Saturday, July 28, 2012

MediaWeek (V5, N31) Financial Results: Informa, WoltersKluwer, Pearson, Reed Elsevier, Cengage, McGraw-Hill

Informa post half year results (Press Release)

  • Resilient profit performance – adjusted operating profit growth of 0.6% to £160.1m; 0.3% on an organic basis
  • Improved margin – adjusted operating margin 25.8% (H1 2011: 25.1%)
  • Strong cash flow – cash conversion rate increased to 76% (H1 2011: 56%)
  • Revenue decline of 2.4% (organic decline of 1.2%) – proactive reduction in marginal product.
  • Statutory loss before tax of £27.4m (H1 2011: £66.5m profit) – reflecting impairment charge of £80.0m and losses on disposal of £24.4m relating to European Conference businesses. 
  • Earnings increased – adjusted diluted earnings per share growth of 3.4% to 18.3p (H1 2011: 17.7p)
  • Dividend increased – interim dividend increased to 6.0p (H1 2011: 5.0p)
  • Net debt/EBITDA ratio of 2.3 times (H1 2011: 2.5 times)
Operational
  • Academic division continues to trade well – organic revenue growth of 3.7%
  • Total cost savings delivered at PCI of £12m
  • 9 new large events run in H1
  • Forward bookings on leading events remains strong
  • Restructure of conference portfolio to reflect prevailing market conditions in Europe
  • 20% of revenue from emerging markets (H1 2011: 19%)
  • Acquisition of market leading exhibition and conference business in Canada

Wolters Kluwer reports half year results (Press Release)

  • Full-year 2012 guidance confirmed. 
  • Revenues up 3% in constant currencies and up 1% organically.
    • Deterioration in Europe offset by improved organic growth in North America.
    • Recurring revenues up 2% organically (76% of total revenues).
    • Online, software and services revenues up 4% organically (75% of total revenues).
    • Health and Financial & Compliance Services grew organically 5% and 6%, respectively.
  • Ordinary EBITA €346 million; Ordinary EBITA margin of 19.9%. 
  • Leverage ratio net-debt-to-EBITDA improves to 2.9x (2011 year-end: 3.1x).
    • Expect to approach target of 2.5x by year-end.
  • Healthcare Analytics disposal completed in May as part of pharma divestiture program.
  • €100 million share buy-back completed on July 9; program will be expanded by up to €35 million under new policy to offset dilution from stock dividend and performance shares.

Pearson report half year results (Press Release):

Sales up 6% to £2.6bn*

  • Strong growth in Education (up 9%) and the FT Group (up 7%).
  • Penguin sales 4% lower on phasing of publishing schedule and continued industry change.

First-half operating profit lower, as expected, at £188m (2011: £208m)

  • Education profits up 6% on growth in North America (up 30%) and International (up 17%).
  • Professional profits £17m lower. New funding criteria for 16-18 year old apprenticeships result in sharp decline in volumes; UK training business reshaped.
  • Sale of FTSE International reduces first-half operating profit by £10m; excluding FTSE, FT Group profits level in spite of increased restructuring charge.
  • Penguin profits lower at £22m (H1 2011: £42m) on drop-through from lower first-half sales; stronger publishing schedule in H2.

Rapid growth in digital and services businesses and developing markets

  • Sales up approximately 20% in developing markets (headline growth)
  • Education digital platform registrations up 30%; FT digital subscriptions up 31% and now exceed print circulation; Penguin ebook revenues up 33% and now almost 20% of Penguin’s revenues.
  • Revenues from digital and services to exceed traditional publishing businesses in 2012.

Full year outlook reiterated

  • At this early stage, Pearson sees good trading momentum in North America, International and the FT Group offsetting weakness in Professional Education and Penguin.
  • Pearson reiterates full year outlook of growth in sales and operating profits at constant exchange rates, with margins reflecting acquisition integration costs and the FTSE sale. 

Reed Elsevier report half year results (Press Release):

Financial highlights
  • Underlying revenue growth +5% (+3% excluding biennial exhibition cycling)
  • Underlying adjusted operating profit growth +7%; overall growth +8% at constant currencies
  • Adjusted EPS +11% to 24.7p for Reed Elsevier PLC; +18% to €0.47 for Reed Elsevier NV
  • Reported EPS growth +52% to 24.0p for Reed Elsevier PLC; +57% to €0.47 for Reed Elsevier NV
  • Interim dividend growth +6% to 6.00p for Reed Elsevier PLC; +18% to €0.130 for Reed Elsevier NV
  • Net debt of £3.3bn; 2.3 times adjusted 12 month trailing EBITDA (pensions and lease adjusted)
Operational highlights
  • Underlying revenue and operating profit growth in all five business areas
  • Growth driven by usage volume, new product development and expansion in high growth markets
  • Further improvement in format mix; good growth in online and face to face
  • Profitability gains driven by on-going process efficiencies
  • Continued portfolio development improving revenue growth and profitability profile 
Selective divestitures
  • Process accelerated in H1. Disposals of Totaljobs, MarketCast, and other small publishing and services assets completed. Planned disposals of Variety and RBI Australia announced. We expect completed and planned disposals to be mildly dilutive to EPS in the short term. However, we intend to use gross divestment proceeds to buy back shares this year, mitigating this impact. In H1 gross cash proceeds from disposals were £158m/€193m.

Cengage presents full year estimates (Press Release):

  • Revenue for the fourth quarter of fiscal 2012 is estimated to be between $499 million and $505 million as compared to $473 million for the same period in the prior year. Excluding National Geographic School Publishing (“NGSP”), acquired on August 1, 2011, revenue for the fourth quarter of fiscal 2012 is estimated to be between $482 million and $488 million, driven primarily by growth in Domestic Learning.
  • Adjusted EBITDA for the fourth quarter of fiscal 2012 is estimated to be between $187 million and $193million. NGSP’s contribution to Adjusted EBITDA during the fourth quarter is estimated to be between $2million and $3 million. The prior year fourth quarter Adjusted EBITDA of $202 million included a minimal expense for domestic incentive compensation. On a comparable basis to include this year’s fourth quarter domestic incentive expense, Adjusted EBITDA for the fourth quarter of the prior year would have been approximately $185 million.
  • Revenue for the full year ended June 30, 2012 is estimated to be between $1,985 million and $1,991 million as compared to $1,876 million in the prior year. Excluding NGSP, revenue for the full year ended June 30, 2012 is estimated to be between $1,910 million and $1,915 million.
  • Adjusted EBITDA for the full year ended June 30, 2012 is estimated to be between $781 million and $787million. NGSP’s contribution to Adjusted EBITDA during the fiscal year is estimated to be between $12million and $15 million. Similar to the fourth quarter, the prior year Adjusted EBITDA of $780 million included a minimal expense for domestic incentive compensation. On a comparable basis to include this fiscal year’s domestic incentive expense, Adjusted EBITDA for fiscal 2011 would have been approximately $737 million.
  • For the last twelve months ended June 30, 2012, Bank EBITDA is estimated to be between $817 million and $823 million.
  • Full year investor call August 8th (Link)

McGraw-Hill reports second quarter results (Press Release):

  • Key management for McGraw-Hill Education is now in place, including Lloyd G. "Buzz" Waterhouse as president and chief executive officer and Patrick Milano as chief financial officer and chief administrative officer.
  • The Form 10 SEC registration statement was filed on July 11, 2012.
  • Cost reductions are accelerating towards the goal to achieve at least $100 million in cost savings, on a run-rate basis, by year-end.
  • Key workstreams are well underway to drive the separation of numerous finance & accounting, human resource, information technology, and other support services.
  • The S&P Dow Jones Indices, the world's largest provider of financial market indices, was launched on June 29, 2012.
Education
  • Revenue for the segment declined 12% to $474 million while operating profit improved by 36% to $57 million in the second quarter, compared to the same period last year. The improvement in operating income was primarily the result of restructuring actions and ongoing tight expense management.
  • Higher Education, Professional and International Group (HPI): Revenue decreased 2% to $241 million in the second quarter compared to the same period last year. Higher Education revenue growth was offset by declines in International revenue, predominately related to the strong U.S. dollar. Higher Education's digital and customized products are being well received in the marketplace. In particular, sales of homework management product Connect, which is sold with LearnSmart, an adaptive learning system, grew by 65%. LearnSmart, designed to help college students learn faster, study more efficiently, and retain more knowledge, is available for approximately 150 different college course titles. 
  • School Education Group (SEG): McGraw-Hill Professional continues to lead the transition to digital materials with 34% of revenue in the quarter derived from digital products and services. Of particular note was the 33% growth of digital subscription platforms, which include AccessMedicine, a product suite of subscription-based Websites that feature regularly updated medical content and access to more than 65 medical titles.Revenue decreased 20% to $233 million for the quarter. The elementary-high school market continues to be impacted by the economic issues facing the states and local school districts. In addition, the state new adoption schedule for 2012 offers the lowest revenue potential for publishers in many years. As a result, the School Education Group anticipates an overall reduction of 10% in the K–12 market this year, which represents the lowest spending level in over a decade. Despite the difficult environment, SEG continues to provide innovative products including new testing materials and programs in reading and mathematics that meet the new Common Core standards. All of its major new programs include digital components, and increasingly many products are wholly digital.

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