 (in millions) 2024 2023 Revenues $ 1,502.7 $ 1,423.5 Cost of revenues, excluding amortization of pre-publication costs and identifiable intangible assets and depreciation stated below 620.4 609.0 Amortization of pre-publ
Slide 22: GAAP Results - Consolidated Balance Sheets
GAAP Results - Consolidated Balance Sheets As of As of March 31, March 31, 2024 2023 Change March 31, March 31, Liabilities, contingently redeemable convertible preferred (in millions) 2024 2023 Change stock, and stockholders' deficit Assets Accounts payable and accrued expenses $ 376.9 $ 364.7 $ 12
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations¹ Non-GAAP Reconciliations $M FY22 FY23 FY24 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY GAAP Revenue 302 389 333 347 1,372 303 384 376 361 1,423 326 428 365 384 1,503 Impact of foreign currency (4) (4) (3) (4) (15) (1) 1 3 - 3 (1) (1) - (1) (2) Adjusted revenue 298 385 330
Slide 24: Non-GAAP Financial Measures - Three Months Ended
Non-GAAP Financial Measures¹ - Three Months Ended Three Months Ended Three Months Ended Mar 31, B / (W) Mar 31, B / (W) 2024 2023 $ % 2024 2023 $ % Adjusted Revenue: Prepub Additions: Cengage Academic $ 220.7 $ 208.6 $ 12.1 5.8% Cengage Academic $ 13.7 $ 12.7 $ (1.0) (7.9)% Cengage Work 26.2 25.5 0.
Slide 25: Non-GAAP Financial Measures - Twelve Months Ended
Non-GAAP Financial Measures¹ - Twelve Months Ended Twelve Months Ended Twelve Months Ended Mar 31, B / (W) Mar 31, B / (W) 2024 2023 $ % 2024 2023 $ % Prepub Additions: Adjusted Revenue: Cengage Academic $ 41.9 $ 38.9 $ (3.0) -7.7% Cengage Academic $ 898.0 $ 876.3 $ 21.7 2.5% Cengage Work 3.0 2.7 (0
Slide 26: Non-GAAP Cash Financial Measures - Three Months Ended
Non-GAAP Cash Financial Measures¹ - Three Months Ended Three Months Ended Three Months Ended Mar 31, B / (W) Mar 31, B / (W) 2024 2023 $ % 2024 2023 $ % Adjusted Cash Revenue: Prepub Additions: Cengage Academic 251.6 237.2 14.4 6.1% Cengage Academic $ 13.8 $ 12.8 $ (1.0) (7.8)% Cengage Work 36.0 30.
Slide 27: Non-GAAP Cash Financial Measures - Twelve Months Ended
Non-GAAP Cash Financial Measures¹ - Twelve Months Ended Twelve Months Ended Twelve Months Ended Mar 31, B / (W) Mar 31, B / (W) 2024 2023 $ % 2024 2023 $ % Adjusted Cash Revenue: Prepub Additions: Cengage Academic 921.5 902.6 18.9 2.1% Cengage Academic $ 42.0 $ 39.0 $ (3.0) -7.7% Cengage Work 125.6
Slide 28: Total SG&A & Prepub Reconciliation
Total SG&A & Prepub Reconciliation $M FY22 FY23 FY24 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Additions to pre-publication costs $ 14 $ 16 $ 16 $ 26 $ 72 $ 14 $ 16 $ 18 $ 27 $ 74 $ 16 $ 21 $ 19 $ 24 $ 80 1,2,3 Proforma SG&A 161 174 174 184 693 178 177 184 185 723 184 187 187 196 755 Total Spend
Slide 29: Summary of Cash Flows
Summary of Cash Flows $M FY23 FY24 Change Summary of cash flows: Net cash provided by operating activities 158 167 9 Net cash used in investing activities (132) (121) 11 Net cash used in financing activities (103) (50) 53 Impact on cash and cash equivalents from changes in foreign currency (2) - 2 N
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