Thursday, May 31, 2012

Pearson Buys Global English + McGraw-Hill, Cengage, Wiley Education News

Getting to be a recurring story: Pearson buys a language learning company this time Global English located in California.  Pearson paid $90 million.  From the press release:
Founded in 1997 in California, GlobalEnglish is a leading provider of cloud-based, on-demand Business English learning, assessment and performance support software. It serves more than 450 corporate customers, including 20 per cent of the Forbes Global 2000 companies, including General Electric, HSBC, Tata Consultancy Services and Unilever. Its product suite is uniquely suited to serve the needs of global professionals with a comprehensive offering - formal Business English learning coursework, informal and social learning capabilities, performance support tools, an enterprise collaboration platform, a mobile app, assessments and a premium one-on-one coaching service. GlobalEnglish’s Business English content is also entirely focused on the application of Business English to real life business situations such as composing emails and participating in conference calls, and its efficacy is highly rated by global companies and their employees. Approximately 75 per cent of GlobalEnglish’s more than 200,000 active subscribers are in fast growing economies in Latin America and Asia
McGraw Hill announced some executive changes in advance of their Education spin-off (Press Release):
To continue the process of building a world-class team to lead the new education company, the Corporation is appointing Patrick Milano, currently Executive Vice President and Director of the Program Management Office of the Corporation's Growth and Value Plan, to the new position of Chief Financial Officer and Chief Administrative Officer of McGraw-Hill Education.  Mr. Milano, a multi-year veteran of McGraw-Hill, including in the education segment, has successfully led the separation phase of the Growth and Value Plan since last year.  In this new role, he will be responsible for Finance, Manufacturing, Distribution and IT, reporting to Jack Callahan, Chief Financial Officer of The McGraw-Hill Companies, until the new Chief Executive Officer of McGraw-Hill Education is appointed.  Joe Micallef, currently Senior Vice President, Finance and Operations, will work closely with Mr. Milano on standing up McGraw-Hill Education before retiring following a very successful career at the company.  (More)
Cengage announced their Q3 results last month (Press Release)
Revenue for the third quarter 2012 is estimated to be between $335 million and $340 million as compared to $319 million for the same period in the prior year. Excluding National Geographic School Publishing (“NGSP”), acquired on August 1, 2011, revenue for the third quarter 2012 is estimated to be between $325 million and $330 million driven by growth in the higher education market. Domestic Learning revenue, excluding NGSP, is estimated to be $205 million to $210 million, as compared to $194 million for the same period in the prior year.
Adjusted EBITDA for the third quarter 2012 is estimated to be between $67 million and $72 million. The prior year third quarter Adjusted EBITDA of $89.7 million did not include an accrual for incentive compensation, but did include a credit related to a reversal of an accrual for incentive compensation accrued during the first half of fiscal 2011. On a comparable basis to this year‟s third quarter, Adjusted EBITDA for the third quarter of the prior year would have been $65 million.
Excluding NGSP, Adjusted EBITDA for the third quarter 2012 is estimated to be between $70 million and $75 million. Adjusted EBITDA for NGSP is negative for the quarter primarily due to seasonality as well as one-time costs related to achieving synergies from the integration of NGSP into Cengage Learning.
Here is the full 3Q report

In their investor presentation Cengage also provided this update to their debt refinancing effort:
We completed the previously announced amendment and extension of our Credit Agreement whereby we:
  • Extended the maturity of $1.3 billion of our existing Term Loan, net of a partial pay down, to July 2017
  • Provided for new commitments to maintain the existing $300 million of revolving credit facility availability until April 2017 resulting in a total extended and non-extended revolving credit facility of up to $525 million until July 2013, $300 million thereafter. We also completed our previously announced private placement of $725 million senior secured notes due in April 2020. These notes bear interest at a coupon rate of 11.5% and were issued at par. We used a portion of the proceeds from these notes to pay down $489 million of the extended term loan.
Anyone interested in how the education business is doing will be disappointed in the deck.

In case you missed it Harcourt's "Official Statement" on their bankruptcy (Press Release):
Today, Houghton Mifflin Harcourt filed a “pre-packaged” comprehensive financial restructuring plan that will strengthen the Company financially so we can continue to invest in our business and ensure we are well positioned for the future. This plan, which is supported by the vast majority of our key financial stakeholders, will eliminate $3.1 billion of debt through a debt to equity transaction, and reduce our annual cash interest costs. The Company today lodged voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York. With a more appropriate capital structure to support our strategic plan and business objectives, we will have greater financial flexibility to pursue growth opportunities.
John Wiley released their 3Q results earlier in the month (Press Release):
John Wiley and Sons, Inc. (NYSE: JWA and JWB), a global provider of content and workflow solutions in areas of scientific, technical, medical, and scholarly research; professional and personal development; and education today announced results for the third quarter of fiscal year 2012:
  • Revenue growth of 1% including and excluding foreign exchange (or "FX")
  • Revenue by segment, including FX:  STMS +3%, P/T -6% and Education +2%
  • Adjusted EPS grew 8% to $0.91, or 6% excluding FX.  Growth was driven by top-line results, prudent expense management and lower interest expense and income taxes.
  • Shared Services and Administrative Costs excluding FX, were up 3% to $91 million, driven principally by technology spending to support investments in digital products and infrastructure.   
  • Outlook:  Reaffirming FY12 revenue guidance of low single-digit growth excluding FX and EPS guidance in a range from $3.15 to $3.20 including the effect of FX and excluding the unusual tax benefits.  
  • Acquisition:  In February, Wiley acquired Inscape Holdings, a leading global provider of workplace learning solutions, for $85 million in cash. Inscape will be integrated into Wiley's Professional/Trade business where it will combine Wiley's extensive reservoir of valuable content and its global reach in leadership and training with Inscape's technology, distribution network, and talent expertise, including the innovative EPIC online assessment-delivery platform and an elite network of nearly 1,700 independent consultants, trainers, and coaches. Annually, Inscape generates approximately $20 million in revenue.
  • Divestment:  On March 7, 2012, Wiley announced that it intends to explore opportunities to sell a number of its consumer print and digital publishing assets in its Professional/Trade business as they no longer align with the company's long-term business strategy.  Fiscal Year 2011 revenue associated with the assets to be sold was approximately $85 million with a direct contribution to profit, before shared-service expenses, of approximately $6 million.  Assets include travel (including the well-known Frommer's brand), culinary, general interest, nautical, pets, crafts, Webster's New World, and CliffsNotes.  Wiley will re-deploy resources in its Professional/Trade business to build on its global market-leading positions in business, finance, accounting, leadership, technology, architecture, psychology, education, and through the For Dummies brand. 
  • Share Repurchases: Wiley repurchased 520,000 shares this quarter at a cost of $23 million.  The Company has 2.9 million authorized shares remaining in its program.

No comments: