Wiley Reports Fourth Quarter and Fiscal Year 2021 Results

FOURTH QUARTER 2021 SUMMARY

●	GAAP results:  Revenue of $536 million, Operating Income of $51 million, and EPS of $0.73

●	Adjusted results (at constant currency):  Revenue +10%, EBITDA +21%, and EPS +41%

FISCAL YEAR 2021 SUMMARY

●	GAAP results:  Revenue of $1,942 million, Operating Income of $186 million, EPS of $2.63, and Cash Flow from Operations of $360 million

●	Adjusted results (at constant currency):  Revenue +4%, EBITDA +16%, and EPS +27%

●	Free Cash Flow of $257 million, up 48% from prior year

●	Digital products and tech-enabled services now at 82% of total revenue, up from 80% a year ago

MANAGEMENT COMMENTARY

FOURTH QUARTER PERFORMANCE

Revenue

●	Research Publishing & Platforms rose 13% as reported and 4% at constant currency and excluding acquisitions, driven primarily by strong growth in open access.

●	Academic & Professional Learning grew 15% as reported and 12% at constant currency driven by strong growth in Education Publishing and trade publishing, accompanied by further recovery in corporate training.

●	Education Services increased 9% as reported and 7% at constant currency, driven by growth in online enrollment and mthree IT talent placements.

Adjusted EBITDA

●	Research Publishing & Platforms was down 6% at constant currency due to increased editorial resources to support higher article output, as well as higher annual incentive compensation and Hindawi acquisition costs.

●	Academic & Professional Learning rose 57% at constant currency, reflecting revenue growth, business optimization gains, and COVID-related savings, offsetting higher annual incentive compensation.

●	Education Services rose 32%, driven by revenue growth and business optimization gains, offsetting higher annual incentive compensation.

●	Adjusted Corporate Expenses were down 11% mainly due to lower retirement plan expense.

EPS

●	GAAP EPS was $0.73 compared to a loss of ($2.83) in the prior year period.  Wiley recorded a restructuring charge of $0.12 per share this quarter primarily related to business optimization efforts.

●	Adjusted EPS growth was primarily due to higher operating income and a lower effective tax rate.

FISCAL YEAR 2021 PERFORMANCE

●

Revenue growth was driven by Research Publishing & Platforms (+7% as reported, +3% constant currency and excluding impact of acquisitions) and Education Services (+21% as reported, +7% constant currency and excluding impact of acquisitions), partially offset by a decline in Academic & Professional Learning (-1% as reported, -3% at constant currency and excluding impact of acquisitions).

●	GAAP EPS increase mainly reflected operating income growth this year and impairment and restructuring charges in the prior year.  Fiscal 2021 restructuring charges totalling $0.44 per share were primarily related to a previously disclosed reduction in Wiley’s real estate footprint.

●	Adjusted EPS and Adjusted EBITDA growth largely due to revenue growth, business optimization gains, and COVID-related savings, including travel and events.  Wiley’s Adjusted EBITDA margin rose from 19.4% in Fiscal 2020 to 21.6% in Fiscal 2021.

●	Balance Sheet:  The Company’s net debt-to-EBITDA ratio was 1.7, inclusive of acquisitions.

●	Net Cash Provided by Operating Activities and Free Cash Flow less Product Development Spending increase primarily due to higher cash earnings.  Capital Expenditures declined $12 million to $103 million largely due to delayed first-half investment in response to COVID-19.

●	Acquisitions:  The Company spent $298 million in cash to acquire Hindawi, a leader in open access research publishing.

●	Returns to Shareholders:  The Company utilized approximately $77 million of cash for dividends and $15.8 million to repurchase approximately 310,000 shares at an average cost per share of $50.93.

FISCAL YEAR 2022 OUTLOOK

Given positive market trends and Wiley’s favorable momentum, the Company anticipates revenue growth to continue to accelerate in Fiscal 2022, with organic growth anticipated for all segments.

●	Revenue Outlook:  Wiley expects revenue to exceed $2 billion for the first time, with mid-to-high single digit growth anticipated for Research Publishing & Platforms, low-single digit growth for Academic & Professional Learning, and low-teens growth for Education Services.

●

Earnings Outlook:  Wiley expects profit gains from revenue growth to be tempered by investments to accelerate growth initiatives, as well as higher T&E expenses due to the resumption of in-person business activities.  Adjusted EPS performance is expected to be moderated by higher depreciation and amortization expense, and a higher effective tax rate.

●

Free Cash Flow Outlook:  Wiley expects strong cash earnings to be partially offset by higher capex (outlook of $120-$130 million vs. $103 million in Fiscal 2021), non-recurrence of a $21 million tax refund received in Fiscal 2021, and higher annual incentive compensation payments related to Fiscal 2021 performance.

EARNINGS CONFERENCE CALL

Scheduled for today, June 10 at 10:00 am (ET).  Access webcast at Investor Relations at investors.wiley.com, or directly at https://event.on24.com/wcc/r/3081625/07B503CEDF337A0960EE124635E07D12.  U.S. callers, please dial (844) 418-0103 and enter the participant code 3516229#.  International callers, please dial (236) 714-3019 and enter the participant code 3516229#.

ABOUT WILEY

Wiley (NYSE: JW-A) is a global leader in research and education, unlocking human potential by enabling discovery, powering education, and shaping workforces. For over 200 years, Wiley has fueled the world’s knowledge ecosystem. Today, our high-impact content, platforms, and services help researchers, learners, institutions, and corporations achieve their goals in an ever-changing world. Visit us at Wiley.com, Like us on Facebook and  Follow us on Twitter and LinkedIn.

NON-GAAP FINANCIAL MEASURES

Wiley provides non-GAAP financial measures and performance results such as “Adjusted EPS,” “Adjusted Operating Income,” “Adjusted EBITDA,” “Adjusted CTP,” “Adjusted Income before Taxes,” “Adjusted Income Tax Provision,” “Adjusted Effective Income Tax Rate,” “Free Cash Flow less Product Development Spending,” “organic revenue,” and results on a Constant Currency basis to assess underlying business performance and trends.  Management believes non-GAAP financial measures, which exclude the impact of restructuring charges and credits and certain other items, and the impact of acquisitions provide a useful comparable basis to analyze operating results and earnings.  See the reconciliations of non-GAAP financial measures and explanations of the uses of non-GAAP measures in the supplementary information. We have not provided our 2022 outlook for the most directly comparable U.S. GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain items, including restructuring charges and credits, gains and losses on foreign currency, and other gains and losses. These items are uncertain, depend on various factors, and could be material to our consolidated results computed in accordance with U.S. GAAP.

FORWARD-LOOKING STATEMENTS

This release 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 such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company and are subject to change based on many important factors. Such factors include, but are not limited to: (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company's journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of the Company's educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) the Company's ability to protect its copyrights and other intellectual property worldwide (ix) the ability of the Company to successfully integrate acquired operations and realize expected opportunities; (x) the Company’s ability to realize operating savings over time and in fiscal year 2022 in connection with our multi-year Business Optimization Program; (xi) the impact of COVID-19 on our operations, performance, and financial condition; and (xii) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

JOHN WILEY & SONS, INC.
SUPPLEMENTARY INFORMATION (1) (2)
RECONCILIATION OF U.S. GAAP MEASURES to NON-GAAP MEASURES
(unaudited)
Reconciliation of U.S. GAAP EPS to Non-GAAP Adjusted EPS
		Three Months Ended								Year Ended
		April 30,								April 30,
		2021				2020				2021				2020
U.S. GAAP Earnings (Loss) Per Share - Diluted		$	0.73			$	(2.83	)		$	2.63			$	(1.32	)
Adjustments:
Restructuring and related charges			0.12				0.20				0.44				0.43
Foreign exchange (gains) losses on intercompany transactions			(0.01	)			(0.01	)			(0.02	)			0.02
Income tax adjustments (A) (B) (C)			-				(0.03	)			(0.13	)			(0.03	)
Impairment of goodwill			-				1.95				-				1.94
Impairment of Blackwell trade name			-				1.32				-				1.31
Impairment of developed technology intangible			-				0.04				-				0.04
EPS impact of using weighted-average dilutive shares for adjusted EPS calculation (D)			-				0.02				-				0.01
Non-GAAP Adjusted Earnings Per Share - Diluted		$	0.84			$	0.66			$	2.92			$	2.40
Reconciliation of U.S. GAAP Income (Loss) Before Taxes to Non-GAAP Adjusted Income Before Taxes
		Three Months Ended								Year Ended
(amounts in thousands)		April 30,								April 30,
			2021				2020				2021				2020
U.S. GAAP Income (Loss) Before Taxes		$	50,273			$	(168,204	)		$	175,912			$	(63,092	)
Pre-Tax Impact of Adjustments:
Restructuring and related charges			8,497				14,573				33,310				32,607
Foreign exchange (gains) losses on intercompany transactions			(385	)			(462	)			(1,457	)			1,256
Impairment of goodwill			-				110,000				-				110,000
Impairment of Blackwell trade name			-				89,507				-				89,507
Impairment of developed technology intangible			-				2,841				-				2,841
Non-GAAP Adjusted Income Before Taxes		$	58,385			$	48,255			$	207,765			$	173,119
Reconciliation of U.S. GAAP Income Tax Provision (Benefit) to Non-GAAP Adjusted Income Tax Provision
U.S. GAAP Income Tax Provision (Benefit)		$	8,944			$	(10,160	)		$	27,656			$	11,195
Income Tax Impact of Adjustments (E):
Restructuring and related charges			1,702				3,675				8,065				7,949
Foreign exchange (gains) losses on intercompany transactions			40				(166	)			(363	)			242
Impairment of goodwill			-				-				-				-
Impairment of Blackwell trade name			-				15,216				-				15,216
Impairment of developed technology intangible			-				686				-				686
Income Tax Adjustments:
Impact of increase in U.K. statutory rate on deferred tax balances (A)			3,261				-				(3,511	)			-
Impact of U.S. CARES Act (B)			-				-				13,998				-
Impact of change in certain U.S. state tax rates in 2021 and tax rates in France in 2020 (C)			(3,225	)			1,887				(3,225	)			1,887
Non GAAP Adjusted Income Tax Provision		$	10,722			$	11,138			$	42,620			$	37,175
U.S. GAAP Effective Tax Rate			17.8	%			6.0	%			15.7	%			-17.7	%
Non-GAAP Adjusted Effective Tax Rate			18.4	%			23.1	%			20.5	%			21.5	%
Notes:
(A) During the first quarter of fiscal 2021, the U.K. officially enacted legislation that increased its statutory rate from 17% to 19%. This resulted in a $3.3 million, or $(0.06) per share, non-cash deferred tax benefit, and a $3.5 million, or $0.06 per share, non-cash deferred tax expense from the re-measurement of the Company’s applicable U.K. net deferred tax liabilities for the three months and year ended April 30, 2021, respectively.
(B) In connection with the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") and certain regulations issued in late July 2020, the Company elected to carry back its fiscal year 2020 loss for tax purposes ("NOL") to its fiscal year 2015 and claimed a $20.7 million refund. The NOL carryback to a year when our corporate tax rate was 35%, including certain related benefits, resulted in a $14.0 million tax benefit, or $(0.25) per share, $8.4 million from current taxes and $5.6 million from deferred taxes. We received the refund in February 2021.
(C) In connection with the increase in certain U.S. state tax apportionment factors in 2021, we recorded income tax expense of $3.2 million, or $0.06 per share for the three months and year ended April 30, 2021. In connection with the reduction in French tax rates in 2020, we recorded an income tax benefit of $1.9 million, or $(0.03) per share, for the three months and year ended April 30, 2020. These adjustments impacted deferred taxes.
(D) Represents the impact of using diluted weighted-average number of common shares outstanding (56.4 million and 56.7 million shares for the three months and year ended April 30, 2020, respectively) included in the Non-U.S. GAAP adjusted EPS calculation in order to apply the dilutive impact on adjusted net income due to the effect of unvested restricted stock units and other stock awards. This impact occurs when U.S. GAAP net loss is reported and the effect of using dilutive shares is antidilutive.
(E) For fiscal year 2021, substantially all of the tax impact was from deferred taxes. For fiscal year 2020, the tax impact was $1.5 million from current taxes and $22.6 million from deferred taxes.
(1) See Explanation of Usage of Non-GAAP performance measures included in this supplementary information for additional details on the reasons why management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three months and year ended April 30, 2021 is preliminary and subject to change prior to the filing of our upcoming Annual Report on Form 10-K with the Securities and Exchange Commission.
(2) All amounts are approximate due to rounding.

JOHN WILEY & SONS, INC.
SUPPLEMENTARY INFORMATION (1)
RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP EBITDA AND ADJUSTED EBITDA
(unaudited)
		Three Months Ended								Year Ended
		April 30,								April 30,
		2021				2020				2021				2020
Net Income (Loss)		$	41,329			$	(158,044	)		$	148,256			$	(74,287	)
Interest expense			4,455				5,786				18,383				24,959
Provision (Benefit) for income taxes			8,944				(10,160	)			27,656				11,195
Depreciation and amortization			52,936				46,589				200,189				175,127
Non-GAAP EBITDA			107,664				(115,829	)			394,484				136,994
Impairment of goodwill and intangible assets			-				202,348				-				202,348
Restructuring and related charges			8,497				14,573				33,310				32,607
Foreign exchange transaction losses (gains)			1,504				(4,534	)			7,977				(2,773	)
Other income			(4,992	)			(3,779	)			(16,761	)			(13,381	)
Non-GAAP Adjusted EBITDA		$	112,673			$	92,779			$	419,010			$	355,795
Adjusted EBITDA Margin			21.0	%			19.5	%			21.6	%			19.4	%
Notes:
(1) See Explanation of Usage of Non-GAAP performance measures included in this supplementary information for additional details on the reasons why management believes presentation of each non-GAAP performance measure provides useful information to investors. The supplementary information included in this press release for the three months and year ended April 30, 2021 is preliminary and subject to change prior to the filing of our upcoming Annual Report on Form 10-K with the Securities and Exchange Commission.