UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
June 16, 2015
(Date of Report)
(Date of earliest event reported)
JOHN WILEY & SONS, INC.
(Exact name of registrant as specified in its charter)
New York
(State or jurisdiction of incorporation)
| | 0-11507 | 13-5593032 |
| | ---------------------------------------------------- | --------------------------------------------- |
| | Commission File Number | IRS Employer Identification Number |
| | 111 River Street, Hoboken NJ | 07030 |
| | ---------------------------------------------------- | --------------------------------------------- |
| | Address of principal executive offices | Zip Code |
| | Registrant’s telephone number, including area code: | (201) 748-6000 |
| | | --------------------------------------------- |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
| ITEM 7.01: | REGULATION FD DISCLOSURE |
The information in this report is being furnished (i) pursuant to Regulation FD, and (ii) pursuant to item 12 Results of Operation and Financial Condition (in accordance with SEC interim guidance issued March 28, 2003). In accordance with General Instructions B.2 and B.6 of Form 8-K, the information in this report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1934, as amended. The furnishing of the information set forth in this report is not intended to, and does not, constitute a determination or admission as to the materiality or completeness of such information.
On June 16, 2015, John Wiley & Sons Inc., a New York corporation (the “Company”), issued a press release announcing the Company’s financial results for the fourth quarter of fiscal year 2015. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated. Exhibit 99.10 is a copy of the slides furnished at the fourth quarter fiscal year 2015 earnings presentation.
99.1 Press release dated June 16, 2015 titled “Wiley Reports Fourth Quarter and Fiscal Year 2015 Results” (furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and not deemed incorporated by reference in any filing under the Securities Act of 1934, as amended).
99.10 Press release slideshow presentation (furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and not deemed incorporated by reference in any filing under the Securities Act of 1934, as amended).
Investor Contact: Media Contact:
Brian Campbell, Investor Relations Helen Bray, Corporate Communications
201.748.6874 +441243770185
brian.campbell@wiley.com hbray@wiley.com
Wiley Reports Fourth Quarter and Fiscal Year 2015 Results
| · | Fourth quarter revenue of $442 million, up 2% on a constant currency basis. Fiscal year revenue of $1,822 million, up 4% on a constant currency basis |
| · | Percent of full-year revenue from digital products and services increased to 60% from 55% for the prior year. Percent of full-year revenue from print books declined to 25% |
| · | Fourth quarter adjusted EPS of $0.81, up 17% on a constant currency basis. Fiscal year adjusted EPS of $3.26, up 10% on a constant currency basis |
| · | Fiscal Year 2016 outlook of low-single-digit revenue growth and flat EPS growth on a constant currency basis and excluding the adverse transitional impact of shifting to time-based journal subscription agreements |
June 16, 2015 (Hoboken, NJ) – John Wiley & Sons, Inc. (NYSE: JWa and JWb), a global provider of knowledge and knowledge-enabled services that improve outcomes in research, professional practice, and education, today announced the following results for the fourth quarter and fiscal year 2015, ending April 30, 2015:
Change
| $ millions | FY15 | FY14 | | Excluding FX | Including FX |
ADJUSTED | | | | | |
Revenue Q4 Full Year | $442 $1,822 | $457 $1,775 | | 2% 4% | (3%) 3% |
EPS Q4 Full Year | $0.81 $3.26 | $0.77 $3.05 | | 17% 10% | 5% 7% |
US GAAP | | | | | |
Revenue Q4 Full Year | $442 $1,822 | $457 $1,775 | | | (3%) 3% |
EPS Q4 Full Year | $0.79 $2.97 | $0.60 $2.70 | | | 32% 10% |
Please see the attached financial schedules for more detail
Management Commentary
“We are pleased to report that we delivered on our revenue and earnings guidance for the year,” said Mark Allin, President and CEO of Wiley. “On a constant currency basis, our largest and most profitable business, Research journals (‘Research Communication’) delivered 4% revenue growth for the year. Our strategic digital solutions businesses also contributed to our growth, with digital products and services rising to 60% of revenues for the full year. Revenue growth, the continued shift to digital, and additional savings from restructuring all contributed to 9% operating income growth for the year.”
Fiscal Year 2016 Outlook
Wiley’s fiscal year 2016 outlook is for low-single-digit revenue growth and flat adjusted EPS growth on a constant currency basis and excluding the adverse transitional impact of shifting to time-based journal subscription agreements. As previously announced, Wiley is moving to time-based digital journal subscription agreements for calendar year 2016 in order to simplify the contracting and administration of such agreements. The change will shift roughly $35 million of revenue and $0.35 of EPS from FY16 to FY17, with recurring effect annually thereafter. The change will not impact free cash flow. Included in the EPS guidance is an incremental expense impact of more than $0.15 for the previously announced ERP implementation as compared to FY15.
Foreign Exchange (FX)
Wiley generates half of its revenue from outside the United States, and is therefore exposed to a stronger dollar, particularly in relation to the euro and pound sterling. For fiscal year 2015, the weighted average rates for sterling and the euro were 1.60 and 1.25, respectively, on a US dollar equivalent basis. Also, throughout this report, references are made to variances “excluding foreign exchange” or “on a constant currency basis”; such amounts exclude both currency translation effects and transactional gains and losses.
Adjusted Results
The Company provides financial measures referred to as “adjusted” revenue, contribution to profit, and EPS, which exclude restructuring and impairment charges, deferred tax benefits related to a UK corporate income tax rate reduction, and other nonrecurring tax benefits. Variances to adjusted revenue, contribution to profit, and EPS are on a constant currency basis unless otherwise noted. Management believes the exclusion of such items provides additional information to facilitate the analysis of results. These non-GAAP measures are not intended to replace the financial results reported in accordance with GAAP.
Fourth Quarter Summary
| · | Revenue on a constant currency basis rose 2% to $442 million. Growth in Professional Development (+10%), aided by the CrossKnowledge and Profiles International acquisitions, and Education (+2%) offset a decline in Research (-1%). Organic revenue decreased 1% at constant currency, while revenue on a US GAAP basis declined 3% due to the adverse impact of foreign exchange. |
| · | Adjusted earnings per share (EPS) on a constant currency basis grew 17% to $0.81 due to restructuring savings, higher gross margins from the shift to digital, and a lower effective income tax rate. Adjusted EPS excludes certain one-time or unusual items in both years as further described in the attached reconciliation of US GAAP to Adjusted EPS. US GAAP EPS for the fourth quarter grew 32%. |
| · | Wiley recorded a restructuring charge of $4.9 million this quarter for severance and other costs related to reorganization and consolidation across the business. |
| · | CEO Update: In the quarter, EVP and COO Mark Allin was named Wiley’s 12th President and CEO after the retirement of Stephen M. Smith. Prior to serving as Chief Operating Officer, Mr. Allin had been EVP, Professional Development. |
· | Revenue on a constant currency basis grew 4% over prior year to $1,822 million, with organic growth in Research (+2%) and Education (+3%), as well as contributions from acquisitions in Professional Development (+13%), driving results. Total organic revenue, which excludes CrossKnowledge and Profiles International, increased modestly (+1%) over prior year at constant currency. Revenue grew 3% on a US GAAP basis. |
| · | Adjusted EPS on a constant currency basis grew 10% to $3.26 with revenue growth, higher gross margins from the shift to digital, restructuring savings, and a lower effective income tax rate. The adverse impact of foreign exchange compared to the prior year was -$0.11 per share. Adjusted EPS excludes certain one-time or unusual items in both years, as described in the attached reconciliation of US GAAP to Adjusted EPS. US GAAP EPS for fiscal year 2015 was $2.97 vs. $2.70 in the prior year. |
| · | Adjusted shared services and administrative costs were essentially flat for the year at $494 million due to restructuring, procurement, and outsourcing savings offset by additional investment in new business growth. Lower Distribution and Operation Services (-10%) and Finance (-1%) expense offset higher Technology and Content Management (+2%) and Other Administration (+6%) expense. |
| · | Restructuring Charges: Wiley recorded $29 million in restructuring charges principally related to facility consolidations and dispositions in connection with prior restructuring actions, as well as severance costs related to reorganization and consolidation. |
| · | Free Cash Flow of $247 million was $4 million behind prior year due to increased investment in technology and restructuring payments related to severance. |
| · | Net Debt and Cash Position: Net debt (long-term debt less cash and cash equivalents) at the end of April was $293 million, up from $214 million at the end of the prior year due to the acquisition of CrossKnowledge. Net debt to EBITDA was at 0.7 on a trailing twelve month basis. Cash and cash equivalents as of April 30, 2015 were $457 million. |
| · | Share repurchases: In fiscal year 2015, Wiley repurchased 1.1 million shares for $62 million, an average cost of $57.26. As of April 30, the Company had nearly 2.2 million shares remaining in the repurchase program announced in June 2013. Wiley did not repurchase shares in the fourth quarter. |
| · | Dividend: In June 2014, Wiley increased its quarterly dividend by 16% to $0.29, or $1.16 annualized. It was the 21st consecutive annual increase. |
RESEARCH
| · | Revenue: Fourth quarter revenue on a constant currency basis declined 1% to $275 million, with a decline in journal subscription (-2%) and print book (-8%) revenue offsetting growth in other journal revenue (+6%), digital books (+3%), and funded access (+3%). For the year, revenue on a constant currency basis rose 2% to $1,041 million, driven by journal subscriptions (+1%), funded access (+29%), and other journal revenue (+15%), which offset an overall book decline of 7%. |
| · | Adjusted Contribution to Profit: Fourth quarter adjusted contribution to profit grew 2% on a constant currency basis to $99 million, with procurement and outsourcing savings offsetting the revenue decline. For the year, adjusted contribution to profit grew 5% on a constant currency basis to $320 million, reflecting revenue growth and gross margin expansion. Gross margin improved due to procurement and outsourcing savings, as well as the continuing shift to digital. |
| · | Calendar Year 2015 Journal Subscriptions: At the end of April, calendar year 2015 journal subscriptions were up 1% on a constant currency basis, with 97% of targeted business closed for the 2015 volume year. |
| · | Society Business: Two new society contracts were signed in the three month period ending April with combined annual revenue of $4 million; 11 were renewed with combined annual revenue of $4 million; and five with combined annual revenue of $5 million were not renewed. For calendar year 2015, nine new society contracts were signed with combined annual revenue of $4 million, and seven with combined annual revenue of $8 million were not renewed, for an annualized revenue loss on a calendar year basis of $4 million. This compares to an annualized revenue gain of $11 million in CY14 and $20 million in CY13. Additionally, CY15 includes renewals of 121 contracts with combined annual revenue of $57 million. |
PROFESSIONAL DEVELOPMENT
| · | Revenue: Fourth quarter revenue grew 10% on a constant currency basis to $100 million due to revenue contributions from CrossKnowledge and Profiles International (+$15 million) and strong growth in Online Test Preparation (+34%), which more than offset continued weakness in Book sales (-9%). Excluding the acquisitions, which were closed on May 1 and April 1, 2014, respectively, revenue declined 5%. For the year, revenue on a constant currency basis increased 13% to $407 million, but decreased 5% excluding the acquisitions, driven by a continued decline in print and digital books. |
| · | Adjusted Contribution to Profit: Fourth quarter adjusted contribution to profit grew 30% on a constant currency basis to $12 million primarily due to restructuring savings, which offset modest dilution from the two recent acquisitions. For the year, adjusted contribution to profit grew 28% to $43 million. Gross margin improved due to the shift to higher margin solutions businesses. |
| · | Institute of Management Accountants (IMA) India Partnership: In the quarter, the IMA® announced a partnership agreement in India with Wiley to offer Wiley’s Certified Management Accountant Exam (CMA) Learning System as part of a full offering that includes live training from Miles Professional Education, a major professional certification course provider in India. |
EDUCATION
| · | Revenue: Fourth quarter revenue rose 2% on a constant currency basis to $67 million. Revenue growth from Education Services/Deltak (+15%), Digital Books (+7%), and Course Workflow/WileyPLUS (+1%) offset a decline in Print Textbooks (-15%). For the year, Education revenue increased 3% on a constant currency basis to $375 million with double digit growth in Education Services/Deltak (+16%), Custom Products (+16%), WileyPLUS (+11%), and Digital Books (+15%) offsetting a 9% decline in Print Textbooks. |
| · | Adjusted Contribution to Profit: Fourth quarter adjusted contribution to profit improved 13% to a seasonal loss of $8 million, reflecting revenue growth and gross margin expansion. For the year, adjusted contribution to profit increased 1% to $48 million, excluding the impact of foreign exchange. Continued investment in Education Services/Deltak offset revenue growth and restructuring savings. Gross profit improved modestly due to portfolio management and improvements in composition costs. |
| · | Online Program Management (OPM): Education Services/Deltak secured two new large university partners in the quarter, the University of Delaware (US) and University College Cork (Ireland). University College Cork is the second international partner signed by Deltak and is one of Ireland’s largest educational institutions, with 18,000 students. At fiscal year-end, Deltak had 38 partners and 200 degree programs under contract. |
Earnings Conference Call
| · | Scheduled for today, June 16, at 10:00 a.m. (EDT) |
| · | Access the webcast at www.wiley.com> Investor Relations> Events and Presentations, or http://www.wiley.com/WileyCDA/Section/id-370238.html |
| · | U.S. callers, please dial (888) 505-4375 and enter the participant code 3217239# |
| · | International callers, please dial (719) 325-2435 and enter the participant code 3217239# |
| · | An archive of the webcast will be available for a period of up to 14 days |
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
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 and (x) 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.
About Wiley
Wiley is a global provider of knowledge and knowledge-enabled services that improve outcomes in areas of research, professional practice, and education. Through the Research segment, the Company provides digital and print scientific, technical, medical, and scholarly journals, reference works, books, database services, and advertising. The Professional Development segment provides digital and print books, online assessment and corporate learning services, and test prep and certification. In Education, Wiley provides education solutions including online program management services for higher education institutions and course management tools for instructors and students, as well as print and digital content.
| JOHN WILEY & SONS, INC. |
| UNAUDITED SUMMARY OF OPERATIONS |
| FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED |
| APRIL 30, 2015 AND 2014 |
| (in thousands, except per share amounts) |
| |
| FOURTH QUARTER ENDED APRIL 30, |
| |
| | | | | 2015 | | 2014 | | % Change |
| | | | | US GAAP | | Adjustments (A,C) | | Adjusted | | US GAAP | | Adjustments (A,C) | | Adjusted | | US GAAP
| | Adjusted excl. FX |
| | | | | | | | | | | | | | | | | | | |
| Revenue | $ | 441,646 | | - | | 441,646 | | 457,089 | | - | | 457,089 | | -3% | | 2% |
| | | | | | | | | | | | | | | | | | | |
| Costs and Expenses | | | | | | | | | | | | | | | | |
| | Cost of Sales | | 116,844 | | - | | 116,844 | | 126,173 | | - | | 126,173 | | -7% | | -3% |
| | Operating and Administrative | | 249,459 | | - | | 249,459 | | 256,366 | | - | | 256,366 | | -3% | | 2% |
| | Restructuring Charges (A) | | 4,925 | | (4,925) | | - | | 15,395 | | (15,395) | | - | | | | |
| | Amortization of Intangibles | | 12,355 | | - | | 12,355 | | 11,613 | | - | | 11,613 | | 6% | | 11% |
| | | | | | | | | | | | | | | | | | | |
| | Total Costs and Expenses | | 383,583 | | (4,925) | | 378,658 | | 409,547 | | (15,395) | | 394,152 | | -6% | | 1% |
| | | | | | | | | | | | | | | | | | | |
| Operating Income | | 58,063 | | 4,925 | | 62,988 | | 47,542 | | 15,395 | | 62,937 | | 22% | | 10% |
| | Operating Margin | | 13.1% | | | | 14.3% | | 10.4% | | | | 13.8% | | | | |
| | | | | | | | | | | | | | | | | | | |
| Interest Expense | | (4,062) | | - | | (4,062) | | (3,568) | | - | | (3,568) | | 14% | | 14% |
| Foreign Exchange Gain | | (1,086) | | - | | (1,086) | | (337) | | - | | (337) | | | | |
| Interest Income and Other | | 839 | | - | | 839 | | 690 | | - | | 690 | | 22% | | 22% |
| | | | | | | | | | | | | | | | | | | |
| Income Before Taxes | | 53,754 | | 4,925 | | 58,679 | | 44,327 | | 15,395 | | 59,722 | | 21% | | 10% |
| | | | | | | | | | | | | | | | | | | |
| Provision for Income Taxes (A,C) | | 6,857 | | 3,945 | | 10,802 | | 8,436 | | 5,331 | | 13,767 | | -19% | | -8% |
| | | | | | | | | | | | | | | | | | | |
| Net Income | $ | 46,897 | | 980 | | 47,877 | | 35,891 | | 10,064 | | 45,955 | | 31% | | 16% |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Earnings Per Share- Diluted (A,C) | $ | 0.79 | | 0.02 | | 0.81 | | 0.60 | | 0.17 | | 0.77 | | 32% | | 17% |
| | | | | | | | | | | | | | | | | | | |
| Average Shares - Diluted | | 59,368 | | 59,368 | | 59,368 | | 59,925 | | 59,925 | | 59,925 | | | | |
| | | | | | | | | | | | | | | | | | | |
| TWELVE MONTHS ENDED APRIL 30, |
| |
| | | | | 2015 | | 2014 | | % Change |
| | | | | US GAAP | | Adjustments (A,C) | | Adjusted | | US GAAP | | Adjustments (A-D) | | Adjusted | | US GAAP | | Adjusted excl. FX |
| | | | | | | | | | | | | | | | | | | |
| Revenue | $ | 1,822,440 | | - | | 1,822,440 | | 1,775,195 | | - | | 1,775,195 | | 3% | | 4% |
| | | | | | | | | | | | | | | | | | | |
| Costs and Expenses | | | | | | | | | | | | | | | | |
| | Cost of Sales | | 499,683 | | - | | 499,683 | | 506,879 | | - | | 506,879 | | -1% | | 0% |
| | Operating and Administrative | | 1,005,000 | | - | | 1,005,000 | | 969,456 | | - | | 969,456 | | 4% | | 5% |
| | Restructuring Charges (A) | | 28,804 | | (28,804) | | - | | 42,722 | | (42,722) | | - | | | | |
| | Impairment Charges (B) | | - | | - | | - | | 4,786 | | (4,786) | | - | | | | |
| | Amortization of Intangibles | | 51,214 | | - | | 51,214 | | 44,679 | | - | | 44,679 | | 15% | | 14% |
| | | | | | | | | | | | | | | | | | | |
| | Total Costs and Expenses | | 1,584,701 | | (28,804) | | 1,555,897 | | 1,568,522 | | (47,508) | | 1,521,014 | | 1% | | 3% |
| | | | | | | | | | | | | | | | | | | |
| Operating Income | | 237,739 | | 28,804 | | 266,543 | | 206,673 | | 47,508 | | 254,181 | | 15% | | 9% |
| | Operating Margin | | 13.0% | | | | 14.6% | | 11.6% | | | | 14.3% | | | | |
| | | | | | | | | | | | | | | | | | | |
| Interest Expense | | (17,077) | | - | | (17,077) | | (13,916) | | - | | (13,916) | | 23% | | 23% |
| Foreign Exchange Gain | | 1,742 | | - | | 1,742 | | (8) | | - | | (8) | | | | |
| Interest Income and Other | | 3,057 | | - | | 3,057 | | 2,785 | | - | | 2,785 | | 10% | | 10% |
| | | | | | | | | | | | | | | | | | | |
| Income Before Taxes | | 225,461 | | 28,804 | | 254,265 | | 195,534 | | 47,508 | | 243,042 | | 15% | | 8% |
| | | | | | | | | | | | | | | | | | | |
| Provision for Income Taxes (A-D) | | 48,593 | | 11,599 | | 60,192 | | 35,024 | | 26,457 | | 61,481 | | 39% | | 1% |
| | | | | | | | | | | | | | | | | | | |
| Net Income | $ | 176,868 | | 17,205 | | 194,073 | | 160,510 | | 21,051 | | 181,561 | | 10% | | 10% |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| Earnings Per Share- Diluted (A-D) | $ | 2.97 | | 0.29 | | 3.26 | | 2.70 | | 0.35 | | 3.05 | | 10% | | 10% |
| | | | | | | | | | | | | | | | | | | |
| Average Shares - Diluted | | 59,594 | | 59,594 | | 59,594 | | 59,514 | | 59,514 | | 59,514 | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment. | | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
