Wiley Reports Third Quarter Fiscal 2020 Results

March 4, 2020 – John Wiley & Sons, Inc. (NYSE: JW-A and JW-B), a global research and education company, today announced results for the third quarter ended January 31, 2020.

●	GAAP Results: Revenue of $467 million (+4%) and EPS of $0.63 (+3%)

●	Adjusted Results (at constant currency): Revenue +4%, EBITDA +7%, and EPS +10%

●	Acquired mthree, a leader in delivering job-ready tech talent for corporations, for $129 million

●	Full year outlook raised for EPS; reaffirmed for revenue, EBITDA, and Free Cash Flow

“We saw good momentum across Wiley this quarter,” said Brian Napack, Wiley’s President and CEO.  “The Research and Education Services businesses continued to deliver solid revenue growth and improved profitability, while the pace of decline in book publishing moderated.  Our focus on high-demand disciplines and careers continued to gain traction while important new client agreements, partnerships and targeted M&A accelerated momentum in key areas such as open science and career-focused education.”

Excluding acquisitions and currency impact, revenue rose 2% for the quarter.  Foreign exchange had minimal impact in the quarter.

Third Quarter Revenue

●	Research Publishing & Platforms increased 3% as reported and at constant currency, primarily driven by growth in open access.

●

Academic & Professional Learning increased 1% as reported and 2% at constant currency, driven by contributions from zyBooks and Knewton acquisitions (+$6 million) and modest organic growth in Higher Education publishing.  Excluding the zyBooks and Knewton acquisitions, revenue declined 2% at constant currency.

●	Education Services increased 20% as reported and 19% at constant currency, driven by organic growth of 10% and the one-month contribution from mthree (+$5 million), which was acquired on January 1.

Third Quarter Earnings

●	GAAP Operating Income declined 4% to $48 million.  Adjusted Operating Income rose 4%, primarily due to revenue growth.

●	Adjusted EBITDA rose 6% to $95 million.   Adjusted EBITDA margin for the quarter was 20%.

o	Research Publishing & Platforms Adjusted EBITDA at constant currency rose 8% due to revenue growth and savings from business optimization initiatives and reduced print volumes.

o	Academic & Professional Learning Adjusted EBITDA at constant currency declined 9%, reflecting investments in acquisitions and other growth initiatives.

o	Education Services Adjusted EBITDA grew to $1 million from a loss of $2 million in the prior year.

o	Corporate Expenses declined 8% to $34 million due to the timing of certain benefit expenses.

●	GAAP EPS increased by 3%, reflecting improved operating performance, a lower effective tax rate (21%) and lower foreign exchange transaction losses, which offset higher restructuring charges and interest expense.  Adjusted EPS rose 10% on a constant currency basis.

Third Quarter Returns to Shareholders

●	Repurchased 205,370 shares for a total of $10 million at an average cost per share of $48.69.

●	Paid cash dividends totaling $19 million ($0.34 per share).

Excluding acquisitions and currency impact, revenue was flat for the nine months.  Wiley recorded an unfavorable FX variance of $13 million in revenue.  FX had marginal impact on EBITDA, EPS, and Free Cash Flow.

YTD Commentary

●

Revenue increased on growth in Research Publishing & Platforms (+2% as reported, +3% constant currency) and Education Services (+50% as reported, or +10% constant currency and excluding impact of acquisitions), partially offset by a decline in Academic & Professional Learning (-4% as reported, -6% at constant currency and excluding impact of acquisitions).

●	GAAP EPS declined by $0.33 to $1.48 due in part to higher restructuring charges in the current fiscal year. Adjusted EPS and Adjusted EBITDA declined 9% and 1%, respectively, on a constant currency basis due to investment in growth initiatives, including acquisitions.

●

Net Cash Provided by Operating Activities rose 71% to $89 million, primarily driven by the timing of cash collections for annual research journal subscriptions. Free Cash Flow less Product Development Spending was a source of $5 million compared to a use of $17 million in the prior year.  Capital expenditures rose $15 million to $84 million due to increased investment in technology-enabled products and services.

FISCAL YEAR 2020 OUTLOOK

The Company is raising its EPS outlook and reaffirming for Revenue, EBITDA, and Free Cash Flow.

*Updated outlook reflects actual currency impact to date, current exchange rates sustained through Q4 (Euro at $1.09 and Pound Sterling at $1.30), and impact of acquisitions closed through nine months

EARNINGS CONFERENCE CALL

Scheduled for today, March 4 at 10:00 a.m. (ET).  Access the webcast on Wiley.com, at  https://www.wiley.com/en-us/investors.  U.S. callers, please dial (844) 231-0103 and enter the participant code 6969259#.  International callers, please dial (216) 562-0402 and enter the participant code 6969259#.

ABOUT WILEY

Wiley drives the world forward with research and education.  Through publishing, platforms and services, we help researchers, professionals, students, universities, and corporations to achieve their goals in an ever-changing world.  And for more than 200 years, we have delivered consistent performance to all of our stakeholders. The Company's website can be accessed at www.wiley.com.

NON-GAAP FINANCIAL MEASURES

Wiley provides non-GAAP financial measures and performance results such as “Adjusted EPS,” “Adjusted Revenue,” “Adjusted Operating Income,” “Adjusted EBITDA,” “Adjusted CTP,” “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.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements concerning the Company's Fiscal Year 2020 Outlook, 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 2020 in connection with our multi-year Business Optimization Program and (xi) 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.

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JOHN WILEY & SONS, INC.
SUPPLEMENTARY INFORMATION (1)
RECONCILIATION OF GAAP EPS to NON-GAAP ADJUSTED EPS - DILUTED
(unaudited)
	Three Months Ended								Nine Months Ended
	January 31,								January 31,
	2020				2019				2020				2019
GAAP Earnings Per Share - Diluted	$	0.63			$	0.61			$	1.48			$	1.81
Adjustments:
Restructuring and related charges (A)		0.04				-				0.24				0.05
Foreign exchange losses on intercompany transactions (A)		0.01				-				0.02				0.06
Non-GAAP Adjusted Earnings Per Share - Diluted		0.68			$	0.61				1.74			$	1.92
Notes:
(A) The table below shows the net of tax impact of our multi-year Business Optimization Program, Restructuring and Reinvestment Program and foreign exchange losses on intercompany transactions.
	Three Months Ended								Nine Months Ended
	January 31,								January 31,
(amounts in millions)		2020				2019				2020				2019
Net of tax, charges related to the Business Optimization Program	$	2.9			$	-			$	13.9			$	-
Net of tax, (credits) charges related to the Restructuring and Reinvestment Program	$	(0.4	)		$	(0.3	)		$	(0.2	)		$	2.7
Net of tax, foreign exchange transaction losses	$	0.6			$	0.1			$	1.3			$	3.2
(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 nine months ended January 31, 2020 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)
RECONCILIATION OF GAAP NET INCOME to NON-GAAP EBITDA AND ADJUSTED EBITDA
(unaudited)
	Three Months Ended								Nine Months Ended
	January 31,								January 31,
	2020				2019				2020				2019
Net Income	$	35,443			$	34,942			$	83,757			$	105,021
Interest expense		6,309				5,346				19,173				11,750
Provision for income taxes		9,229				10,275				21,355				30,599
Depreciation and amortization		43,681				39,833				128,538				119,656
Non-GAAP EBITDA		94,662				90,396				252,823				267,026
Restructuring and related charges (credits)		3,298				(348	)			18,034				3,562
Foreign exchange transaction losses		1,745				2,525				1,761				4,308
Interest and other income		(4,232	)			(2,742	)			(9,602	)			(7,717	)
Non-GAAP Adjusted EBITDA	$	95,473			$	89,831			$	263,016			$	267,179
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 nine months ended January 31, 2020 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.