John Wiley Shares Up on Robust Q4 Earnings - Analyst Blog
John Wiley & Sons Inc.
) gained nearly 6% on the index yesterday following
better-than-expected fourth quarter fiscal 2014 results. The
company's adjusted earnings per share came in at 77 cents, much
ahead of the Zacks Consensus Estimate of 69 cents per share while
rising 8% (or up 4% on constant currency basis) year over
year. Including one time items, earnings per share came in at
60 cents, rising substantially year over year.
For fiscal 2014, adjusted earnings came in at $3.05 per share, increasing 4% (also up 4% on constant currency basis) and outpacing the Zacks Consensus Estimate of $2.97 per share. Including one time items, earnings were $2.70 per share, increasing 13% (or 12% on constant currency basis) year over year.
Revenues grew 3% (or 1% on constant currency basis) year over year to $457 million and surpassed the Zacks Consensus Estimate of $445 million. Growth at Education and Research segments was partly run down by declining revenues at the Professional Development segment. For the fiscal, revenues were $1,775 million rising 1% both on constant currency as well as excluding foreign exchange translations.
Adjusted operating profit came in at $62.9 million, up 3% year over year, whereas operating margin expanded 40 basis points to 13.8%.
Research: The division reported revenues of $296.8 million, up 5% year over year. The growth was driven by increase in journal subscription and digital books partly offset by decline in print book revenue and other revenue (that includes corporate reprints, rights income, and advertising). The segment's contribution to profit came in at $140.5 million, up 3% year over year. After allocating shared services and administrative expenses, the division contributed $104.8 million to profit, up 3% year over year.
Education: Revenues for the division grew 7% year over year to $67.2 million. The increase in online program management, digital books and WileyPLUS was partly run down by a decline in print textbooks revenue. Direct contribution to profit came in at $5.8 million, up 8%, whereas the division reported loss of $8.6 million after allocating shared services and administrative expenses.
Professional Development: Quarterly revenues fell 7% to $93.0 million mainly due to declining revenues from print textbooks as well as digital books. Growth in the online and training assessment was not enough to mitigate the negatives. The division contributed nearly $29.0 million to overall profits whereas contribution to profit after allocating shared services and administrative expenses was $9.5 million.
Other Financial Details
The company which competes with Reed Elsevier NV ( ENL ) and Scholastic Corporation ( SCHL ) reported cash and cash equivalents of $486.4 million, inventories of $75.5 million and long-term debt of $700.1 million.
The company generated free cash flow of $250 million and bought back 1.25 million shares for $63.4 million in the year. As of Apr 30, 2014 the company had 3.3 million shares left in the repurchase program that was announced in Jun 2013.
Moreover, the company announced that it was on track to achieve the $80 million in annualized savings commencing from 2015 as announced under the restructuring plan in Jan 2013. The company has incurred over $67.2 million in restructuring expenses ever since the announcement of the program.
Moreover, John Wiley completed the acquisition of Profiles International for $51 million in the quarter while CrossKnowledge was bought for $175 million in the ongoing quarter.
Fiscal 2015 Outlook
John Wiley is looking at a mid-single-digit revenue growth for the fiscal and expects earnings to be in the range of $3.25 -$3.35. The expected earnings are inclusive of a 10 cents dilutive impact from the recent acquisitions. The Zacks Consensus Estimate stands at $3.30 per share.
Currently, John Wiley carries a Zacks Rank #3 (Hold). A better ranked publishing stock worth consideration includes The E. W. Scripps Company ( SSP ), which sports a Zacks Rank #1 (Strong Buy).
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