John Wiley & Sons Inc (WLY) Faces Headwinds in Q2 2024 Despite Value Creation Plan Progress
John Wiley & Sons Inc (NYSE:WLY) reports a 4% decline in GAAP revenue and a 19% drop in operating income for Q2 2024.
Adjusted EPS at $0.73, marking a 25% decrease, with restructuring and impairment charges influencing results.
Company reaffirms its fiscal 2024 outlook, expecting improvements in the second half of the year.
On December 6, 2023, John Wiley & Sons Inc (NYSE:WLY) released its 8-K filing, detailing the financial results for the second quarter ended October 31, 2023. The company faced several challenges, including a decrease in GAAP revenue to $493 million, down by 4%, and a significant reduction in operating income, which fell by 19% to $46 million. The earnings per share (EPS) also saw a loss of -$0.35, a stark contrast to the previous year's gain of $0.68.
Financial Highlights and Challenges
John Wiley & Sons Inc (NYSE:WLY) encountered headwinds in the second quarter, with impairment charges of $52 million related to assets held for sale or sold, and restructuring charges totaling $25 million as part of its value creation plan. Adjusted results at constant currency, which exclude the held for sale or sold segment results, showed a 2% decrease in adjusted revenue to $407 million, a 13% decline in adjusted EBITDA to $92 million, and a 25% decrease in adjusted EPS to $0.73.
Segment Performance
The Research segment experienced a 5% revenue decline, primarily due to the Hindawi publishing pause and a soft market for recruiting. The Learning segment, however, reported a 7% increase in revenue, driven by growth in both Academic and Professional areas. The Held for Sale or Sold businesses saw a 17% revenue decrease, mainly due to declines in Wiley Edge.
Management Commentary
"Our second quarter and year-to-date overall performance was in line with our expectations as we execute on our value creation plan to make Wiley a stronger, leaner, and more profitable company focused on driving consistent growth in our core," said Matthew Kissner, Interim President and CEO. "We expect year-over-year revenue improvement in the second half and expect to exit the year with a stronger margin profile. Fiscal 2025 and 2026 is where we will realize the full benefits of our current actions."
Balance Sheet and Cash Flow
John Wiley & Sons Inc (NYSE:WLY) reported a net debt-to-EBITDA ratio of 2.0x at quarter end, a slight improvement from the previous year. Net cash used in operating activities year-to-date was $83 million, compared to $76 million in the prior year period. Free cash flow less product development spending was a use of $132 million, primarily due to lower cash earnings and higher restructuring payments.
Outlook and Fiscal Year 2024 Transition
As John Wiley & Sons Inc (NYSE:WLY) navigates a transition year, the company is reaffirming its overall Fiscal 2024 outlook for adjusted revenue, adjusted EBITDA, and adjusted EPS. The outlook anticipates a flat to low-single digit decline in Research revenue (excluding Hindawi) and a flat to low-single digit increase in Learning revenue.
The company's efforts to intensify focus on the core of Research & Learning, divest non-core assets, and optimize operations are expected to yield significant savings and position John Wiley & Sons Inc (NYSE:WLY) for improved performance in the coming years.
For more detailed financial tables and additional information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from John Wiley & Sons Inc for further details.
This article first appeared on GuruFocus.
