Highlights
- Full-year 2022 guidance reaffirmed.
- 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% organically.
- First-quarter adjusted operating profit margin increased, with strong operational gearing more than compensating for increased personnel expenses.
- First-quarter adjusted free cash flow increased 6% in constant currencies, despite higher capital expenditure and tax payments in the quarter.
- 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 2, 2022.
First Quarter 2022 Developments
First quarter revenues increased 13% in reporting currency, partly reflecting the significant strengthening of the
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
Tax & Accounting revenues grew 9% organically (1Q 2021: 3%), largely reflecting revenue phasing related to the timing of the
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
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
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
As of
As of
Dividends and Share Buybacks
At the Annual General Meeting held on
In the year to date,
Recent ESG and Other Developments
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,
Full-Year 2022 Outlook
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
Full-Year 2022 Outlook | ||
Performance indicators | 2022 Guidance | 2021 |
Adjusted operating profit margin | 25.5%-26.0% | 25.3% |
Adjusted free cash flow | €1,025-1,075 million | €1,010 million |
ROIC | Around 14% | 13.7% |
Diluted adjusted EPS | Mid-single-digit growth | €3.38 |
Guidance for adjusted operating profit margin and ROIC is in reported currencies and assumes an average EUR/USD rate in 2022 of €/ |
If current exchange rates persist, the
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: 112%).
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 term.
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 in 2021.
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Financial Calendar
May 18, 2022 Payment date: 2021 final dividend ordinary shares
May 25, 2022 Payment date: 2021 final dividend ADRs
August 3, 2022 Half-Year 2022 Results
August 30, 2022 Ex-dividend date: 2022 interim dividend
August 31, 2022 Record date: 2022 interim dividend
September 22, 2022 Payment date: 2022 interim dividend
September 29, 2022 Payment date: 2022 interim dividend ADRs
November 2, 2022 Nine-Month 2022 Trading Update
February 22, 2023 Full-Year 2022 Results
March 8, 2023 Publication of 2022 Annual Report and ESG Data Overview
Media Investors/Analysts
Gerbert van Genderen Stort Meg Geldens
Global Branding & Communications Investor Relations
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Forward-looking Statements and Other Important Legal Information
This report contains forward-looking statements. These statements may be identified by words such as “expect”, “should”, “could”, “shall” and similar expressions.
Elements of this press release contain or may contain inside information about
Trademarks referenced are owned by
1
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.
Source:
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