Wolters Kluwer First-Quarter 2022 Trading Update
May 4, 2022 - Wolters Kluwer
(EURONEXT: WKL), a global leader in
professional information, software solutions, and services, today
released its scheduled
- Full-year 2022
- First-quarter revenues up 8%
in constant currencies and up 8% organically.
- Recurring revenues (81%) grew 8%
organically; non-recurring revenues rose 9% organically.
- Digital & services revenues
(93%) grew 9% organically; print revenues grew 4% organically.
- Expert solutions (56%) grew 10%
- First-quarter adjusted
operating profit margin increased, with
strong operational gearing
more than compensating for increased personnel
- First-quarter adjusted free
cash flow increased 6% in
constant currencies, despite
higher capital expenditure and tax payments in the
- Net debt-to-EBITDA 1.2x as
of March 31, 2022.
- 2022 share buyback: €216
million of intended buyback of up to €600 million completed in
the year through May
Nancy McKinstry, CEO and Chair of the Executive
Board, commented: “The year has started
well, with improved organic growth across all four divisions, even
if we exclude favorable timing and phasing effects that influenced
the first quarter. We continued to invest in our people and
products as we pursue opportunities to grow our expert solutions.
While we face more challenging revenue comparables in the remainder
of the year, we are confident in reaffirming our overall guidance
First Quarter 2022
First quarter revenues increased 13% in reporting currency,
partly reflecting the significant strengthening of the U.S. dollar
against the euro compared to a year ago (average EUR/USD rate 1.12
versus 1.20 in 1Q 2021). In constant currencies, first quarter
revenues increased 8%. Excluding both currency and the net effect
of acquisitions and divestments, organic growth was 8% (1Q 2021:
4%). All divisions posted improved organic growth in the quarter
compared to a year ago.
Recurring revenues (81% of revenues), which include
subscriptions and other repeating revenue streams, increased 8%
organically against a relatively weak comparable (1Q 2021: 3%).
Non-recurring revenues (19% of revenues) increased 9% organically
(1Q 2021: 7%) with transactional revenues in Governance, Risk &
Compliance (GRC) broadly flat (1Q 2021: 11%) but other
non-recurring revenues, such as software license and implementation
services, up 14% organically (1Q 2021: stable). Print revenues rose
4% organically (1Q 2021: 6%), with an 8% organic decline in Legal
& Regulatory print revenues more than offset by an organic
increase in Health.
The adjusted operating profit margin increased in all divisions,
except in Governance, Risk & Compliance. The first quarter
margin benefitted from operational gearing which more than offset
increased personnel costs related to hires made in recent quarters.
Expenses related to travel and other activities that were reduced
during the pandemic remained low in the first quarter but are
expected to build over the year.
Health revenues increased 9% organically (1Q
2021: 8%) in the quarter, with strong performance around the world.
Clinical Solutions grew 9% organically (1Q 2021: 6%), driven by
strong subscription renewals for our decision support tool,
UpToDate, and our drug information solutions, Medi-Span and
Lexicomp. Health Learning, Research & Practice also grew 9%
organically (1Q 2021: 11%), buoyed by an unexpected increase in
U.S. print book revenues due to favorable timing of distributor
orders. Organic growth in Learning, Research & Practice digital
subscriptions, advertising, and other non-recurring revenues slowed
compared to a year ago due to a challenging comparable.
Tax & Accounting revenues grew 9%
organically (1Q 2021: 3%), largely reflecting revenue phasing
related to the timing of the U.S. tax season and a surge in demand
for outsourced professional services in a tight labor market.
Corporate Performance Solutions (CCH Tagetik and TeamMate) recorded
mid-single digit organic growth, driven by double-digit organic
growth at CCH Tagetik. Professional Tax & Accounting North
America recorded double-digit organic growth, against a weak
comparable which saw revenues shift into the second quarter of 2021
due to the delay in the U.S. tax season. Professional Tax &
Accounting Europe delivered mid-single digit organic growth, while
Asia Pacific growth moderated.
Governance, Risk & Compliance revenues
increased 8% organically (1Q 2021: 3%). Legal Services organic
growth was 7% (1Q 2021: 2%), mainly driven by robust renewals for
CT Corporation legal representation subscription services.
Financial Services recorded 8% organic growth (1Q 2021: 5%). In
Compliance Solutions, subscription revenues increased, especially
for eOriginal digital lending solutions, however this was offset by
a decline in transactional volumes due to the absence of a Paycheck
Protection Program1 in 2022 and the market-wide decline in U.S.
mortgage originations. Finance, Risk & Reporting posted strong
organic growth driven by non-recurring implementation services and
higher license fees for OneSumX software. On April 8, 2022, GRC
completed the acquisition of International Document Services (IDS)
for approximately $70 million in cash.
Legal & Regulatory revenues grew 6%
organically (1Q 2021: 2%), benefitting from higher non-recurring
license revenues for EHS/ORM2 software. Information Solutions (79%
of divisional revenues) posted 3% organic growth (1Q 2021: 2%),
with digital information solutions up 7% and print formats down 8%
in the quarter. Divestitures, notably the disposal of the U.S.
Legal Education business in September 2021, reduced divisional
revenues by 4% in constant currencies in the quarter. The sale of
our legal publishing assets in Spain and France, agreed in December
2021 and expected to complete in 2022, remains subject to approval
of the Spanish antitrust authorities.
Cash Flow and Net Debt
First quarter adjusted free cash flow increased 6% in constant
currencies. Cash conversion was lower than a year ago due to an
increase in capital expenditures and a decline in working capital
inflows. Mainly as a result of new U.S. rules on the capitalization
of research & development expenses, cash tax payments
increased. Net cash spend on acquisitions was nil, while a total of
€157 million in cash was deployed towards share repurchases
during the first quarter.
As of March 31, 2022, net debt was €1,920 million, compared to
€2,131 million at December 31, 2021. Net-debt-to-EBITDA, based on
rolling twelve months’ EBITDA, was 1.2x at the end of March 2022,
compared to 1.4x at year-end 2021.
As of March 31, 2022, the number of issued ordinary shares
outstanding (excluding 5.5 million shares held in treasury) was
Dividends and Share Buybacks
At the Annual General Meeting held on April 21, 2022,
shareholders approved a total dividend of €1.57 over financial year
2021. This results in a final dividend of €1.03 per share to be
paid to shareholders on May 18, 2022 (ADRs: May 25, 2022). The
interim dividend for 2022 will be set at 40% of the prior year
In the year to date, Wolters Kluwer has repurchased 2.3 million
ordinary shares for a total consideration of €216 million (average
share price €92.55). This includes a €46 million block trade
executed on February 24, 2022, to offset dilution caused by
incentive share issuance. For the period starting May 5, 2022, up
to and including August 1, 2022, we have engaged a third party to
execute €140 million in share buybacks on our behalf, within the
limits of relevant laws and regulations (in particular Regulation
(EU) 596/2014) and Wolters Kluwer’s Articles of Association. Share
repurchases will be used for capital reduction purposes and to meet
obligations arising from share-based incentive plans.
Recent ESG and
As of the end of April, 90% of our offices have reopened and
about a quarter of our global workforce was back in office for all
or part of the week. At the 2022 Annual General Meeting in April,
Ann Ziegler succeeded Frans Cremers as Chair of the Supervisory
Board. Heleen Kersten was appointed Member, increasing the
proportion of women on the Supervisory Board to 57%.
We reiterate our overall guidance for full-year 2022 adjusted
operating profit margin, adjusted free cash flow, return on
invested capital (ROIC), and diluted adjusted EPS (see table
below). We continue to expect good organic growth for the full
year, albeit slower than in 2021 due to challenging comparables
starting in the second quarter. The recent suspension of business
in Russia and Belarus is expected to have minimal impact as these
countries represent less than 1% of group revenues. We maintain our
full year adjusted operating profit margin guidance, although we
now expect the group margin to rise in the first half of 2022. As
previously indicated, we expect growth in diluted adjusted EPS to
be dampened by a return to our historical tax rate.
Full-Year 2022 Outlook
Adjusted operating profit margin
Diluted adjusted EPS
for adjusted operating profit margin and ROIC is in reported
currencies and assumes an average EUR/USD rate in 2022 of €/$1.13.
Guidance for adjusted free cash flow and diluted adjusted EPS is in
constant currencies (€/$ 1.18). Guidance reflects share repurchases
for up to €600 million in 2022.
If current exchange rates persist, the U.S. dollar rate will
have a positive effect on 2022 results reported in euros. In 2021,
Wolters Kluwer generated more than 60% of its revenues and adjusted
operating profit in North America. As a rule of thumb, based on our
2021 currency profile, each 1 U.S. cent move in the average €/$
exchange rate for the year causes an opposite change of
approximately 2 euro cents in diluted adjusted EPS3.
We include restructuring costs in adjusted operating profit. We
currently expect that restructuring costs will increase to within
our normal range of €10-€15 million (FY 2021: €6 million). We
expect adjusted net financing costs of approximately €65 million in
constant currencies4, including lease interest charges. We expect
the benchmark tax rate on adjusted pre-tax profits to increase to
approximately 23.0%-24.0% (FY 2021: 21.5%). Capital expenditure is
expected to be within our normal range of 5.0%-6.0% of total
revenues (FY 2021: 5.0%). We expect the full-year cash
conversion ratio to be in the range of 100%-105% (FY 2021:
Any guidance we provide assumes no additional significant change
to the scope of operations. We may make further acquisitions or
disposals which can be dilutive to margins and earnings in the near
2022 Outlook by Division
Health: we expect organic growth to slow from
2021 levels, mainly due to the absence of a contract win of the
size of the 2021 ASCO deal. We expect the adjusted operating profit
margin to improve modestly.
Tax & Accounting: we expect organic growth
to improve slightly from 2021 levels and the adjusted operating
profit margin to improve.
Governance, Risk & Compliance: we expect
organic growth to slow from 2021 levels, due to slower growth in
transactional revenues in the second half of the year. We expect
the adjusted operating profit margin to ease in the first half but
to improve for the full year.
Legal & Regulatory: we expect organic
growth to be in line with 2021. The adjusted operating profit
margin is expected to decline in the second half and for the full
year due to the absence of the one-off pension amendment recorded
About Wolters Kluwer
Wolters Kluwer (EURONEXT: WKL) is a global leader in
professional information, software solutions, and services for the
healthcare; tax and accounting; governance, risk and compliance;
and legal and regulatory sectors. We help our customers make
critical decisions every day by providing expert solutions that
combine deep domain knowledge with technology and services.
Wolters Kluwer reported 2021 annual revenues of €4.8 billion.
The group serves customers in over 180 countries, maintains
operations in over 40 countries, and employs approximately 19,800
people worldwide. The company is headquartered in Alphen aan den
Rijn, the Netherlands.
Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and
are included in the AEX and Euronext 100 indices. Wolters Kluwer
has a sponsored Level 1 American Depositary Receipt (ADR) program.
The ADRs are traded on the over-the-counter market in the U.S.
For more information, visit www.wolterskluwer.com or follow us
on Twitter, Facebook, LinkedIn, and YouTube.
Financial CalendarMay 18,
date: 2021 final dividend ordinary sharesMay 25,
date: 2021 final dividend ADRsAugust 3,
2022 ResultsAugust 30,
date: 2022 interim dividendAugust 31,
date: 2022 interim dividendSeptember 22,
2022 Payment date:
2022 interim dividendSeptember 29,
2022 Payment date:
2022 interim dividend ADRsNovember 2,
2022 Nine-Month 2022
Trading UpdateFebruary 22,
2023 Full-Year 2022
of 2022 Annual Report and ESG Data Overview
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Forward-looking Statements and Other Important Legal
This report contains forward-looking statements. These
statements may be identified by words such as “expect”, “should”,
“could”, “shall” and similar expressions. Wolters Kluwer cautions
that such forward-looking statements are qualified by certain risks
and uncertainties that could cause actual results and events to
differ materially from what is contemplated by the forward-looking
statements. Factors which could cause actual results to differ from
these forward-looking statements may include, without limitation,
general economic conditions; conditions in the markets in which
Wolters Kluwer is engaged; behavior of customers, suppliers, and
competitors; technological developments; the implementation and
execution of new ICT systems or outsourcing; and legal, tax, and
regulatory rules affecting Wolters Kluwer’s businesses, as well as
risks related to mergers, acquisitions, and divestments. In
addition, financial risks such as currency movements, interest rate
fluctuations, liquidity, and credit risks could influence future
results. The foregoing list of factors should not be construed as
exhaustive. Wolters Kluwer disclaims any intention or obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
Elements of this press release contain or may contain inside
information about Wolters Kluwer within the meaning of Article 7(1)
of the Market Abuse Regulation (596/2014/EU).
Trademarks referenced are owned by Wolters Kluwer N.V. and its
subsidiaries and may be registered in various countries.
1 The U.S. Small Business Association (SBA) Paycheck Protection
Program.2 EHS/ORM = environmental, health & safety and
operational risk management.3 This rule of thumb excludes the
impact of exchange rate movements on intercompany balances, which
is accounted for in adjusted net financing costs in reported
currencies and determined based on period-end spot rates and
balances.4 Guidance for adjusted net financing costs in constant
currencies excludes the impact of exchange rate movements on
currency hedging and intercompany balances.
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