# John Wiley & Sons, Inc.: Form 10-Q for the period ended Jan 31, 2022

- Company: [John Wiley & Sons, Inc.](/companies/wly.md) (CIK 107140)
- Form: 10-Q
- Filed: 2022-03-09
- Accepted by EDGAR: Mar 9, 2022, 13:35 ET
- Period: 2022-01-31
- Accession: 0000107140-22-000007
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/107140/000010714022000007/form10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/107140/000010714022000007/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-01-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2021-11-01 to 2022-01-31 | $515.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2021-05-01 to 2022-01-31 | $1.54bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2021-11-01 to 2022-01-31 | $172.9m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2021-05-01 to 2022-01-31 | $513.7m | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2021-11-01 to 2022-01-31 | $275.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2021-05-01 to 2022-01-31 | $800.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2021-11-01 to 2022-01-31 | $46.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2021-05-01 to 2022-01-31 | $160.8m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2021-11-01 to 2022-01-31 | $5.1m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2021-05-01 to 2022-01-31 | $14.7m | us-gaap:InterestExpense |
| Income tax | 3 months, 2021-11-01 to 2022-01-31 | $7.9m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2021-05-01 to 2022-01-31 | $52.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2021-11-01 to 2022-01-31 | $35.4m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2021-05-01 to 2022-01-31 | $105.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2021-11-01 to 2022-01-31 | $0.63 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2021-05-01 to 2022-01-31 | $1.86 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2021-11-01 to 2022-01-31 | $0.63 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2021-05-01 to 2022-01-31 | $1.89 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2021-11-01 to 2022-01-31 | 56,389,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2021-05-01 to 2022-01-31 | 56,481,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2021-05-01 to 2022-01-31 | $158.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2021-05-01 to 2022-01-31 | $60.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2021-05-01 to 2022-01-31 | $57.9m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2021-05-01 to 2022-01-31 | $24.9m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2022-01-31 | $109.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-01-31 | $491.6m | us-gaap:AssetsCurrent |
| Total assets | at 2022-01-31 | $3.38bn | us-gaap:Assets |
| Current liabilities | at 2022-01-31 | $821.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-01-31 | $2.26bn | us-gaap:Liabilities |
| Long-term debt | at 2022-01-31 | $902.0m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2022-01-31 | $15.6m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2022-01-31 | $1.12bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 61,894 characters.

The information in our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read together with our Condensed Consolidated Financial Statements and related notes set forth in Item 1 of Part I of this Quarterly Report on Form 10-Q, our MD&A set forth in Item 7 of Part II of our 2021 Form 10-K and our Consolidated Financial Statements and related notes set forth in Item 8 of Part II of our 2021 Form 10-K. See Part II, Item 1A, “Risk Factors,” below and “Cautionary Notice Regarding Forward-Looking Statements “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995,” above, and the information referenced therein, for a description of risks that we face and important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. All amounts and percentages are approximate due to rounding and all dollars are in thousands, except per share amounts or where otherwise noted. When we cross-reference to a “Note,” we are referring to our “Notes to Unaudited Condensed Consolidated Financial Statements,” unless the context indicates otherwise.

### OVERVIEW

Wiley is a global leader in research and education, unlocking human potential by enabling discovery, powering education, and shaping workforces. For over 200 years, Wiley has fueled the world’s knowledge ecosystem. Today, our high-impact content, platforms, and services help researchers, learners, institutions, and corporations achieve their goals in an ever-changing world. Wiley is a predominantly digital company with over 80% of revenue for the nine months ended January 31, 2022 generated by digital products and services.

We report financial information for the following segments, as well as a Corporate category, which includes certain costs that are not allocated to the reportable segments:

- Research Publishing & Platforms
- Academic & Professional Learning
- Education Services

Through the Research Publishing & Platforms segment, we provide peer-reviewed scientific, technical, and medical (STM) publishing, content platforms, and related services to academic, corporate, and government customers, academic societies, and individual researchers. The Academic & Professional Learning segment provides Education Publishing and Professional Learning content and courseware, training and learning services, to students, professionals, and corporations. The Education Services segment provides online program management (OPM) services for academic institutions and talent development services for professionals and businesses.

Wiley’s business strategies are tightly aligned with accelerating growth trends, including open research, career-connected education, and talent development. Research strategies include driving publishing output to meet the increasing demand for peer-reviewed research and expanding platform and service offerings for corporations and societies. Education strategies include expanding online degree programs and driving online enrollment for university partners, scaling digital content and courseware, and expanding IT talent placement and reskilling programs for corporate partners.

Wiley has operations in Russia consisting primarily of technology development resources. We have exercised contingency plans to minimize any disruption if we were to lose access to our staff. If that should occur, we believe it will not materially impact our overall operations. As of January 31, 2022, the net assets of our Russian operations were not material to our overall financial position. We have customers in Russia, primarily for our Research offerings, which are not material to our overall financial results. We do not have operations in Ukraine or Belarus and the business conducted in those countries are also not material to our overall financial results.

### RESULTS OF OPERATIONS – THREE MONTHS ENDED JANUARY 31, 2022

### THIRD QUARTER SUMMARY:

- **US GAAP Results**: Consolidated Revenue of $516 million (+7%, compared with the prior year), Operating Income of $46 million (+34%, compared with the prior year), and EPS of $0.63 (+62%, compared with the prior year)
- **Adjusted Results** (at constant currency compared with the prior year): Consolidated Revenue of $516 million (+7%, compared with the prior year), Adjusted EBITDA of $100 million (-5%, compared with the prior year), and Adjusted EPS of $0.95 (-9%, compared with the prior year)
- **Acquisitions:** In the three months ended January 31, 2022, we completed three acquisitions, including acquiring the assets of XYZ Media Inc. (Education Services segment)

### CONSOLIDATED RESULTS OF OPERATIONS

### Revenue:

Revenue for the three months ended January 31, 2022 increased $33.0 million, or 7%, as compared with the prior year on a reported basis and on a constant currency basis including contributions from acquisitions. Excluding the contributions from acquisitions, revenue increased 4% on a constant currency basis.

See the “Segment Operating Results” below for additional details on each segment’s revenue and Adjusted EBITDA performance.

### Cost of Sales:

Cost of sales for the three months ended January 31, 2022 increased $15.3 million, or 10%, as compared with the prior year on a reported and on a constant currency basis as compared with the prior year. This increase was primarily due to higher employee costs and, to a lesser extent, higher student acquisition costs in Education Services, as well as increased royalty costs in Research Publishing & Platforms.

### Operating and Administrative Expenses:

Operating and administrative expenses for the three months ended January 31, 2022 increased $24.2 million, or 10%, as compared with the prior year. On a constant currency basis, operating and administrative expenses increased 11% as compared with the prior year primarily reflecting higher technology costs, editorial costs due to additional resources to support investments in growth and, to a lesser extent, advertising and marketing costs.

### Restructuring and Related Charges (Credits):

For the three months ended January 31, 2022 and 2021, we recorded pretax restructuring charges of $0.4 million and $20.7 million, respectively, primarily related to our Business Optimization Program. We anticipate $10.0 million in run rate savings from actions starting in fiscal 2022. These charges are reflected in Restructuring and related charges (credits) in our Unaudited Condensed Consolidated Statements of Net Income. See Note 9, “Restructuring and Related Charges (Credits)” for more details on these charges.

In November 2020, in response to the COVID-19 pandemic and the Company’s successful transition to a virtual work environment, we increased use of virtual work arrangements for post-pandemic operations. As a result, we expanded the scope of the Business Optimization Program to include the exit of certain leased office space beginning in the third quarter of fiscal 2021, and the reduction of our occupancy at other facilities. We are reducing our real estate square footage occupancy by approximately 12%.

These actions yielded annualized cost savings of approximately $8.0 million. We anticipate ongoing facility-related costs associated with certain properties to result in additional restructuring charges in future periods.

For the impact of our restructuring program on diluted earnings per share, see the section below, “Diluted Earnings per Share (EPS).”

### Amortization of Intangible Assets:

Amortization of intangible assets was $21.1 million for the three months ended January 31, 2022, an increase of $2.0 million, or 11%, as compared with the prior year on a reported and constant currency basis. This increase was primarily due to the intangible assets acquired as part of the Hindawi acquisition completed in fiscal year 2021 and, to a lesser extent, other acquisitions completed in fiscal year 2022. See Note 3, “Acquisitions” for more details on our acquisitions.

### Operating Income, Adjusted Contribution to Profit (CTP) and Adjusted EBITDA:

Operating income for the three months ended January 31, 2022 increased $11.7 million, or 34%, as compared with the prior year. On a constant currency basis, operating income increased 31% as compared with the prior year, primarily due to the increase in revenue and, to a lesser extent, lower restructuring charges, partially offset by an increase in operating and administrative expenses and cost of sales.

Adjusted CTP and Adjusted EBITDA on a constant currency basis and excluding restructuring charges, decreased 17% and 5%, respectively, as compared with the prior year. The decrease in Adjusted CTP and Adjusted EBITDA was primarily due to an increase in operating and administrative expenses, and cost of sales, partially offset by revenue performance described above. In addition, the decrease in Adjusted CTP reflected higher depreciation and amortization.

### Adjusted CTP

Below is a reconciliation of our consolidated US GAAP Operating Income to Non-GAAP Adjusted CTP:

|  | Three Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **US GAAP Operating Income** | **$45,989** | $34,327 |
| Adjustments: |  |  |
| Restructuring and related charges | **448** | 20,675 |
| **Non-GAAP Adjusted CTP** | **$46,437** | $55,002 |

### Adjusted EBITDA

Below is a reconciliation of our consolidated US GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA:

|  | Three Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **Net Income** | **$35,366** | $22,161 |
| Interest expense | **5,103** | 4,853 |
| Provision for income taxes | **7,853** | 5,231 |
| Depreciation and amortization | **53,363** | 49,316 |
| **Non-GAAP EBITDA** | **101,685** | 81,561 |
| Restructuring and related charges | **448** | 20,675 |
| Foreign exchange transaction losses | **488** | 5,694 |
| Other income, net | **(2,821)** | (3,612) |
| **Non-GAAP Adjusted EBITDA** | **$99,800** | $104,318 |

### Interest Expense:

Interest expense for the three months ended January 31, 2022 was $5.1 million compared with the prior year of $4.9 million. This increase was due to a higher weighted average effective interest rate and, to a lesser extent, higher average debt balance outstanding, which included borrowings for the funding of acquisitions.

### Foreign Exchange Transaction Losses:

Foreign exchange transaction losses were $0.5 million for the three months ended January 31, 2022 and were primarily due to losses on our foreign currency denominated intercompany and, to a lesser extent, third party accounts receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar.

Foreign exchange transaction losses were $5.7 million for the three months ended January 31, 2021. The losses were primarily due to the unfavorable impact of the changes in exchange rates on US Dollar cash balances held in the UK to fund the acquisition of Hindawi.

### Provision for Income Taxes:

Below is a reconciliation of our US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes:

|  | Three Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **US GAAP Income Before Taxes** | **$43,219** | $27,392 |
| Pretax Impact of Adjustments: |  |  |
| Restructuring and related charges | **448** | 20,675 |
| Foreign exchange losses on intercompany transactions | **722** | 267 |
| Amortization of acquired intangible assets | **22,189** | 20,163 |
| **Non-GAAP Adjusted Income Before Taxes** | **$66,578** | $68,497 |

Below is a reconciliation of our 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:

|  | Three Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **US GAAP Income Tax Provision** | **$7,853** | $5,231 |
| Income Tax Impact of Adjustments (1): |  |  |
| Restructuring and related charges | **114** | 4,965 |
| Foreign exchange losses on intercompany transactions | **239** | 87 |
| Amortization of acquired intangible assets | **4,834** | 4,691 |
| **Non-GAAP Adjusted Income Tax Provision** | **$13,040** | $14,974 |
| **US GAAP Effective Tax Rate** | **18.2%** | 19.1% |
| **Non-GAAP Adjusted Effective Tax Rate** | **19.6%** | 21.9% |

(1) For the three months ended January 31, 2022 and 2021, substantially all of the tax impact was from deferred taxes.

The US GAAP effective tax rate for the three months ended January 31, 2022 was 18.2% compared with 19.1% for the three months ended January 31, 2021. The Non-GAAP adjusted effective tax rate for the three months ended January 31, 2022 was 19.6%, compared with 21.9% for the three months ended January 31, 2021. The US GAAP effective tax rate and the Non-GAAP adjusted effective tax rate for the three months ended January 31, 2022, were lower than the US statutory rate, as well as the rate for the three months ended January 31, 2021, primarily due to the mix of income at lower rates, as well as certain discrete items realized during the three months ended January 31, 2022.

### Diluted Earnings per Share (EPS):

EPS for the three months ended January 31, 2022 was $0.63 per share compared with $0.39 per share for the three months ended January 31, 2021. This increase was due to higher operating income as described above and, to a lesser extent, lower foreign exchange transaction losses in the three months ended January 31, 2022.

Below is a reconciliation of our US GAAP EPS to Non-GAAP Adjusted EPS. The amount of the pretax, and the related income tax impact for the adjustments included in the table below, are presented in the section above, “Provision for Income Taxes”.

|  | Three Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **US GAAP EPS** | **$0.63** | $0.39 |
| Adjustments: |  |  |
| Restructuring and related charges | **0.01** | 0.28 |
| Foreign exchange losses on intercompany transactions | **0.01** | 0.01 |
| Amortization of acquired intangible assets | **0.30** | 0.27 |
| **Non-GAAP Adjusted EPS** | **$0.95** | $0.95 |

On a constant currency basis, Adjusted EPS decreased 9% primarily due to lower Adjusted CTP, partially offset by a lower Adjusted income tax provision.

### SEGMENT OPERATING RESULTS

| RESEARCH PUBLISHING & PLATFORMS: Revenue: | Three Months Ended January 31, 2022 | 2021 | % Change Favorable (Unfavorable) | Constant Currency % Change Favorable (Unfavorable) |
| --- | ---: | ---: | ---: | ---: |
| Research Publishing | **$248,884** | $229,327 | 9% | 9% |
| Research Platforms | **14,457** | 10,523 | 37% | 37% |
| **Total Research Publishing & Platforms Revenue** | **263,341** | 239,850 | 10% | 10% |
| Cost of Sales | **72,037** | 66,883 | (8)% | (8)% |
| Operating Expenses | **117,160** | 102,628 | (14)% | (15)% |
| Amortization of Intangible Assets | **11,979** | 9,474 | (26)% | (27)% |
| Restructuring Charges (see Note 9) | **—** | 83 | 100% | 100% |
| **Contribution to Profit** | **62,165** | 60,782 | 2% | 1% |
| Restructuring Charges (see Note 9) | **—** | 83 | 100% | 100% |
| **Adjusted Contribution to Profit** | **62,165** | 60,865 | 2% | 1% |
| Depreciation and amortization | **23,914** | 20,997 | (14)% | (14)% |
| **Adjusted EBITDA** | **$86,079** | $81,862 | 5% | 4% |
| Adjusted EBITDA Margin | **32.7%** | 34.1% |  |  |

\# Not meaningful

### Revenue:

Research Publishing & Platforms revenue for the three months ended January 31, 2022 increased $23.5 million, or 10%, as compared with the prior year on a reported basis and on a constant currency basis. Excluding revenue from acquisitions, organic revenue increased 5% on a constant currency basis. This increase was primarily due to an increase in publishing, corporate solutions and, to a lesser extent Research Platforms. Research Publishing has continued growth due to Transitional Agreements (read and publish), sometimes referred to as Comprehensive Agreements. Excluding the impact from acquisitions, Open Access article output growth was approximately 16% for the three months ended January 31, 2022 as compared with the prior year.

### Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased 4% as compared with the prior year. This increase was primarily due to higher revenue, partially offset by higher editorial costs due to additional resources to support investments in growth, which includes the impact of the acquisition of Hindawi and, to a lesser extent, higher cost of sales, which includes the incremental impact of acquisitions and technology-related costs.

| ACADEMIC & PROFESSIONAL LEARNING: Revenue: | Three Months Ended January 31, 2022 | 2021 | % Change Favorable (Unfavorable) | Constant Currency % Change Favorable (Unfavorable) |
| --- | ---: | ---: | ---: | ---: |
| Education Publishing (1) | **$95,498** | $97,671 | (2)% | (2)% |
| Professional Learning | **75,135** | 75,955 | (1)% | — |
| **Total Academic & Professional Learning** | **170,633** | 173,626 | (2)% | (1)% |
| Cost of Sales | **46,421** | 48,103 | 3% | 3% |
| Operating Expenses | **85,806** | 88,246 | 3% | 2% |
| Amortization of Intangible Assets | **3,417** | 4,126 | 17% | 16% |
| Restructuring Charges (see Note 9) | **215** | 328 | 34% | 34% |
| **Contribution to Profit** | **34,774** | 32,823 | 6% | 7% |
| Restructuring Charges (see Note 9) | **215** | 328 | 34% | 34% |
| **Adjusted Contribution to Profit** | **34,989** | 33,151 | 6% | 6% |
| Depreciation and amortization | **17,038** | 17,233 | 1% | — |
| **Adjusted EBITDA** | **$52,027** | $50,384 | 3% | 4% |
| Adjusted EBITDA Margin | **30.5%** | 29.0% |  |  |

\# Not meaningful

(1) In May 2021, we moved the WileyNXT product offering from Academic & Professional Learning – Education Publishing to Education Services – Talent Development Services. As a result, the prior period results related to the WileyNXT product offering have been included in Education Services - Talent Development Services. The Revenue, Adjusted Contribution to Profit and Adjusted EBITDA for WileyNXT was $0.5 million, $(0.2) million, and $(0.2) million, respectively, for the three months ended January 31, 2021. There were no changes to our total consolidated financial results.

### Revenue:

Academic & Professional Learning revenue decreased $3.0 million, or 2%, as compared with the prior year on a reported basis. On a constant currency basis, revenue decreased 1% as compared with the prior year. The decrease in Education Publishing was due to lower US enrollment and an easing of the prior-year COVID-19 related favorability for courseware and content, and test preparation. Professional Learning was flat due to an increase in corporate training due to a strong recovery from prior year COVID-19 lockdown impacts, offset by a decrease in professional publishing.

### Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased 4% as compared with the prior year. This increase was attributable to lower operating expenses, primarily due a decline in sales costs, which more than offset lower revenues.

| EDUCATION SERVICES: Revenue: | Three Months Ended January 31, 2022 | 2021 | % Change Favorable (Unfavorable) | Constant Currency % Change Favorable (Unfavorable) |
| --- | ---: | ---: | ---: | ---: |
| University Services (1) | **$55,090** | $56,725 | (3)% | (3)% |
| Talent Development Services (2)(3) | **26,820** | 12,711 | # | # |
| **Total Education Services Revenue** | **81,910** | 69,436 | 18% | 18% |
| Cost of Sales | **54,457** | 42,651 | (28)% | (28)% |
| Operating Expenses | **19,134** | 16,073 | (19)% | (19)% |
| Amortization of Intangible Assets | **5,660** | 5,431 | (4)% | (4)% |
| Restructuring Charges (see Note 9) | **5** | 71 | 93% | 93% |
| **Contribution to Profit** | **2,654** | 5,210 | (49)% | (49)% |
| Restructuring Charges (see Note 9) | **5** | 71 | 93% | 93% |
| **Adjusted Contribution to Profit** | **2,659** | 5,281 | (50)% | (49)% |
| Depreciation and amortization | **8,260** | 7,493 | (10)% | (10)% |
| **Adjusted EBITDA** | **$10,919** | $12,774 | (15)% | (14)% |
| Adjusted EBITDA Margin | **13.3%** | 18.4% |  |  |

\# Not meaningful

(1) University Services was previously referred to as Education Services OPM.

(2) Talent Development Services was previously referred to as mthree.

(3) In May 2021, we moved the WileyNXT product offering from Academic & Professional Learning – Education Publishing to Education Services – Talent Development Services. As a result, the prior period results related to the WileyNXT product offering have been included in Education Services – Talent Development Services. The Revenue, Adjusted Contribution to Profit and Adjusted EBITDA for WileyNXT was $0.5 million, $(0.2) million, and $(0.2) million, respectively, for the three months ended January 31, 2021. There were no changes to our total consolidated financial results.

### Revenue:

Education Services revenue increased $12.5 million, or 18%, as compared with the prior year on a reported basis and on a constant currency basis as compared with the prior year. Excluding revenue from acquisitions, organic revenue increased 17% on a constant currency basis. This increase was primarily due to an increase in placements in Talent Development Services, partially offset by a decline in University Services due to lower US student enrollment. We delivered approximately 140% growth in IT talent placements in Talent Development Services. University Services experienced a modest decrease in online enrollment.

### Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA decreased 14% as compared with the prior year. This decrease was due to an increase in employee related costs due to increased investments to accelerate growth in Talent Development Services and, to a lesser extent, higher student acquisition costs in University Services, which more than offset higher revenues.

### Education Services Partners and Programs:

As of January 31, 2022, Wiley had 64 full-service university partners under contract. As of January 31, 2021, Wiley had 69 university partners under contract.

### CORPORATE EXPENSES:

Corporate expenses for the three months ended January 31, 2022 decreased $10.9 million, or 17%, as compared with the prior year. On a constant currency basis and excluding restructuring charges, these expenses increased 21% as compared with the prior year. This was primarily due to higher technology-related spending, increased marketing costs and, to a lesser extent, higher employee-related costs.

### RESULTS OF OPERATIONS – NINE MONTHS ENDED JANUARY 31, 2022

### NINE MONTHS SUMMARY:

- **US GAAP Results**: Consolidated Revenue of $1,537 million (+9%, compared with the prior year), Operating Income of $161 million (+20%, compared with the prior year), EPS of $1.86 (-2%, compared with the prior year), Net Cash Provided by Operating Activities of $158 million (+2%, compared with the prior year)
- **Adjusted Results** (at constant currency compared with the prior year): Consolidated Revenue of $1,537 million (+8%, compared with the prior year), Adjusted EBITDA of $322 million (+4%, compared with the prior year), Adjusted EPS of $3.09 (+4%, compared with the prior year), and Free Cash Flow of $77 million (-3%, compared with the prior year)

### CONSOLIDATED RESULTS OF OPERATIONS

### Revenue:

Revenue for the nine months ended January 31, 2022 increased $132.0 million, or 9%, as compared with the prior year. On a constant currency basis, revenue increased 8% as compared with the prior year including contributions from acquisitions. Excluding the contributions from acquisitions, revenue increased in each of our segments and 5% overall on a constant currency basis.

See the “Segment Operating Results” below for additional details on each segment’s revenue and Adjusted EBITDA performance.

### Cost of Sales:

Cost of sales for the nine months ended January 31, 2022 increased $56.4 million, or 12%, as compared with the prior year. On a constant currency basis, cost of sales increased 11% as compared with the prior year. This increase was primarily due to higher employee costs and, to a lesser extent, higher student acquisition costs in Education Services, increased print product costs in Academic & Professional Learning and, to a lesser extent, higher royalty costs in Research Publishing & Platforms.

### Operating and Administrative Expenses:

Operating and administrative expenses for the nine months ended January 31, 2022 increased $64.5 million, or 9%, as compared with the prior year. On a constant currency basis, operating and administrative expenses increased 8% as compared with the prior year primarily reflecting higher editorial costs due to additional resources to support investments in growth, technology costs to support growth initiatives and, to a lesser extent, higher advertising and marketing costs.

### Restructuring and Related (Credits) Charges:

For the nine months ended January 31, 2022 and 2021, we recorded pretax restructuring credits of $1.2 million and charges of $24.8 million, respectively, primarily related to our Business Optimization Program. These (credits) charges are reflected in Restructuring and related charges (credits) in our Unaudited Condensed Consolidated Statements of Net Income. See Note 9, “Restructuring and Related Charges (Credits)” for more details on these credits and charges.

For the impact of our restructuring program on diluted earnings per share, see the section below, “Diluted Earnings per Share (EPS).”

### Amortization of Intangible Assets:

Amortization of intangible assets was $63.7 million for the nine months ended January 31, 2022, an increase of $10.6 million, or 20%, as compared with the prior year. On a constant currency basis, amortization of intangible assets increased 19% as compared with the prior year primarily due to the intangible assets acquired as part of the Hindawi acquisition completed in fiscal year 2021 and, to a lesser extent, other acquisitions completed in fiscal year 2022. See Note 3, “Acquisitions” for more details on our acquisitions.

### Operating Income, Adjusted Contribution to Profit (CTP) and Adjusted EBITDA:

Operating income for the nine months ended January 31, 2022 increased $26.6 million, or 20%, as compared with the prior year. On a constant currency basis, operating income increased 19% as compared with the prior year, primarily due to the increase in revenue and, to a lesser extent, lower restructuring charges, partially offset by an increase in operating and administrative expenses and cost of sales.

Adjusted CTP on a constant currency basis and excluding restructuring (credits) charges was flat as compared with the prior year primarily due to higher revenue performance as described above, offset by an increase in cost of sales, operating and administrative expenses and, to a lesser extent, amortization of intangible assets.

Adjusted EBITDA on a constant currency basis and excluding restructuring (credits) charges, increased 4%, as compared with the prior year primarily due to revenue performance, partially offset by an increase in operating and administrative expenses, and cost of sales.

### Adjusted CTP

Below is a reconciliation of our consolidated US GAAP Operating Income to Non-GAAP Adjusted CTP:

|  | Nine Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **US GAAP Operating Income** | **$160,845** | $134,271 |
| Adjustments: |  |  |
| Restructuring and related (credits) charges | **(1,161)** | 24,813 |
| **Non-GAAP Adjusted CTP** | **$159,684** | $159,084 |

### Adjusted EBITDA

Below is a reconciliation of our consolidated US GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA:

|  | Nine Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **Net Income** | **$105,163** | $106,927 |
| Interest expense | **14,739** | 13,928 |
| Provision for income taxes | **52,673** | 18,712 |
| Depreciation and amortization | **162,484** | 147,253 |
| **Non-GAAP EBITDA** | **335,059** | 286,820 |
| Restructuring and related (credits) charges | **(1,161)** | 24,813 |
| Foreign exchange transaction losses | **1,488** | 6,473 |
| Gain on sale of certain assets | **(3,694)** | — |
| Other income, net | **(9,524)** | (11,769) |
| **Non-GAAP Adjusted EBITDA** | **$322,168** | $306,337 |

### Interest Expense:

Interest expense for the nine months ended January 31, 2022 was $14.7 million compared with the prior year of $13.9 million. This increase was due to a higher average debt balance outstanding, which included borrowings for the funding of acquisitions, partially offset by a lower weighted average effective interest rate.

### Foreign Exchange Transaction Losses:

Foreign exchange transaction losses were $1.5 million for the nine months ended January 31, 2022 and were primarily due to losses on our foreign currency denominated third-party accounts receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar.

Foreign exchange transaction losses were $6.5 million for the nine months ended January 31, 2021. The losses were primarily due to the unfavorable impact of the changes in exchange rates primarily on US Dollar cash balances held in the UK to fund the acquisition of Hindawi.

### Gain on Sale of Certain Assets:

The gain on the 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 nine months ended January 31, 2022.

### Provision for Income Taxes:

Below is a reconciliation of our US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes:

|  | Nine Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **US GAAP Income Before Taxes** | **$157,836** | $125,639 |
| Pretax Impact of Adjustments: |  |  |
| Restructuring and related (credits) charges | **(1,161)** | 24,813 |
| Foreign exchange losses (gains) on intercompany transactions | **494** | (1,071) |
| Amortization of acquired intangible assets | **67,081** | 56,693 |
| Gain on sale of certain assets | **(3,694)** | — |
| **Non-GAAP Adjusted Income Before Taxes** | **$220,556** | $206,074 |

Below is a reconciliation of our 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:

|  | Nine Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **US GAAP Income Tax Provision** | **$52,673** | $18,712 |
| Income Tax Impact of Adjustments (1): |  |  |
| Restructuring and related (credits) charges | **(118)** | 6,362 |
| Foreign exchange losses (gains) on intercompany transactions | **258** | (403) |
| Amortization of acquired intangible assets | **15,097** | 13,324 |
| Gain on sale of certain assets | **(922)** | — |
| Income Tax Adjustments: |  |  |
| Impact of increase in UK statutory rate on deferred tax balances (2) | **(20,726)** | (6,772) |
| Impact of US CARES Act (3) | **—** | 13,998 |
| **Non-GAAP Adjusted Income Tax Provision** | **$46,262** | $45,221 |
| **US GAAP Effective Tax Rate** | **33.4%** | 14.9% |
| **Non-GAAP Adjusted Effective Tax Rate** | **21.0%** | 21.9% |

(1) For the nine months ended January 31, 2022 and 2021, substantially all of the tax impact was from deferred taxes.

(2) These adjustments impacted deferred taxes in the nine months ended January 31, 2022 and 2021.

(3) For the nine months ended January 31, 2021, the tax impact was $8.4 million from current taxes and $5.6 million from deferred taxes.

The US GAAP effective tax rate for the nine months ended January 31, 2022 was 33.4%, compared with 14.9% for the nine months ended January 31, 2021. The rate for the nine months ended January 31, 2022 was greater than the US statutory rate, as well as the rate for the nine months ended January 31, 2021 due to an increase in the UK statutory rate, resulting in a noncash deferred tax expense from the re-measurement of our applicable UK net deferred tax liabilities. The 6-percentage point increase in the UK statutory rate during the nine months ended January 31, 2022 was greater than the 2-percentage point increase during the nine months ended January 31, 2021. In addition, during the nine months ended January 31, 2021, as a result of the CARES Act and certain regulations issued in late July 2020, we carried back certain US NOLs to a year with a higher statutory rate, decreasing the rate for the nine months ended January 31, 2021.

During the nine months ended January 31, 2022, the UK enacted legislation that increased its statutory rate from 19% to 25% effective April 1, 2023, resulting in a $20.7 million non-cash deferred tax expense. During the nine months ended January 31, 2021, the UK officially enacted legislation that increased its statutory rate from 17% to 19%, resulting in a $6.7 million non-cash deferred tax expense.

The Non-GAAP Adjusted effective tax rate for the nine months ended January 31, 2022 was 21.0%, compared with 21.9% for the nine months ended January 31, 2021. The rate for the nine months ended January 31, 2022, was slightly lower than the rate for the nine months ended January 31, 2021 primarily due to the mix of income at lower rates.

### Diluted Earnings per Share (EPS):

EPS for the nine months ended January 31, 2022 was $1.86 per share compared with $1.90 per share for the nine months ended January 31, 2021. This decrease was due to a higher provision for income taxes driven by the CARES Act benefit of $0.25 per share in the nine months ended January 31, 2021, partially offset by higher operating income and, to a lesser extent, lower foreign exchange transaction losses, and the gain on sale of certain assets.

Below is a reconciliation of our US GAAP EPS to Non-GAAP Adjusted EPS. The amount of the pretax, and the related income tax impact for the adjustments included in the table below, are presented in the section above, “Provision for Income Taxes”.

|  | Nine Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **US GAAP EPS** | **$1.86** | $1.90 |
| Adjustments: |  |  |
| Restructuring and related (credits) charges | **(0.02)** | 0.33 |
| Foreign exchange gains on intercompany transactions | **—** | (0.01) |
| Amortization of acquired intangible assets | **0.93** | 0.77 |
| Gain on sale of certain assets | **(0.05)** | — |
| Income tax adjustments | **0.37** | (0.13) |
| **Non-GAAP Adjusted EPS** | **$3.09** | $2.86 |

On a constant currency basis, Adjusted EPS increased 4% primarily due to an increase in Adjusted EBITDA and, to a lesser extent, lower foreign exchange transaction losses.

### SEGMENT OPERATING RESULTS

| RESEARCH PUBLISHING & PLATFORMS: Revenue: | Nine Months Ended January 31, 2022 | 2021 | % Change Favorable (Unfavorable) | Constant Currency % Change Favorable (Unfavorable) |
| --- | ---: | ---: | ---: | ---: |
| Research Publishing | **$775,115** | $700,482 | 11% | 9% |
| Research Platforms | **38,136** | 31,512 | 21% | 21% |
| **Total Research Publishing & Platforms Revenue** | **813,251** | 731,994 | 11% | 10% |
| Cost of Sales | **218,369** | 201,599 | (8)% | (6)% |
| Operating Expenses | **341,084** | 300,894 | (13)% | (12)% |
| Amortization of Intangible Assets | **35,556** | 25,165 | (41)% | (39)% |
| Restructuring Charges (Credits) (see Note 9) | **238** | (352) | # | # |
| **Contribution to Profit** | **218,004** | 204,688 | 7% | 6% |
| Restructuring Charges (Credits) (see Note 9) | **238** | (352) | # | # |
| **Adjusted Contribution to Profit** | **218,242** | 204,336 | 7% | 7% |
| Depreciation and amortization | **71,140** | 60,463 | (18)% | (16)% |
| **Adjusted EBITDA** | **$289,382** | $264,799 | 9% | 9% |
| Adjusted EBITDA Margin | **35.6%** | 36.2% |  |  |

\# Not meaningful

### Revenue:

Research Publishing & Platforms revenue for the nine months ended January 31, 2022 increased $81.3 million, or 11%, as compared with the prior year on a reported basis. On a constant currency basis, revenue increased 10% as compared with the prior year. Excluding revenue from acquisitions, organic revenue increased 4% on a constant currency basis. This increase was primarily due to an increase in publishing, corporate solutions and, to a lesser extent an increase in Research Platforms. Research Publishing has continued growth due to Transitional Agreements (read and publish), sometimes referred to as Comprehensive Agreements. Excluding the impact from acquisitions, Open Access article output growth was approximately 25% for the nine months ended January 31, 2022 as compared with the prior year.

### Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased 9% as compared with the prior year. This increase was primarily due to higher revenue, partially offset by higher editorial costs due to additional resources to support investments in growth, which includes the impact of the acquisition of Hindawi and, to a lesser extent, higher cost of sales including the incremental impact of acquisitions, technology, and sales-related costs.

| ACADEMIC & PROFESSIONAL LEARNING: Revenue: | Nine Months Ended January 31, 2022 | 2021 | % Change Favorable (Unfavorable) | Constant Currency % Change Favorable (Unfavorable) |
| --- | ---: | ---: | ---: | ---: |
| Education Publishing (1) | **$260,459** | $263,702 | (1)% | (2)% |
| Professional Learning | **225,967** | 206,269 | 10% | 9% |
| **Total Academic & Professional Learning** | **486,426** | 469,971 | 4% | 3% |
| Cost of Sales | **134,334** | 129,700 | (4)% | (3)% |
| Operating Expenses | **257,524** | 263,441 | 2% | 3% |
| Amortization of Intangible Assets | **10,650** | 12,376 | 14% | 14% |
| Restructuring (Credits) Charges (see Note 9) | **(79)** | 1,902 | # | # |
| **Contribution to Profit** | **83,997** | 62,552 | 34% | 33% |
| Restructuring (Credits) Charges (see Note 9) | **(79)** | 1,902 | # | # |
| **Adjusted Contribution to Profit** | **83,918** | 64,454 | 30% | 29% |
| Depreciation and amortization | **53,550** | 53,757 | — | 1% |
| **Adjusted EBITDA** | **$137,468** | $118,211 | 16% | 15% |
| Adjusted EBITDA Margin | **28.3%** | 25.2% |  |  |

\# Not meaningful

(1) In May 2021, we moved the WileyNXT product offering from Academic & Professional Learning – Education Publishing to Education Services – Talent Development Services. As a result, the prior period results related to the WileyNXT product offering have been included in Education Services – Talent Development Services. The Revenue, Adjusted Contribution to Profit and Adjusted EBITDA for WileyNXT was $1.6 million, $(0.4) million, and $(0.4) million, respectively, for the nine months ended January 31, 2021. There were no changes to our total consolidated financial results.

### Revenue:

Academic & Professional Learning revenue increased $16.5 million, or 4%, as compared with the prior year on a reported basis. On a constant currency basis, revenue increased 3% as compared with the prior year. This increase was primarily driven by strong recovery in Professional Learning from prior year COVID-19 lockdown impacts primarily due to an increase in corporate training, and an increase in professional publishing compared with the prior year. This more than offset a 2% decline in Education Publishing due to lower US college enrollment and some easing of prior year COVID-19 related favorability for courseware and content and, to a lesser extent, test preparation.

### Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased 15% as compared with the prior year. This increase was due to higher revenues and, to a lesser extent, lower sales costs. This was partially offset by higher print product costs.

| EDUCATION SERVICES: Revenue: | Nine Months Ended January 31, 2022 | 2021 | % Change Favorable (Unfavorable) | Constant Currency % Change Favorable (Unfavorable) |
| --- | ---: | ---: | ---: | ---: |
| University Services (1) | **$167,565** | $163,248 | 3% | 2% |
| Talent Development Services (2)(3) | **70,033** | 40,036 | 75% | 70% |
| **Total Education Services Revenue** | **237,598** | 203,284 | 17% | 16% |
| Cost of Sales | **160,950** | 126,001 | (28)% | (26)% |
| Operating Expenses | **57,646** | 48,480 | (19)% | (18)% |
| Amortization of Intangible Assets | **17,477** | 15,547 | (12)% | (12)% |
| Restructuring (Credits) Charges (see Note 9) | **(23)** | 294 | # | # |
| **Contribution to Profit** | **1,548** | 12,962 | (88)% | (89)% |
| Restructuring (Credits) Charges (see Note 9) | **(23)** | 294 | # | # |
| **Adjusted Contribution to Profit** | **1,525** | 13,256 | (88)% | (90)% |
| Depreciation and amortization | **25,376** | 21,982 | (15)% | (15)% |
| **Adjusted EBITDA** | **$26,901** | $35,238 | (24)% | (24)% |
| Adjusted EBITDA Margin | **11.3%** | 17.3% |  |  |

\# Not meaningful

(1) University Services was previously referred to as Education Services OPM.

(2) Talent Development Services was previously referred to as mthree.

(3) In May 2021, we moved the WileyNXT product offering from Academic & Professional Learning – Education Publishing to Education Services – Talent Development Services. As a result, the prior period results related to the WileyNXT product offering have been included in Education Services – Talent Development Services. The Revenue, Adjusted Contribution to Profit and Adjusted EBITDA for WileyNXT was $1.6 million, $(0.4) million, and $(0.4) million, respectively, for the nine months ended January 31, 2021. There were no changes to our total consolidated financial results.

### Revenue:

Education Services revenue increased $34.3 million, or 17%, as compared with the prior year on a reported basis. On a constant currency basis, revenue increased 16% as compared with the prior year. Excluding revenue from acquisitions, organic revenue increased 15% on a constant currency basis. This increase was primarily due to an increase in placements in Talent Development Services and, to a lesser extent, higher student enrollments in University Services. For the nine months ended January 31, 2022, University Services experienced a 3% increase in online enrollment. For the nine months ended January 31, 2022, we delivered approximately 140% growth in IT talent placements in Talent Development Services.

### Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA decreased 24% as compared with the prior year. This was due to an increase in employee related costs due to increased investments to accelerate growth in Talent Development Services and, to a lesser extent, higher student acquisition costs in University Services and sales related costs, partially offset by higher revenue.

### CORPORATE EXPENSES:

Corporate expenses for the nine months ended January 31, 2022 decreased $3.2 million, or 2%, as compared with the prior year. On a constant currency basis and excluding restructuring (credits) charges, these expenses increased 17% as compared with the prior year. This was primarily due to higher employee-related costs, technology-related spending and marketing costs.

### FISCAL YEAR 2022 OUTLOOK:

Given performance through the nine months ended January 31, 2022 and leading indicators, the Company is reaffirming its Fiscal Year 2022 guidance ranges. As previously disclosed, we have added the newly defined Adjusted EPS metric described below. Going forward, Wiley will discontinue reporting on the former Adjusted EPS metric.

#### Amounts in millions, except Adjusted EPS

| Metric | Fiscal Year 2020 Actual | Fiscal Year 2021 Actual | Fiscal Year 2022 Outlook |
| --- | ---: | ---: | --- |
| **Revenue** | $1,831 | $1,942 | **$2,070 to $2,100** |
| **Adjusted EBITDA** | $356 | $419 | **$415 to $435** |
| **Adjusted EPS - newly defined** | $3.30 | $4.00 | **$4.00 to $4.25** |
| **Free Cash Flow** | $173 | $257 | **$200 to $220** |

- **Revenue Outlook:** Wiley expects consolidated revenue growth of mid-to-high single digits, to a range of $2.07 billion to $2.1 billion.
- **Adjusted EBITDA Outlook:** Wiley expects a range between $415 and $435 million, with profit gains on higher revenue tempered by investments to drive profitable growth in Research and Education Services.
- **Adjusted EPS Outlook (newly defined):** Wiley expects a range between $4.00 to $4.25.
- **Free Cash Flow Outlook:** Wiley expects a range between $200 and $220 million. Higher cash earnings are expected to be partially offset by higher capital expenditures, higher net cash taxes due to the CARES Act related tax refund received in Fiscal Year 2021, and higher annual incentive compensation payments related to Fiscal Year 2021 outperformance, which were issued in the three months ended July 31, 2021.
- Revenue and Adjusted EPS are trending toward the lower end of the guidance range due to the aforementioned market conditions in University Services and Education Publishing.

**Adjusted EPS Chang**e:

Going forward, Wiley’s Adjusted EPS metric will exclude the impact of certain non-cash items directly related to acquisitions, most notably the amortization of acquired intangible assets. The Company does not consider these non-cash items to be indicative of its ongoing operating performance. The amortization of intangible assets is reflected in Amortization of intangible assets on the Unaudited 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 Unaudited Condensed Consolidated Statements of Net Income. Under the new measurement, Adjusted EPS (excluding the impact of amortization of acquired intangible assets) was $0.95 for both the three months ended January 31, 2022 and 2021. For the nine months ended January 31, 2022, under the new measurement, Adjusted EPS (excluding the impact of amortization of acquired intangible assets) was $3.09 compared to $2.86 in the nine months ended January 31, 2021. See the reconciliation tables below for more information.

|  | Three Months Ended January 31, 2022 | 2021 | Nine Months Ended January 31, 2022 | 2021 | Fiscal Year 2021 | Fiscal Year 2020 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **US GAAP Earnings (Loss) Per Share** | **$0.63** | $0.39 | **$1.86** | $1.90 | $2.63 | $(1.32) |
| Adjustments: |  |  |  |  |  |  |
| Restructuring and related charges (credits) | **0.01** | 0.28 | **(0.02)** | 0.33 | 0.44 | 0.43 |
| Foreign exchange losses (gains) on intercompany transactions | **0.01** | 0.01 | **—** | (0.01) | (0.02) | 0.02 |
| Gain on sale of certain assets | **—** | — | **(0.05)** | — | — | — |
| Income tax adjustments | **—** | — | **0.37** | (0.13) | (0.13) | (0.03) |
| Impairment of goodwill | **—** | — | **—** | — | — | 1.94 |
| Impairment of Blackwell trade name | **—** | — | **—** | — | — | 1.31 |
| Impairment of developed technology intangible | **—** | — | **—** | — | — | 0.04 |
| EPS impact of using weighted-average dilutive shares for adjusted EPS calculation (1) | **—** | — | **—** | — | — | 0.01 |
| **Non-GAAP Adjusted EPS (Previously Reported)** | **$0.65** | $0.68 | **$2.16** | $2.09 | $2.92 | $2.40 |
| Amortization of acquired intangible assets | **0.30** | 0.27 | **0.93** | 0.77 | 1.08 | 0.90 |
| **Non-GAAP Adjusted EPS (Newly Defined)** | **$0.95** | $0.95 | **$3.09** | $2.86 | $4.00 | $3.30 |
| **Weighted average number of common shares outstanding:** |  |  |  |  |  |  |
| **Diluted (shares in 000's) (1)** | **56,389** | 56,332 | **56,481** | 56,230 | 56,461 | 56,729 |

(1) For Fiscal Year 2020, represents the impact of using diluted weighted-average number of common shares outstanding (56.7 million shares for the year ended April 30, 2020) included in the Non-US GAAP Adjusted EPS calculation in order to apply the dilutive impact on adjusted net income due to the effect of unvested restricted stock units and other stock awards. This impact occurs when a US GAAP net loss is reported and the effect of using dilutive shares is antidilutive.

Below is a reconciliation of our US GAAP Income (Loss) Before Taxes to Non-GAAP Adjusted Income Before Taxes:

|  | Three Months Ended January 31, 2022 | 2021 | Nine Months Ended January 31, 2022 | 2021 | Fiscal Year 2021 | Fiscal Year 2020 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **US GAAP Income (Loss) Before Taxes** | **$43,219** | $27,392 | **$157,836** | $125,639 | $175,912 | $(63,092) |
| Pretax Impact of Adjustments: |  |  |  |  |  |  |
| Restructuring and related charges (credits) | **448** | 20,675 | **(1,161)** | 24,813 | 33,310 | 32,607 |
| Foreign exchange losses (gains) on intercompany transactions | **722** | 267 | **494** | (1,071) | (1,457) | 1,256 |
| Gain on sale of certain assets | **—** | — | **(3,694)** | — | — | — |
| Impairment of goodwill | **—** | — | **—** | — | — | 110,000 |
| Impairment of Blackwell trade name | **—** | — | **—** | — | — | 89,507 |
| Impairment of developed technology intangible | **—** | — | **—** | — | — | 2,841 |
| **Non-GAAP Adjusted Income Before Taxes (Previously Reported)** | **$44,389** | $48,334 | **$153,475** | $149,381 | $207,765 | $173,119 |
| Amortization of acquired intangible assets | **22,189** | 20,163 | **67,081** | 56,693 | 79,421 | 68,269 |
| **Non-GAAP Adjusted Income Before Taxes (Newly Defined)** | **$66,578** | $68,497 | **$220,556** | $206,074 | $287,186 | $241,388 |

45

Below is a reconciliation of our 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:

|  | Three Months Ended January 31, 2022 | 2021 | Nine Months Ended January 31, 2022 | 2021 | Fiscal Year 2021 | Fiscal Year 2020 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **US GAAP Income Tax Provision** | **$7,853** | $5,231 | **$52,673** | $18,712 | $27,656 | $11,195 |
| Income Tax Impact of Adjustments (1): |  |  |  |  |  |  |
| Restructuring and related charges (credits) | **114** | 4,965 | **(118)** | 6,362 | 8,065 | 7,949 |
| Foreign exchange losses (gains) on intercompany transactions | **239** | 87 | **258** | (403) | (363) | 242 |
| Gain on sale of certain assets | **—** | — | **(922)** | — | — | — |
| Impairment of Blackwell trade name | **—** | — | **—** | — | — | 15,216 |
| Impairment of developed technology intangible | **—** | — | **—** | — | — | 686 |
| Income Tax Adjustments: |  |  |  |  |  |  |
| Impact of increase in UK statutory rate on deferred tax balances (2) | **—** | — | **(20,726)** | (6,772) | (3,511) | — |
| Impact of US CARES Act (3) | **—** | — | **—** | 13,998 | 13,998 | — |
| Impact of change in certain US state tax rates in 2021 and tax rates in France in 2020 (2) | **—** | — | **—** | — | (3,225) | 1,887 |
| **Non-GAAP Adjusted Income Tax Provision (Previously Reported)** | **$8,206** | $10,283 | **$31,165** | $31,897 | $42,620 | $37,175 |
| Amortization of acquired intangible assets (1) | **4,834** | 4,691 | **15,097** | 13,324 | 18,511 | 16,820 |
| **Non-GAAP Adjusted Income Tax Provision (Newly Defined)** | **$13,040** | $14,974 | **$46,262** | $45,221 | $61,131 | $53,995 |
| **US GAAP Effective Tax Rate** | **18.2%** | 19.1% | **33.4%** | 14.9% | 15.7% | (17.7)% |
| **Non-GAAP Adjusted Effective Tax Rate (Previously Reported)** | **18.5%** | 21.3% | **20.3%** | 21.4% | 20.5% | 21.5% |
| **Non-GAAP Adjusted Effective Tax Rate (Newly Defined)** | **19.6%** | 21.9% | **21.0%** | 21.9% | 21.3% | 22.4% |

(1) These adjustments substantially impacted deferred taxes.

(2) These adjustments impacted deferred taxes.

(3) The tax impact was $8.4 million from current taxes and $5.6 million from deferred taxes.

Below is a reconciliation of our consolidated US GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA for the year ended April 30, 2021:

|  | Fiscal Year 2021 |
| --- | ---: |
| **Net Income** | $148,256 |
| Interest expense | 18,383 |
| Provision for income taxes | 27,656 |
| Depreciation and amortization | 200,189 |
| **Non-GAAP EBITDA** | 394,484 |
| Restructuring and related charges | 33,310 |
| Foreign exchange transaction losses | 7,977 |
| Other income, net | (16,761) |
| **Non-GAAP Adjusted EBITDA** | $419,010 |

46

Below are the details of Free Cash Flow Less Product Development Spending for the year ended April 30, 2021:

|  | Fiscal Year 2021 |
| --- | ---: |
| **Net cash provided by operating activities** | $359,923 |
| Less: Additions to technology, property and equipment | (77,407) |
| Less: Product development spending | (25,954) |
| **Free cash flow less product development spending** | $256,562 |

### LIQUIDITY AND CAPITAL RESOURCES

### Principal Sources of Liquidity

We believe that our operating cash flow, together with our revolving credit facilities and other available debt financing, will be adequate to meet our operating, investing and financing needs in the foreseeable future. There can be no assurance that continued or increased volatility in the global capital and credit markets will not impair our ability to access these markets on terms commercially acceptable in the future. In addition, our liquidity could be adversely impacted by COVID-19 due to the continued impact on our customers, including cash collections. We do not have any off-balance-sheet debt. We will continue to pursue attractive opportunities to add scale and provide enhanced tech-enabled services in research and online education.

As of January 31, 2022, we had cash and cash equivalents of $109.4 million, of which approximately $101.5 million, or 93%, was located outside the US. Maintenance of these cash and cash equivalent balances outside the US does not have a material impact on the liquidity or capital resources of our operations. Notwithstanding the Tax Cuts and Jobs Act of 2017 (the Tax Act), which generally eliminated federal income tax on future cash repatriation to the US, cash repatriation may be subject to state and local taxes or withholding or similar taxes. Since April 30, 2018, we no longer intend to permanently reinvest earnings outside the US. We have a $2.5 million liability related to the estimated taxes that would be incurred upon repatriating certain non-US earnings.

On May 30, 2019, we entered into a credit agreement that amended and restated our existing revolving credit agreement, which was then amended on December 22, 2021 (collectively, the Amended and Restated RCA). See Note 15, “Debt and Available Credit Facilities” for more details on the amendment. The Amended and Restated RCA provides for senior unsecured credit facilities comprised of a (i) five-year revolving credit facility in an aggregate principal amount up to $1.25 billion, and (ii) a five-year term loan A facility consisting of $250 million. The agreement contains certain customary affirmative and negative covenants, including a financial covenant in the form of a consolidated net leverage ratio and consolidated interest coverage ratio.

As of January 31, 2022, we had approximately $917.7 million of debt outstanding, net of unamortized issuance costs of $0.4 million, and approximately $559.5 million of unused borrowing capacity under our Amended and Restated RCA and other facilities. Our Amended and Restated RCA contains certain restrictive covenants related to our consolidated leverage ratio and interest coverage ratio, which we were in compliance with as of January 31, 2022.

### Analysis of Historical Cash Flows

The following table shows the changes in our Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended January 31, 2022 and 2021.

|  | Nine Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| Net cash provided by operating activities | **$158,484** | $154,826 |
| Net cash used in investing activities | **(152,051)** | (392,393) |
| Net cash provided by financing activities | **13,099** | 115,843 |
| Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash | **$(3,875)** | $10,631 |

Cash flow from operations is seasonally a use of cash in the first half of Wiley’s fiscal year principally due to the timing of collections for annual journal subscriptions, which typically occurs in the beginning of the second half of our fiscal year.

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 dividends, and fund share repurchases, and acquisitions. Below are the details of Free cash flow less product development spending.

### Free Cash Flow less Product Development Spending:

|  | Nine Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| **Net cash provided by operating activities** | **$158,484** | $154,826 |
| Less: Additions to technology, property and equipment | **(60,668)** | (58,176) |
| Less: Product development spending | **(20,388)** | (17,103) |
| **Free cash flow less product development spending** | **$77,428** | $79,547 |

### Net Cash Provided By Operating Activities

The following is a summary of the $3.7 million change in Net cash provided by operating activities for the nine months ended January 31, 2022 compared with the nine months ended January 31, 2021 (amounts in millions).

|  |  |
| --- | ---: |
| **Net cash provided by operating activities – Nine months ended January 31, 2021** | $154.8 |
| Net income adjusted for items to reconcile net income to net cash provided by operating activities, which would include such noncash items as, depreciation and amortization, and the change in deferred taxes | (1.6) |
| Working capital changes: |  |
| Income taxes receivable and payable | 32.1 |
| Accounts payable and accrued royalties | 26.7 |
| Accounts receivable, net and contract liabilities | (29.2) |
| Changes in other assets and liabilities | (24.3) |
| **Net cash provided by operating activities – Nine months ended January 31, 2022** | **$158.5** |

The change in income taxes was due to a $20.7 million receivable we recorded in the nine months ended January 31, 2021 in connection with the impact of the CARES Act, see Note 13, “Income taxes” which was received in February 2021 and, to a lesser extent, lower international tax payments in prior years, and timing in the nine months ended January 31, 2022.

The favorable change in accounts payable and accrued royalties was due to the timing of payments.

The unfavorable change in accounts receivable, net and contract liabilities was primarily the timing of billings and collections with customers, partially offset by sales growth.

The unfavorable changes in other assets and liabilities noted in the table above was primarily due to an increase in employee related costs, including payments due to higher annual incentive compensation payments in fiscal year 2022, partially offset by a decrease in restructuring payments, and the timing of prepayments.

Our negative working capital (current assets less current liabilities) was $329.9 million and $462.7 million as of January 31, 2022 and April 30, 2021, respectively. This $132.8 million change in negative working capital was primarily due to the seasonality of our business. The primary driver of the negative working capital is the benefit realized from unearned contract liabilities related to subscriptions for which cash has been collected in advance. The contract liabilities will be recognized as income when the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of January 31, 2022 and as of April 30, 2021 includes $355.8 million and $545.4 million, respectively, primarily related to deferred subscription revenue for which cash was collected in advance.

Cash collected in advance for subscriptions is used by us for a number of purposes including funding: operations, capital expenditures, acquisitions, debt repayments, dividend payments, and share repurchases. Many of our customers have been adversely impacted by COVID-19, and we expect some continued delays in payments due to widespread disruption and pervasive cash conservation behaviors in the face of uncertainty. We have recorded provisions for bad debt where appropriate.

### Net Cash Used In Investing Activities

Net cash used in investing activities for the nine months ended January 31, 2022 was $152.1 million compared to $392.4 million in the prior year. The decrease in cash used in investing activities was due to a decrease of $228.0 million in cash used to acquire businesses. See Note 3, “Acquisitions” for more information related to the acquisitions that occurred in the nine months ended January 31, 2022 and 2021. Additionally, cash outflows for the acquisitions of publication rights and other activities decreased $14.8 million.

### Net Cash Provided By Financing Activities

Net cash provided by financing activities was $13.1 million for the nine months ended January 31, 2022 compared to $115.8 million for the nine months ended January 31, 2021. This decrease in cash provided by financing activities was primarily due to a decrease in net borrowings of long-term debt of $68.8 million, partially offset by an increase of $17.8 million in cash used for purchases of treasury shares, and $11.9 million change from book overdrafts.

### Dividends and Share Repurchases

In June 2021, Wiley increased its quarterly dividend to shareholders to $1.38 per share annualized versus $1.37 per share annualized.

The following table summarizes the shares repurchased of Class A and Class B Common Stock for the nine months ended January 31, 2022 and 2021 (shares in thousands):

|  | Nine Months Ended January 31, 2022 | 2021 |
| --- | ---: | ---: |
| Shares repurchased – Class A | **446** | 146 |
| Shares repurchased – Class B | **2** | 1 |
| Average price – Class A and Class B | **$55.48** | $48.09 |

## Market risk

As filed, 5,984 characters.

We are exposed to market risk primarily related to interest rates, foreign exchange, and credit risk. It is our policy to monitor these exposures and to use derivative financial investments and/or insurance contracts from time to time to reduce fluctuations in earnings and cash flows when it is deemed appropriate to do so. We do not use derivative financial instruments for trading or speculative purposes.

### Interest Rates

From time to time, we may use interest rate swaps, collars, or options to manage our exposure to fluctuations in interest rates. It is management’s intention that the notional amount of interest rate swaps be less than the variable rate loans outstanding during the life of the derivatives.

The information set forth in Note 16, "Derivatives Instruments and Hedging Activities," of the Notes to Unaudited Condensed Consolidated Financial Statements under the caption "Interest Rate Contracts," is incorporated herein by reference.

On an annual basis, a hypothetical one percent change in interest rates for the $518.1 million of unhedged variable rate debt as of January 31, 2022 would affect net income and cash flow by approximately $4.1 million.

### Foreign Exchange Rates

Fluctuations in the currencies of countries where we operate outside the US may have a significant impact on financial results. We are primarily exposed to movements in British pound sterling, euros, Canadian and Australian dollars, and certain currencies in Asia. The statements of financial position of non-US business units are translated into US dollars using period-end exchange rates for assets and liabilities and the statements of income are translated into US dollars using weighted-average exchange rates for revenues and expenses.

Our significant investments in non-US businesses are exposed to foreign currency risk. Adjustments resulting from translating assets and liabilities are reported as a separate component of Accumulated other comprehensive loss, net of tax within Shareholders’ Equity under the caption Foreign currency translation adjustment. During the three and nine months ended January 31, 2022, we recorded foreign currency translation losses in Accumulated other comprehensive loss, net of tax of approximately $15.9 million and $31.3 million, respectively, primarily as a result of the fluctuations of the US dollar relative to the euro and the British pound sterling. During the three and nine months ended January 31, 2021, we recorded foreign currency translation gains in Accumulated other comprehensive income, net of tax of approximately $48.3 million and $83.5 million, respectively, primarily as a result of the fluctuations of the US dollar relative to the British pound sterling, and to a lesser extent the euro.

Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses on the Unaudited Condensed Consolidated Statements of Net Income as incurred. Under certain circumstances, we may enter into derivative financial instruments in the form of foreign currency forward contracts to hedge against specific transactions, including intercompany purchases and loans.

The information set forth in Note 16, "Derivatives Instruments and Hedging Activities," of the Notes to Unaudited Condensed Consolidated Financial Statements under the caption "Foreign Currency Contracts," is incorporated herein by reference.

### Sales Return Reserves

The estimated allowance for print book sales returns is based upon historical return patterns, as well as current market trends in the businesses in which we operate, including the impact of COVID-19. In connection with the estimated sales return reserves, we also include a related increase to inventory and a reduction to accrued royalties as a result of the expected returns.

The reserves are reflected in the following accounts of our Unaudited Condensed Consolidated Statements of Financial Position:

|  | January 31, 2022 | April 30, 2021 |
| --- | ---: | ---: |
| Increase in Inventories, net | **$10,243** | $10,886 |
| Decrease in Accrued royalties | **$(4,971)** | $(4,949) |
| Increase in Contract liabilities | **$39,427** | $38,034 |
| Print book sales return reserve net liability balance | **$(24,213)** | $(22,199) |

50

A one percent change in the estimated sales return rate could affect net income by approximately $1.4 million. A change in the pattern or trends in returns could affect the estimated allowance.

### Customer Credit Risk

In the journal publishing business, subscriptions are primarily sourced through journal subscription agents who, acting as agents for library customers, facilitate ordering by consolidating the subscription orders/billings of each subscriber with various publishers. Cash is generally collected in advance from subscribers by the subscription agents and is principally remitted to us between the months of December and April. Although currently we have minimal credit risk exposure to these agents, future calendar-year subscription receipts from these agents are highly dependent on their financial condition and liquidity. Subscription agents account for approximately 20% of total annual consolidated revenue, and no one affiliated group of subscription agents accounts for more than 10% of total annual consolidated revenue.

Our book business is not dependent upon a single customer; however, the industry is concentrated in national, regional, and online bookstore chains. No single book customer accounts for more than 8% of total consolidated revenue and more than 17% of accounts receivable at January 31, 2022. The top 10 book customers account for approximately 13% of total consolidated revenue and approximately 28% of accounts receivable at January 31, 2022.

Many of our customers have been adversely impacted by COVID-19, and we expect some continued delays in payments due to widespread disruption and pervasive cash conservation behaviors in the face of uncertainty.

## Controls and procedures

As filed, 2,607 characters.

The Company's Chief Executive Officer and Chief Financial Officer, together with the Chief Accounting Officer and other members of the Company's management, have conducted an evaluation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

*Changes in Internal Control over Financial Reporting:* During the three months ended January 31, 2022, we closed on the acquisition of XYZ Media Inc. (XYZ Media). We excluded XYZ Media from the scope of management’s report on internal control over financial reporting for the nine months ended January 31, 2022. We are in the process of integrating XYZ Media to our overall internal control over financial reporting and will include them in scope for the year ending April 30, 2022. This process may result in additions or changes to our internal control over financial reporting.

We continue to implement additional functionality and enhancements to our previously disclosed global ERP implementation. As with any new information system we implement, this application, along with the internal controls over financial reporting included in this process, will require testing for effectiveness. In connection with this ERP implementation, we are updating our internal controls over financial reporting, as necessary, to accommodate modifications to our business processes and accounting procedures. We do not believe that the ERP implementation will have an adverse effect on our internal control over financial reporting.

Except as described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the quarter ended January 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 294 characters.

See Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended April 30, 2021. Except as required by the federal securities law, we undertake no obligation to update or revise any risk factor, whether as a result of new information, future events or otherwise.

Filed Mar 9, 2022.
Source: SEC EDGAR, the filing index for accession 0000107140-22-000007. Last ingested by Listed: Nov 10, 2026, 22:22 ET. No prices; not investment advice.