John Wiley & Sons, Inc. Reports First Quarter Results
John Wiley & Sons, Inc. (NYSE:JWa) (NYSE:JWb) announced today that first quarter revenue of $226.9 million increased 3% from $219.7 million in the previous year's first quarter. Excluding foreign currency effects, revenue increased 2%. Net income of $19.9 million declined from $21.8 million in the prior year. Earnings per diluted share was $0.32 compared to $0.35 in the prior year.
"Overall, Wiley's first quarter results are consistent with our expectations. Our Scientific, Technical, and Medical business reported healthy year-on-year growth, with journals and books contributing to these results. As expected, our Professional/Trade business was flat with last year's strong first quarter. Solid Fall, Winter and Spring frontlists will drive year-on-year growth during the balance of fiscal year 2005. The only disappointment was in our Higher Education business, where revenue was below expectations," said William J. Pesce, President & Chief Executive Officer.
Mr. Pesce concluded, "Based on first quarter results, leading indicators and market conditions, we continue to anticipate revenue and earnings growth in the mid-to-high single digits in fiscal year 2005."
Wiley's U.S. P/T revenue for the first quarter was essentially flat with prior year and in line with our expectations. The architecture, professional culinary, psychology and education book programs performed well. Subscription journals and online advertising also contributed positively to the first quarter results. Sales in the consumer cooking and business categories lagged behind last year's first quarter.
Several P/T titles received considerable attention from the media and our customers, including Maccioni & Wright/Sirio: The Story of My Life and Le Cirque; Edwards/Edward R. Murrow and the Birth of Broadcast Journalism; and Pescatore/The Hamptons Diet. The Edwards' book was on the New York Times-Expanded Best Seller list for nine weeks. Other titles that were on national and regional bestseller lists include Lencioni/Five Dysfunctions of a Team; Lencioni/Death by Meeting; Allen/Multiple Streams of Income; and Mauldin/Bull's Eye Investing.
First quarter highlights for the business program include the publication of Flying High: How JetBlue Founder and CEO David Neeleman Beat the Competition in the World's Most Turbulent Industry. Ross & Segal/Breakthrough Thinking for Nonprofit Organizations was selected as this year's winner of the Terry McAdam Book Award, a prestigious honor from the Alliance for Nonprofit Management, The Chronicle of Philanthropy, and the New York Community Trust. Four P/T journals were recognized for outstanding quality: Leader to Leader, the National Civic Review, and Natural Gas and Electricity each received a 2004 Apex Award of Excellence from Communications Concepts, while Human Resources Management received a 2004 Golden Page Award for general readability.
P/T's architecture/engineering and professional culinary/hospitality programs had a strong quarter. A bulk sale of a customized edition of our Guide to New York City Landmarks was made during the quarter. The guide will be distributed to every delegate and guest attending the Republican National Convention in New York. Piotrowski/Becoming an Interior Designer was named by the American Society of Interior Designers as this year's Polsky Prize winner. A multi-year contract to provide course plans and textbooks and develop curricula in hospitality management was signed with Axia College, a University of Phoenix sister school. This was a collaborative effort between Wiley's P/T and Higher Education businesses.
Throughout July, Wiley participated in a successful co-promotion with Travelocity. Ads for the campaign appeared in USA Today and The Wall Street Journal, among other publications and online sites. An agreement with MTV was signed during the quarter to publish an eight volume series of travel guides targeted to students and co-branded as MTV and Frommer's.
Guitar For Dummies, Forensics For Dummies, and nine pet-related titles were top performers in the quarter. Two video/DVDs that were produced with Razor & Tie, Golf For Dummies and Poker For Dummies, were released successfully and benefited from a television advertising campaign. PCs Para Dummies, 8th edition, received an award as the "Best Business Book for 2003" from the Latino Book and Family Festival.
Scientific, Technical, and Medical (STM)
Wiley's U.S. STM business started the year on a strong note, with revenue in the first quarter up 11% over prior year. Journal revenue increased 12%, with new society journals contributing significantly to the year-on-year growth. The STM book program performed well, as reflected in a 9% revenue increase over prior year.
In addition to healthy license renewals, several new Enhanced Access Licenses to Wiley InterScience were signed by academic and corporate customers around the world. Customers continue to take advantage of Wiley InterScience's wide range of access options. During the quarter, the number of visits to Wiley InterScience increased by approximately 40% over prior year.
STM launched a number of major reference works in Wiley InterScience during the quarter, including the Encyclopedia of Statistical Sciences, Handbook of Plant Biotechnology, and Handbook of Statistical Genetics, Genomics, and Proteomics. In addition, journals were added to the Company's Biotechnology Backfile collection. Wiley and the American College of Rheumatology signed a long-term contract extension for the journal publications Arthritis and Rheumatism and Arthritis Care and Research.
The global STM book program performed very well during the first quarter. Product output was excellent; manuscript transmittals have been strong; global market conditions were relatively favorable; and online sales channels have fueled growth. Key titles that are contributing to these results include VanBelle/Biostatistics: A Methodology for the Health Sciences, second edition; Freeman/Telecommunications Systems Engineering, fourth edition; Proctor and Hughes/Chemical Hazards of the Workplace, fifth edition; Witcoff/Industrial Organic Chemicals, second edition; Grob/Modern Practice of Gas Chromatography, fourth edition; Basagni/Mobile Ad Hoc Networking; and Hancock/Dictionary of Bioinformatics and Computational Biology. Further, the publication of new volumes of major continuation titles, such as the Kirk-Othmer Encyclopedia of Chemical Technology and the Encyclopedia of Statistical Sciences, bolstered sales.
Revenue of Wiley's U.S. Higher Education business declined 5% during the first quarter. Some delayed ordering and tighter inventory management by college bookstores, as well as increases in used book sales and the sharing of textbooks by students appear to have contributed to these results.
Strong performances were recorded by titles such as Tortora/Anatomy and Physiology, tenth edition; Kieso/Intermediate Accounting, eleventh edition; Cutnell/Physics, sixth edition; deBlij/Regions; and Solomons/Organic Chemistry, eleventh edition.
The Company's online product, eGrade Plus, was launched successfully for 30 new courses in the first quarter. eGrade Plus delivers integrated content that is organized around teaching and learning activities. Several pricing options are available to students. In addition to purchasing a textbook, the student receives online study guides and self-testing products, which provide immediate feedback to promote understanding of the subject and help the student succeed in the course. Professors who adopt eGrade Plus can customize the course content to fit their curriculum.
During the quarter, Wiley Higher Education and Rand McNally & Co. renewed and expanded an agreement for Wiley to be the exclusive distributor to the academic community of Rand McNally's Goode’s World Atlas, 21st Edition. Wiley is also publishing and distributing new regional and course editions of Goode's Atlas, as well as the Goode's World Atlas Map Workbook.
Wiley Europe's first quarter revenue was up 18% over prior year, or 12% excluding foreign currency effects. Journal revenue was up across all markets. Book sales increased, especially through online sales channels. Of particular note were the strong sales of indigenous products from both the U.K. and Germany, as well as of imported U.S. Professional/Trade titles.
Corporate and special sales of Prechter/Conquer the Crash, Hasslacher/Diabetes and the Kidney, Concise Encyclopedia of Computer Science, and a customized version of Wi-Fi For Dummies contributed to the quarter's strength. An agreement was signed with Lilly to sponsor a series of newsletters based on Practical Diabetes International.
Wiley Europe's general interest and consumer publishing program continues to generate publicity. First quarter highlights include the serialization in national newspapers and magazines for Morrison/My Life Among the Serial Killers; Pound/Inside the Olympics; and Pescatore/The Hamptons Diet. Interior Angles, a new series in interior design, was launched during the quarter, as part of a revamped U.K. architecture list. The first title, Fashion Retail, was well received by the market.
During the quarter, Wiley-VCH successfully launched the new journal, Plasma, Processes, and Polymers and published a number of new major reference works.
Asia, Australia, and Canada
Wiley's revenue in Asia, Australia, and Canada was flat during the first quarter, or off 2% excluding foreign currency effects. Encouraging growth throughout most of Asia was offset by sluggish results in Australia and Canada.
Key Wiley Asia publications for the quarter included Lexus: The Relentless Pursuit by Business Week auto-correspondent Chester Dawson, as well as Structured Credit Products and Fixed Income Markets, both by Moorad Choudhry. The gradual economic recovery in Japan, combined with the development of a local market partnership with a major online bookseller, had a positive effect on results in Asia.
Sales of Wiley's Higher Education products in Canada were below expectations. Nonetheless, the market response to eGrade Plus, including a Canadian adaptation for Weygandt/Accounting Principles, third edition, was positive. Wiley Canada's indigenous titles did well during the quarter, in particular, Pound/Inside the Olympics, which picked up interest outside of Canada.
Wiley Australia won Secondary Publisher of the Year for the fifth consecutive year at the seventh annual Awards for Excellence in Australian Educational Publishing. Recognizing overall excellence, the award was granted by a panel of judges that included booksellers, teachers, and publishers.
Wiley will hold a conference call today, Wednesday, September 1, 2004, at 10:30 a.m. (EDT) to discuss its financial results for the first quarter of fiscal year 2005. The call will include a brief management presentation followed by a question and answer session.
To participate in the conference call, please dial the following number approximately ten minutes prior to the scheduled starting time: (800) 478-6251
International callers may participate by dialing: (913) 981-5558
A replay of the call will be available from 1:30 p.m. (EDT) on Wednesday, September 1 through midnight (EDT) on Tuesday, September 7, by dialing (888) 203-1112 or (719) 457-0820 and entering Passcode 989492.
A live audio Webcast will be accessible at http://www.wiley.com/go/communications. A replay of the Webcast will be accessible for 14 days afterwards.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
This report contains certain forward-looking statements concerning the Company's operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and are subject to change based on many important factors. Such factors include, but are not limited to (i)the level of investment in new technologies and products; (ii)subscriber renewal rates for the Company's journals; (iii)the financial stability and liquidity of journal subscription agents; (iv)the consolidation of book wholesalers and retail accounts; (v)the market position and financial stability of key online retailers; (vi)the seasonal nature of the Company's educational business and the impact of the used book market; (vii)worldwide economic and political conditions; (viii)the Company's ability to protect its copyrights and other intellectual property worldwide and (ix)other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.
Founded in 1807, John Wiley & Sons, Inc., provides must-have content and services to customers worldwide. Its core businesses include scientific, technical, and medical journals, encyclopedias, books, and online products and services; professional and consumer books and subscription services; and educational materials for undergraduate and graduate students and lifelong learners. Wiley has publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia. The Company is listed on the New York Stock Exchange under the symbols JWa and JWb. Wiley's Internet site can be accessed at http://www.wiley.com.