Wiley Reports Second Quarter Fiscal Year 2023 Results

2022-12-07

财报

HOBOKEN, N.J.--(BUSINESS WIRE)-- John Wiley & Sons, Inc. (NYSE: WLY), one of the world’s largest publishers and a global leader in scientific research and career-connected education, today announced results for the second quarter ended October 31, 2022. GAAP Results: Revenue of $515 million (-3% vs. prior year), Operating Income of $57 million (-22% vs. prior year), and EPS of $0.68 (-31% vs. prior year) Adjusted Results at constant currency: Revenue of $515 million (+1% vs. prior year), Adjusted EBITDA of $124 million (-4% vs. prior year), and Adjusted EPS of $1.20 (-13% vs. prior year) Fiscal 2023 Outlook: Wiley is lowering its revenue outlook at constant currency due to consumer spending and enrollment headwinds in Academic & Professional Learning. Reaffirms full year outlook for Adjusted EBITDA and Free Cash Flow; Adjusted EPS trending to lower end of range mainly due to rising interest expense MANAGEMENT COMMENTARY “Despite the challenging economic environment, we continue to see good underlying momentum in our core growth areas of Research Publishing, Research Solutions, and Corporate Talent Development,” said Brian Napack, President and CEO. “This quarter’s results were weighed down by difficult market conditions in our publishing lines in Academic & Professional Learning. We are aggressively managing costs to offset these challenges while continuing to scale our growth offerings in line with favorable long-term trends.” SECOND QUARTER PERFORMANCE GAAP Measures Unaudited ($millions except for EPS) Q2 2023 Q2 2022 Change Revenue $514.8 $533.0 (3%) Operating Income $57.4 $73.9 (22%) Diluted EPS $0.68 $0.99 (31%) Non-GAAP Measures Q2 2023 Q2 2022 Change Change Constant Currency Revenue $514.8 $533.0 (3%) +1% Adjusted EBITDA $123.8 $127.1 (3%) (4%) Adjusted EPS $1.20 $1.29 (7%) (13%) Please see attached financial tables for results for three month and six month periods Excluding acquisitions and currency impact, revenue was down 0.5% for the quarter Unfavorable FX variance of $22 million in Revenue; favorable variance of $1.7 million in Adjusted EBITDA and $0.08 in Adjusted EPS Revenue Research was down 1% as reported, or up 3% at constant currency (+2% organic), driven by organic growth in Research Publishing and Research Solutions and contributions from Solutions acquisitions. Academic & Professional Learning revenue declined 14% as reported and 10% at constant currency. Education Publishing performance saw a significant decline in print course material offsetting solid growth in digital content and courseware. Professional Learning saw a material decline in professional publishing from a pullback in consumer spending offsetting continued strong growth in corporate leadership training. Education Services increased 12% as reported and 17% at constant currency (+13% organic), with strong double-digit growth in Talent Development offsetting a modest decline in University Services primarily from market-related enrollment challenges. Adjusted EBITDA Research was down 4% at constant currency with revenue growth offset by investment to optimize and scale publishing and solutions. Academic & Professional Learning declined 12% at constant currency due to the revenue performance. Education Services rose 69% at constant currency due to revenue flow-through in Talent Development and the timing of expenses in University Services Adjusted Corporate Expenses were flat at constant currency with higher employee costs offset by the timing of certain expenses. EPS GAAP EPS was $0.68 as compared to $0.99 in the prior year period, primarily reflecting lower operating income and a $0.19/share ($14 million) restructuring charge related to workforce actions and real estate optimization. Adjusted EPS of $1.20 was down 13% at constant currency, driven by lower adjusted EBITDA and higher interest expense. Balance Sheet, Cash Flow, and Capital Allocation Net Debt-to-EBITDA ratio (trailing twelve months) at quarter-end was 2.1 compared to 2.0 in the year-ago period, and 1.6 at year end (April 30). Financing: On November 30, Wiley entered into an amendment to its revolving credit agreement that provides for senior unsecured credit facilities comprised of (i) five-year credit commitments with the principal amount of $1.315 billion, extended to a maturity date in November 2027, and (ii) $185 million in existing credit commitments to remain through the existing maturity date in May 2024. Net Cash Used in Operating Activities (YTD) was a use of $76 million on par with the prior year period. Note, Wiley’s regular use of cash in the first half of the fiscal year is driven by the timing of cash collections for annual journal subscriptions. Free Cash Flow less Product Development Spending (YTD) was a use of $126 million on par with prior year period. Share Repurchases (YTD): The Company utilized $17.5 million to repurchase approximately 382,000 shares at an average cost per share of $45.84. FISCAL YEAR 2023 OUTLOOK Wiley is reducing its revenue growth outlook at constant currency due to consumer spending and enrollment headwinds in Education. Based on leading indicators, Wiley is reaffirming its guidance for Adjusted EBITDA and Free Cash Flow. Adjusted EPS is reaffirmed but trending to the lower end of range mainly due to rising interest expense. Metric ($millions, except EPS) FY22 Actual* FY23 Outlook* Constant currency Original FY23 Outlook* Constant currency Update FY23 Outlook* Constant currency Current Revenue $2,083 $2,175 - $2,215 Reduced $2,110 - $2,150 Adjusted EBITDA $433 $425 - $450 Reaffirmed $425 - $450 Adjusted EPS $4.16 $3.70 - $4.05 Reaffirmed $3.70 - $4.05 Free Cash Flow $223 $210 - $235 Reaffirmed $210 - $235 *Based on Fiscal 2022 average rates of 1.15 euro and 1.36 British pound. FX impact to FY23 outlook based on YTD average rates of 1.00 euro and 1.16 British pound: $85M unfavorable to revenue; immaterial to Adjusted EBITDA, Adjusted EPS, and Free Cash Flow EARNINGS CONFERENCE CALL Scheduled for today, December 7 at 10:00 am (ET). Access webcast at investors.wiley.com. or directly at . US callers, please dial (888) 210-3346 and enter the participant code 2521217#. International callers, please dial (646) 960-0253 and enter the participant code 2521217#. ABOUT WILEY Wiley is one of the world’s largest publishers and a global leader in scientific research and career-connected education. Founded in 1807, Wiley enables discovery, powers education, and shapes workforces. Through its industry-leading content, digital platforms, and knowledge networks, the company delivers on its timeless mission to unlock human potential. Visit us at Wiley.com. Follow us on Facebook, Twitter, LinkedIn and Instagram. NON-GAAP FINANCIAL MEASURES Wiley provides non-GAAP financial measures and performance results such as “Adjusted EPS,” “EBITDA,” “Adjusted EBITDA,” “Adjusted Contribution to Profit,” “Adjusted Income before Taxes,” “Adjusted Income Tax Provision,” “Adjusted Effective 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 2023 outlook for the most directly comparable US 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 US 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 by Wiley 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 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 2023 in connection with our multi-year Business Optimization Program and Fiscal Year 2023 Restructuring 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. CATEGORY: ALL CORPORATE NEWS CATEGORY: EARNINGS RELEASES JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION (1)(2) CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (Dollars in thousands, except per share information) (unaudited) Three Months Ended Six Months Ended October 31, October 31, 2022 2021 2022 2021 Revenue, net $ 514,836 $ 533,003 $ 1,002,405 $ 1,021,391 Costs and expenses: Cost of sales 170,302 174,782 344,333 340,738 Operating and administrative expenses 253,029 264,190 535,780 524,779 Restructuring and related charges (credits) 13,956 (1,333) 36,397 (1,609) Amortization of intangible assets 20,110 21,476 45,421 42,627 Total costs and expenses 457,397 459,115 961,931 906,535 Operating income 57,439 73,888 40,474 114,856 As a % of revenue 11.2% 13.9% 4.0% 11.2% Interest expense (9,332) (4,997) (15,664) (9,636) Foreign exchange transaction gains (losses) 478 (1,370) (138) (1,000) (Loss) gain on sale of certain assets - (56) - 3,694 Other (expense) income, net (255) 3,150 271 6,703 Income before taxes 48,330 70,615 24,943 114,617 Provision for income taxes 10,137 14,648 4,585 44,820 Effective tax rate 21.0% 20.7% 18.4% 39.1% Net income $ 38,193 $ 55,967 $ 20,358 $ 69,797 As a % of revenue 7.4% 10.5% 2.0% 6.8% Earnings per share Basic $ 0.69 $ 1.00 $ 0.37 $ 1.25 Diluted $ 0.68 $ 0.99 $ 0.36 $ 1.24 Weighted average number of common shares outstanding Basic 55,622 55,806 55,679 55,833 Diluted 56,195 56,388 56,326 56,477 Notes: (1) The supplementary information included in this press release for the three and six months ended October 31, 2022 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. (2) All amounts are approximate due to rounding. JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION (1) (2) RECONCILIATION OF US GAAP MEASURES to NON-GAAP MEASURES (unaudited) Reconciliation of US GAAP EPS to Non-GAAP Adjusted EPS Three Months Ended Six Months Ended October 31, October 31, 2022 2021 2022 2021 US GAAP Earnings Per Share - Diluted $ 0.68 $ 0.99 $ 0.36 $ 1.24 Adjustments: Restructuring and related charges (credits) 0.19 (0.02) 0.49 (0.02) Foreign exchange losses (gains) on intercompany transactions 0.03 0.01 0.04 - Amortization of acquired intangible assets (3) 0.30 0.31 0.67 0.60 Loss (gain) on sale of certain assets (4) - - - (0.05) Income tax adjustments (5) - - - 0.37 Non-GAAP Adjusted Earnings Per Share - Diluted $ 1.20 $ 1.29 $ 1.56 $ 2.14 Reconciliation of US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes Three Months Ended Six Months Ended (amounts in thousands) October 31, October 31, 2022 2021 2022 2021 US GAAP Income Before Taxes $ 48,330 $ 70,615 $ 24,943 $ 114,617 Pretax Impact of Adjustments: Restructuring and related charges (credits) 13,956 (1,333) 36,397 (1,609) Foreign exchange losses (gains) on intercompany transactions 2,654 567 3,320 (228) Amortization of acquired intangible assets (3) 21,185 22,608 47,570 44,892 Loss (gain) on sale of certain assets (4) - 56 - (3,694) Non-GAAP Adjusted Income Before Taxes $ 86,125 $ 92,513 $ 112,230 $ 153,978 Reconciliation of US GAAP Income Tax Provision to Non-GAAP Adjusted Income Tax Provision, including our US GAAP Effective Tax Rate and our Non-GAAP Adjusted Effective Tax Rate US GAAP Income Tax Provision $ 10,137 $ 14,648 $ 4,585 $ 44,820 Income Tax Impact of Adjustments (6) Restructuring and related charges (credits) 3,422 (277) 8,939 (232) Foreign exchange losses (gains) on intercompany transactions 694 120 869 19 Amortization of acquired intangible assets (3) 4,388 5,420 10,220 10,263 Loss (gain) on sale of certain assets (4) - 14 - (922) Income Tax Adjustments: Impact of increase in UK statutory rate on deferred tax balances (5) - - - (20,726) Non-GAAP Adjusted Income Tax Provision $ 18,641 $ 19,925 $ 24,613 $ 33,222 US GAAP Effective Tax Rate 21.0% 20.7% 18.4% 39.1% Non-GAAP Adjusted Effective Tax Rate 21.6% 21.5% 21.9% 21.6% 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 and six months ended October 31, 2022 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. (2) All amounts are approximate due to rounding. (3) Reflects the amortization of intangible assets established on the opening balance sheet for an acquired business. This includes the amortization of intangible assets such as developed technology, customer relationships, tradenames, etc., which is reflected in the "Amortization of intangible assets" line in the Condensed Consolidated Statements of Net Income. It also includes the amortization of acquired product development assets, which is reflected in "Cost of sales" in the Condensed Consolidated Statements of Net Income. (4) The gain on sale of certain assets is due to the sale of our world languages product portfolio which was included in our Academic & Professional Learning segment, and resulted in a pretax gain of approximately $3.7 million during the six months ended October 31, 2021. (5) In the three months ended July 31, 2021, the UK enacted legislation that increased its statutory rate from 19% to 25% effective April 1, 2023. This resulted in a $20.7 million non-cash deferred tax expense from the re-measurement of the Company’s applicable UK net deferred tax liabilities during the three months ended July 31, 2021. These adjustments impacted deferred taxes. (6) For the three and six months ended October 31, 2022 and 2021, substantially all of the tax impact was from deferred taxes. JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION (1) RECONCILIATION OF US GAAP NET INCOME TO NON-GAAP EBITDA AND ADJUSTED EBITDA (unaudited) Three Months Ended Six Months Ended October 31, October 31, 2022 2021 2022 2021 Net Income $ 38,193 $ 55,967 $ 20,358 $ 69,797 Interest expense 9,332 4,997 15,664 9,636 Provision for income taxes 10,137 14,648 4,585 44,820 Depreciation and amortization 52,421 54,555 110,700 109,121 Non-GAAP EBITDA 110,083 130,167 151,307 233,374 Restructuring and related charges (credits) 13,956 (1,333) 36,397 (1,609) Foreign exchange transaction (gains) losses (478) 1,370 138 1,000 Loss (gain) on sale of certain assets - 56 - (3,694) Other expense (income), net 255 (3,150) (271) (6,703) Non-GAAP Adjusted EBITDA $ 123,816 $ 127,110 $ 187,571 $ 222,368 Adjusted EBITDA Margin 24.0% 23.8% 18.7% 21.8% 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 and six months ended October 31, 2022 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION (1) SEGMENT RESULTS (in thousands) (unaudited) % Change Three Months Ended October 31, Favorable (Unfavorable) 2022 2021 Reported Constant Currency Research (2): Revenue, net Research Publishing (3) $ 232,641 $ 238,853 -3% 2% Research Solutions (3) 38,718 36,301 7% 11% Total Revenue, net $ 271,359 $ 275,154 -1% 3% Contribution to Profit $ 73,279 $ 77,031 -5% -8% Adjustments: Restructuring charges 1,179 22 # # Non-GAAP Adjusted Contribution to Profit $ 74,458 $ 77,053 -3% -7% Depreciation and amortization 23,384 23,464 0% -4% Non-GAAP Adjusted EBITDA $ 97,842 $ 100,517 -3% -4% Adjusted EBITDA margin 36.1% 36.5% Academic & Professional Learning: Revenue, net Education Publishing $ 86,200 $ 98,581 -13% -10% Professional Learning 66,441 77,948 -15% -11% Total Revenue, net $ 152,641 $ 176,529 -14% -10% Contribution to Profit $ 30,411 $ 41,071 -26% -24% Adjustments: Restructuring charges (credits) 3,439 (465) # # Non-GAAP Adjusted Contribution to Profit $ 33,850 $ 40,606 -17% -15% Depreciation and amortization 16,152 18,148 11% 7% Non-GAAP Adjusted EBITDA $ 50,002 $ 58,754 -15% -12% Adjusted EBITDA margin 32.8% 33.3% Education Services: Revenue, net University Services (4) $ 57,759 $ 58,630 -1% -1% Talent Development Services (4) 33,077 22,690 46% 61% Total Revenue, net $ 90,836 $ 81,320 12% 17% Contribution to Profit $ 6,082 $ 721 # # Adjustments: Restructuring charges 506 6 # # Non-GAAP Adjusted Contribution to Profit $ 6,588 $ 727 # # Depreciation and amortization 8,975 8,813 -2% -3% Non-GAAP Adjusted EBITDA $ 15,563 $ 9,540 63% 69% Adjusted EBITDA margin 17.1% 11.7% Corporate Expenses: $ (52,333) $ (44,935) -16% -22% Adjustments: Restructuring charges (credits) 8,832 (896) # # Non-GAAP Adjusted Contribution to Profit $ (43,501) $ (45,831) 5% 0% Depreciation and amortization 3,910 4,130 5% 2% Non-GAAP Adjusted EBITDA $ (39,591) $ (41,701) 5% 0% Consolidated Results: Revenue, net $ 514,836 $ 533,003 -3% 1% Operating Income $ 57,439 $ 73,888 -22% -27% Adjustments: Restructuring charges (credits) 13,956 (1,333) # # Non-GAAP Adjusted Operating Income $ 71,395 $ 72,555 -2% -6% Depreciation and amortization 52,421 54,555 4% 1% Non-GAAP Adjusted EBITDA $ 123,816 $ 127,110 -3% -4% Adjusted EBITDA margin 24.0% 23.8% Notes: (1) The supplementary information included in this press release for the three and six months ended October 31, 2022 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. (2) The Research segment was previously referred to as Research Publishing & Platforms. (3) As previously announced in May 2022, our revenue by product type previously referred to as Research Platforms was changed to Research Solutions. Research Solutions includes infrastructure and publishing services that help societies and corporations thrive in a complex knowledge ecosystem. In addition to Platforms (Atypon), certain product offerings such as corporate sales which included the recent acquisitions of Madgex Holdings Limited (Madgex), and Bio-Rad Laboratories Inc.’s Informatics products (Informatics) that were previously included in Research Publishing moved to Research Solutions to align with our strategic focus. Research Solutions also includes product offerings related to certain recent acquisitions such as J&J, and EJP. Prior period results have been revised to the new presentation. There were no changes to the total Research segment or our consolidated financial results. The revenue was $24.0 million for the three months ended October 31, 2021, $44.1 million for the six months ended October 2021, $93.3 million for the year ended April 30, 2022, and $80.3 million for the year ended April 30, 2021. (4) In May 2022, we moved the WileyNXT product offering from Talent Development Services to University Services and the prior period results have been included in University Services. The revenue was $0.5 million and $1.1 million for the three and six months ended October 31, 2021, respectively. There were no changes to the total Education Services segment or our total consolidated financial results. (5) On January 1, 2020, Wiley acquired mthree, a talent placement provider that addresses the IT skills gap by finding, training, and placing job-ready technology talent in roles with leading corporations worldwide. Its results of operations are included in our Education Services segment. In late May 2022, Wiley renamed the mthree talent development solution to Wiley Edge and discontinued use of the mthree trademark during the three months ended July 31, 2022. As a result of these actions, we determined that a revision of the useful life was warranted, and the intangible asset was fully amortized over its remaining useful life resulting in accelerated amortization expense of $4.6 million in the three months ended July 31, 2022. # Variance greater than 100% JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION (1) SEGMENT RESULTS (in thousands) (unaudited) % Change Six Months Ended October 31, Favorable (Unfavorable) 2022 2021 Reported Constant Currency Research (2): Revenue, net Research Publishing (3) $ 472,164 $ 482,137 -2% 2% Research Solutions (3) 74,108 67,773 9% 14% Total Revenue, net $ 546,272 $ 549,910 -1% 3% Contribution to Profit $ 142,302 $ 155,839 -9% -11% Adjustments: Restructuring charges 1,260 238 # # Non-GAAP Adjusted Contribution to Profit $ 143,562 $ 156,077 -8% -10% Depreciation and amortization 47,185 47,226 0% -3% Non-GAAP Adjusted EBITDA $ 190,747 $ 203,303 -6% -7% Adjusted EBITDA margin 34.9% 37.0% Academic & Professional Learning: Revenue, net Education Publishing $ 149,256 $ 164,961 -10% -6% Professional Learning 136,344 150,832 -10% -6% Total Revenue, net $ 285,600 $ 315,793 -10% -6% Contribution to Profit $ 25,996 $ 49,223 -47% -45% Adjustments: Restructuring charges (credits) 9,229 (294) # # Non-GAAP Adjusted Contribution to Profit $ 35,225 $ 48,929 -28% -26% Depreciation and amortization 32,684 36,512 10% 7% Non-GAAP Adjusted EBITDA $ 67,909 $ 85,441 -21% -18% Adjusted EBITDA margin 23.8% 27.1% Education Services: Revenue, net University Services (4) $ 105,570 $ 113,598 -7% -6% Talent Development Services (4) 64,963 42,090 54% 68% Total Revenue, net $ 170,533 $ 155,688 10% 14% Contribution to Profit $ (11,087) $ (1,106) # # Adjustments: Restructuring charges (credits) 1,339 (28) # # Accelerated amortization of an intangible asset (5) 4,594 - # # Non-GAAP Adjusted Contribution to Profit $ (5,154) $ (1,134) # # Depreciation and amortization 18,171 17,116 -6% -7% Non-GAAP Adjusted EBITDA $ 13,017 $ 15,982 -19% -14% Adjusted EBITDA margin 7.6% 10.3% Corporate Expenses: $ (116,737) $ (89,100) -31% -36% Adjustments: Restructuring charges (credits) 24,569 (1,525) # # Non-GAAP Adjusted Contribution to Profit $ (92,168) $ (90,625) -2% -7% Depreciation and amortization 8,066 8,267 2% 0% Non-GAAP Adjusted EBITDA $ (84,102) $ (82,358) -2% -7% Consolidated Results: Revenue, net $ 1,002,405 $ 1,021,391 -2% 2% Operating Income $ 40,474 $ 114,856 -65% -70% Adjustments: Restructuring charges (credits) 36,397 (1,609) # # Accelerated amortization of an intangible asset (5) 4,594 - # # Non-GAAP Adjusted Operating Income $ 81,465 $ 113,247 -28% -33% Depreciation and amortization 106,106 109,121 3% 0% Non-GAAP Adjusted EBITDA $ 187,571 $ 222,368 -16% -17% Adjusted EBITDA margin 18.7% 21.8% # Variance greater than 100% JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION (1) CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in thousands) (unaudited) October 31, April 30, 2022 2022 Assets: Current assets Cash and cash equivalents $ 118,423 $ 100,397 Accounts receivable, net 260,026 331,960 Inventories, net 34,447 36,585 Prepaid expenses and other current assets 70,098 81,924 Total current assets 482,994 550,866 Technology, property and equipment, net 249,922 271,572 Intangible assets, net 860,576 931,429 Goodwill 1,268,312 1,302,142 Operating lease right-of-use assets 93,334 111,719 Other non-current assets 173,233 193,967 Total assets $ 3,128,371 $ 3,361,695 Liabilities and shareholders' equity: Current liabilities Accounts payable $ 46,250 $ 77,438 Accrued royalties 101,598 101,596 Short-term portion of long-term debt 25,000 18,750 Contract liabilities 263,821 538,126 Accrued employment costs 84,333 117,121 Short-term portion of operating lease liabilities 19,043 20,576 Other accrued liabilities 94,532 95,812 Total current liabilities 634,577 969,419 Long-term debt 978,683 768,277 Accrued pension liability 75,668 78,622 Deferred income tax liabilities 157,048 180,065 Operating lease liabilities 120,559 132,541 Other long-term liabilities 84,029 90,502 Total liabilities 2,050,564 2,219,426 Shareholders' equity 1,077,807 1,142,269 Total liabilities and shareholders' equity $ 3,128,371 $ 3,361,695 Notes: (1) The supplementary information included in this press release for October 31, 2022 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. JOHN WILEY & SONS, INC. SUPPLEMENTARY INFORMATION (1) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended October 31, 2022 2021 Operating activities: Net income $ 20,358 $ 69,797 Amortization of intangible assets 45,421 42,627 Amortization of product development assets 16,452 18,088 Depreciation and amortization of technology, property, and equipment 48,827 48,406 Other noncash charges 56,601 56,311 Net change in operating assets and liabilities (263,855) (310,851) Net cash used in operating activities (76,196) (75,622) Investing activities: Additions to technology, property, and equipment (38,530) (37,676) Product development spending (11,445) (13,001) Businesses acquired in purchase transactions, net of cash acquired (96) (13,615) Proceeds related to the sale of certain assets 40 3,375 Acquisitions of publication rights and other 1,738 (1,654) Net cash used in investing activities (48,293) (62,571) Financing activities: Net debt borrowings 228,386 227,476 Cash dividends (38,749) (38,619) Purchases of treasury shares (17,500) (17,367) Other (20,534) (24,444) Net cash provided by financing activities 151,603 147,046 Effects of exchange rate changes on cash, cash equivalents and restricted cash (8,784) (1,742) Change in cash, cash equivalents and restricted cash for period 18,330 7,111 Cash, cash equivalents and restricted cash - beginning 100,727 94,359 Cash, cash equivalents and restricted cash - ending $ 119,057 $ 101,470 CALCULATION OF NON-GAAP FREE CASH FLOW LESS PRODUCT DEVELOPMENT SPENDING (2) Six Months Ended October 31, 2022 2021 Net cash used in operating activities $ (76,196) $ (75,622) Less: Additions to technology, property, and equipment (38,530) (37,676) Less: Product development spending (11,445) (13,001) Free cash flow less product development spending $ (126,171) $ (126,299) Notes: (1) The supplementary information included in this press release for the six months ended October 31, 2022 is preliminary and subject to change prior to the filing of our upcoming Quarterly Report on Form 10-Q with the Securities and Exchange Commission. (2) See Explanation of Usage of Non-GAAP Performance Measures included in this supplemental information. JOHN WILEY & SONS, INC. EXPLANATION OF USAGE OF NON-GAAP PERFORMANCE MEASURES In this earnings release and supplemental information, management may present the following non-GAAP performance measures: · Earnings Per Share (Adjusted EPS); · Free Cash Flow less Product Development Spending; · Adjusted Contribution to Profit and margin; · Adjusted Operating Income and margin; · Adjusted Income Before Taxes; · Adjusted Income Tax Provision; · Adjusted Effective Tax Rate; · EBITDA, Adjusted EBITDA and margin; · Organic revenue; and · Results on a constant currency basis. Management uses these non-GAAP performance measures as supplemental indicators of our operating performance and financial position as well as for internal reporting and forecasting purposes, when publicly providing our outlook, to evaluate our performance and calculate incentive compensation. We present these non-GAAP performance measures in addition to US GAAP financial results because we believe that these non-GAAP performance measures provide useful information to certain investors and financial analysts for operational trends and comparisons over time. The use of these non-GAAP performance measures may also provide a consistent basis to evaluate operating profitability and performance trends by excluding items that we do not consider to be controllable activities for this purpose. The performance metric used by our chief operating decision maker to evaluate performance of our reportable segments is Adjusted Contribution to Profit. We present both Adjusted Contribution to Profit and Adjusted EBITDA for each of our reportable segments as we believe Adjusted EBITDA provides additional useful information to certain investors and financial analysts for operational trends and comparisons over time. It removes the impact of depreciation and amortization expense, as well as presents a consistent basis to evaluate operating profitability and compare our financial performance to that of our peer companies and competitors. For example: Adjusted EPS, Adjusted Contribution to Profit, Adjusted Operating Income, Adjusted Income Before Taxes, Adjusted Income Tax Provision, Adjusted Effective Tax Rate, Adjusted EBITDA and organic revenue (excluding acquisitions) provide a more comparable basis to analyze operating results and earnings, and are measures commonly used by shareholders to measure our performance. Free Cash Flow less Product Development Spending helps assess our ability, over the long term, to create value for our shareholders as it represents cash available to repay debt, pay common stock dividends, and fund share repurchases and acquisitions. Results on a constant currency basis remove distortion from the effects of foreign currency movements to provide better comparability of our business trends from period to period. We measure our performance excluding the impact of foreign currency (or at constant currency), which means that we apply the same foreign currency exchange rates for the current and equivalent prior period. In addition, we have historically provided these or similar non-GAAP performance measures and understand that some investors and financial analysts find this information helpful in analyzing our operating margins and net income, and in comparing our financial performance to that of our peer companies and competitors. Based on interactions with investors, we also believe that our non-GAAP performance measures are regarded as useful to our investors as supplemental to our US GAAP financial results, and that there is no confusion regarding the adjustments or our operating performance to our investors due to the comprehensive nature of our disclosures. We have not provided our 2023 outlook for the most directly comparable US 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 US GAAP. Non-GAAP performance measures do not have standardized meanings prescribed by US GAAP and therefore may not be comparable to the calculation of similar measures used by other companies and should not be viewed as alternatives to measures of financial results under US GAAP. The adjusted metrics have limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, US GAAP information. It does not purport to represent any similarly titled US GAAP information and is not an indicator of our performance under US GAAP. Non-GAAP financial metrics that we present may not be comparable with similarly titled measures used by others. Investors are cautioned against placing undue reliance on these non-GAAP measures.