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John Wiley & Sons (JW.A) Down 1.4% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for John Wiley & Sons (JW.A). Shares have lost about 1.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is John Wiley & Sons due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

John Wiley Posts Earnings & Sales Beat in Q4

John Wiley posted earnings and sales beat in fourth-quarter fiscal 2020. However, the top and bottom lines declined year over year. Further, management did not provide an outlook for fiscal 2021, as it is unable to confidently forecast the extent or duration of COVID-19 impacts on its results.

Moreover, the isolation measures with respect to the pandemic continue to hurt the company’s Research and Education businesses, including uncertainties in student enrollments, university budgets and corporate expenditure. Meanwhile, the company’s CEO and Executive Leadership Team (ELT) have agreed to take six-month base pay cuts of 30% and 15%, respectively. Also, the board of directors will slash the cash-based part of their annual retainers by similar amounts for the aforesaid period.

Q4 in Detail

John Wiley’s adjusted earnings of 66 cents per share surpassed the Zacks Consensus Estimate of 44 cents but plunged 37.1% year over year. Also, at constant currency (cc), the metric decreased 44%.

Revenues of $474.6 million fell 3.4% year over year (down 2% at cc) but outpaced the Zacks Consensus Estimate of $454 million. Excluding acquisitions and currency impact, the metric dropped 6%. Decline in revenues at the Research Publishing & Platforms and Academic & Professional Learning divisions resulted in a year-over-year revenue decrease. This was somewhat offset by growth at the Education Services segment.

Further, the company reported adjusted operating income of $46.2 million that decreased 42% year over year. Also, adjusted EBITDA fell 23% to $92.8 million.

Segmental Details

The Research Publishing & Platforms segment consists of Research Publishing and Research Platforms businesses. In the fiscal fourth quarter, revenues fell 3% year over year (1% at cc) to $251.2 million on delays in renewing subscription agreements due to COVID-19 shutdowns, partly offset by growth in open access. Research Publishing dipped 3% while Research Platforms increased 19%. The segment’s adjusted contribution to profit declined 4% to $79.2 million.

The Academic & Professional Learning segment includes the Education Publishing and Professional Learning businesses. Revenues in the segment declined 17% on a reported basis and 16% at cc to $149.9 million due to adverse COVID-19 impacts on print books, test prep and corporate training. Adjusted contribution to profit tumbled 73% to $10.7 million in the quarter under review.

The Education Services segment revenues increased 41% on a reported basis and 42% at cc to $73.5 million. The upside was backed by gains from the mthree buyout. Also, the segment’s adjusted contribution to profit increased significantly to $4.3 million.

Other Financial Update

John Wiley ended the quarter with cash and cash equivalents of $202.5 million, long-term debt of $765.7 million and total shareholders’ equity of $933.6 million.

The company generated $288.4 million of cash from operating activities in fiscal 2020. Further, it provided free cash flow (net of Product Development Spending) of nearly $173.2 million at the end of the fiscal year.

During the fiscal fourth quarter, John Wiley bought back 325,000 shares for $12 million and paid out cash dividends of $19 million. In March, the company’s board approved a new $200-million share buyback authorization. However, management has temporarily suspended share repurchases due to COVID-19.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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John Wiley Sons, Inc. (JW.A): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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