John Wiley & Sons(US:WLY)2024-09-06 16:05Financial Performance - Consolidated revenue for the three months ended July 31, 2024, was $403.8 million, a decrease of 10% compared to the prior year[129] - Adjusted revenue, excluding the Held for Sale or Sold segment, increased by 6% on a constant currency basis to $389.6 million[130] - Operating income for the same period was $29.0 million, compared to an operating loss of $16.4 million in the prior year[139] - Adjusted EBITDA increased by 22% on a constant currency basis to $72.6 million[140] - Cost of sales decreased by 30% to $109.2 million, primarily due to the sale of non-core businesses[132] - Operating and administrative expenses decreased by 3% to $248.8 million, reflecting lower employee-related costs[133] - The company recorded a goodwill impairment of $26.7 million in the prior year, impacting financial results[134] - The Global Restructuring Program is expected to yield annualized cost savings of approximately $75 million, with $70 million realized in the current fiscal year[136] - Interest expense increased to $12.8 million from $11.3 million in the prior year due to a higher effective interest rate[143] - US GAAP Income (Loss) Before Taxes for the three months ended July 31, 2024 was $23.0 million, compared to a loss of $106.7 million for the same period in 2023[153] - The Non-GAAP Adjusted Effective Tax Rate was 23.6% for the three months ended July 31, 2024, slightly down from 23.8% for the same period in 2023[157] - Diluted loss per share improved to $(0.03) for the three months ended July 31, 2024, compared to $(1.67) for the same period in 2023[158] Revenue Breakdown - Research revenue increased by $7.5 million, or 3%, for the three months ended July 31, 2024, driven by growth in Research Publishing[161] - Total Learning Revenue increased by $15.0 million, or 14%, compared to the prior year, driven by a $21 million content rights project for training GenAI models[165] - Revenue for Held for Sale or Sold decreased by $69.7 million, or 83%, due to the sale of University Services and Wiley Edge businesses[169] Cash Flow and Debt - As of July 31, 2024, the company had cash and cash equivalents of $89.4 million, including $6.8 million classified as held-for-sale[174] - The company had approximately $918.6 million of debt outstanding as of July 31, 2024, with $388.1 million of unused borrowing capacity[176] - Free cash flow less product development spending was $(106.6) million for the three months ended July 31, 2024, compared to $(106.2) million in the prior year[179] - Net cash used in operating activities was $(88.7) million for the three months ended July 31, 2024, compared to $(82.3) million in the prior year[178] - Net cash used in investing activities decreased to $23.8 million for the three months ended July 31, 2024, from $25.7 million in the prior year[185] - Net cash provided by financing activities decreased to $101.6 million for the three months ended July 31, 2024, from $105.8 million in the prior year, primarily due to a $2.5 million increase in cash used for share repurchases and a $1.7 million decrease in net borrowings[186] Impairments and Losses - The company recorded pretax gains (losses) on sale of businesses and impairment charges related to assets held-for-sale totaling $5.8 million for the three months ended July 31, 2024, compared to a loss of $75.9 million for the same period in 2023[147] - The pretax loss on the sale of Wiley Edge was $19.6 million, with cumulative impairment charges of $19.4 million recognized in the year ended April 30, 2024[148] - The pretax loss on the sale of University Services was $105.6 million, reduced by $1.5 million due to working capital adjustments in the first quarter of fiscal year 2025[149] - As of July 31, 2024, the total impairment charge for CrossKnowledge was $51.0 million, including a reduction of $4.4 million in the three months ended July 31, 2024[150] Shareholder Returns - Quarterly dividend increased to $1.41 per share annualized compared to $1.40 per share in the prior year[186] - Class A shares repurchased totaled 295,000 at an average price of $42.34, down from 301,000 shares at an average price of $33.25 in the prior year[186] Other Financial Metrics - Negative working capital was $296.0 million as of July 31, 2024, a decrease of $123.2 million from April 30, 2024, primarily due to seasonality[183] - Foreign exchange transaction losses amounted to $1.6 million for the three months ended July 31, 2023, primarily due to changes in average foreign exchange rates compared to the US dollar[145] - Foreign currency translation gains were approximately $15.0 million for the three months ended July 31, 2024, compared to $11.2 million in the prior year, primarily due to fluctuations in the US dollar relative to the British pound sterling[191] - A hypothetical one percent change in interest rates for the $419.1 million of unhedged variable rate debt would affect net income and cash flow by approximately $3.2 million[189] - Estimated sales return reserves could affect net income by approximately $0.6 million with a one percent change in the estimated sales return rate[194] - Subscription agents account for approximately 16% of total annual consolidated revenue, with no single group exceeding 10%[195] - No single book customer accounts for more than 7% of total consolidated revenue, while the top 10 book customers account for approximately 10% of total consolidated revenue[196] - Increase in inventories was $7,578,000 as of July 31, 2024, down from $7,833,000 in April 2024[194] - Print book sales return reserve net liability balance decreased to $13,480,000 from $14,448,000 in the previous period[194]