Wolters Kluwer First-Quarter 2021 Trading Update
Wolters Kluwer First-Quarter
2021 – Wolters Kluwer, a
global leader in professional information,
software solutions, and
reiterated: good start to
4% in constant currencies
and up 4%
- Recurring revenues (81%) grew 3%
organically; non-recurring revenues rose 7% organically.
- Digital & services revenues
(92%) grew 4% organically.
- Expert solutions (55%) grew 6%
- First-quarter adjusted
by 290 basis
points, benefitting from
temporary savings in travel and other
- First-quarter adjusted free
cash flow up 115% in
largely reflecting timing of working
- Net debt-to-EBITDA
1.5x as of March 31,
- Progress on
million of intended
buyback of up to €350 million
completed in the
year through May
Nancy McKinstry, CEO and Chairman of the Executive
Board, commented: “First quarter results
were better than expected, notwithstanding some favorable timing
effects. In recent weeks, the new sales environment has shown early
signs of improvement in selected areas. We remain focused on our
strategic goals, including advancing our expert solutions, while
supporting the well-being of our employees and delivering value to
our customers. We continue to expect the recovery towards
pre-pandemic growth levels to be gradual but are encouraged by the
good start to the year.”
First Quarter 2021
First quarter revenues declined 2% in reporting currency, due to
the depreciation of the U.S. dollar compared to a year ago.
Excluding the impact of currency movements, first quarter revenues
increased 4%. The impact of 2020 acquisitions on revenues and
adjusted operating profit was nearly offset by the impact of last
year’s divestments. Organic growth was 4%, slightly better than
expected across all four divisions. Recurring revenues (81% of
revenues), which include subscriptions and other repeating revenue
streams, grew 3% organically (1Q 2020: 5%). Non-recurring revenues
(19% of revenues) increased 7% organically (1Q 2020: decline of
2%), buoyed by a 24% organic increase in printed books (timing of
orders) and a 24% organic increase in Financial Services
transactional revenues (reflecting volumes related to the 2021 U.S.
Paycheck Protection Program1). Non-recurring software license fees
and implementation services were broadly stable in the quarter. The
adjusted operating profit margin increased in all divisions,
primarily due to temporary cost savings as travel and in-person
events remain restricted.
Health revenues grew 8% organically (1Q 2020: 5%) in the
quarter. Clinical Solutions grew 6% organically against a tough
comparable (1Q 2020: 8%), driven by subscriptions to our decision
support and drug information solutions. UpToDate Advanced was
enhanced with more content and functionality to integrate into EMR2
workflows. Health Learning, Research & Practice grew 11%
organically, driven by favorable timing of book reseller orders
(expected to reverse in coming quarters) and by the addition of the
American Society of Clinical Oncology journals in medical research.
Digital nursing solutions for education and practice achieved
strong double-digit growth, led by CoursePoint+ and vSim.
Tax & Accounting revenues increased 5% in constant
currencies, partly due to the acquisition of XCM Solutions in
September 2020. Organic growth was 3% (1Q 2020: 5%). Corporate
Performance Solutions (CCH Tagetik and TeamMate) delivered
double-digit organic growth, driven by cloud and on-premise
software products. In Professional Tax & Accounting, organic
growth was muted due to the delayed start to the U.S. tax filing
season which has shifted bank product and other filing-related
revenues into the second quarter. Market conditions for new
software sales remain challenged.
Governance, Risk & Compliance revenues increased 6% in
constant currencies, including the effect of the eOriginal
acquisition completed in December 2020. Organic growth was 3% (1Q
2020: 4%). Legal Services organic growth was 2%, slower than a year
ago as a late March rebound in transactional revenues partly offset
more moderate growth in recurring revenues. Financial Services
delivered 5% organic growth supported by steady growth in recurring
software maintenance and cloud subscription revenues and an uptick
in transactional volumes related to the 2021 U.S. PPP.
Legal & Regulatory revenues declined 2% in constant
currencies due to the impact of 2020 divestments. Organic growth
was 2% (1Q 2020: decline of 1%). The software activities recorded
single-digit organic growth following the pandemic’s impact on new
sales in 2020. Information Solutions (82% of divisional revenues)
posted 2% organic growth, as digital information solutions
sustained good organic growth in both Europe and the U.S. Print
formats benefitted from a favorable publication schedule and a
recovery in sales of U.S. legal education textbooks.
Cash Flow and Net
First-quarter adjusted EBITDA increased 8% overall and 16% in
constant currencies. Cash conversion was strong, benefitting from
timing of working capital inflows in the quarter. Adjusted free
cash flow increased 115% in constant currencies, despite higher
cash taxes and financing costs compared to the same period a year
Net cash spend on acquisitions net of disposals was negligible
in the quarter. A total of €122 million cash was deployed towards
share repurchases during the quarter.
As of March 31, 2021, net debt was €2,200 million, compared to
€2,383 million at December 31, 2020. Net-debt-to-EBITDA, based on
rolling twelve months’ EBITDA, was 1.5x at the end of March 2021,
compared to 1.7x at year-end 2020.
On March 30, 2021, we issued a new €500 million, 7-year senior
unsecured Eurobond with an attractive coupon of 0.25%. The proceeds
will be used for general corporate purposes.
As of March 31, 2021, the number of the number of issued
ordinary shares outstanding (excluding 6.2 million shares held in
treasury) was 261.3 million.
Approximately 95% of Wolters Kluwer’s 19,200 employees remain in
a work-from-home status. In the first quarter, we launched a range
of virtual webinars and training to continue to support well-being,
belonging, and engagement.
Dividends and Share Buybacks
At the Annual General Meeting in April, shareholders approved a
total dividend of €1.36. The final dividend will therefore be €0.89
per share, to be paid on May 19, 2021 (ADRs: May 26, 2021). The
interim dividend for 2021 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 €159 million (average
share price €69.66). For the period starting May 6, 2021, up to and
including August 2, 2021, we have engaged a third party to execute
€70 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.
Full-Year 2021 Outlook
Due to the ongoing nature of the COVID-19 pandemic, we continue
to expect economic activity and spending patterns to be subdued for
most of 2021, with a gradual recovery starting in the second half
of the year. In the second quarter of 2021 we face a challenging
comparable in Governance, Risk & Compliance, as we expect lower
PPP-related revenues in 2021 compared to 2020. Overall, we remain
in a strong position to respond to new challenges should they
arise. We reiterate our specific guidance for full-year 2021
adjusted operating profit margin, adjusted free cash flow, return
on invested capital (ROIC), and diluted adjusted EPS. See table
Full-Year 2021 Outlook
Adjusted operating profit margin
24.5% - 25.0%
Diluted adjusted EPS
for adjusted operating profit margin and ROIC is in reported
currencies and assumes an average EUR/USD rate in 2021 of €/$1.21.
Guidance for adjusted free cash flow and diluted adjusted EPS is in
constant currencies (€/$ 1.14). Guidance reflects share repurchases
for up to €350 million in 2021.
If current exchange rates persist, the U.S. dollar rate will
have a negative effect on 2021 results reported in euros. In 2020,
Wolters Kluwer generated more than 60% of its revenues and adjusted
operating profit in North America. As a rule of thumb, based on our
2020 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 EPS.
We include restructuring costs in adjusted operating profit. We
expect that restructuring costs will be in the range of €10-€15
million in 2021 (FY 2020: €49 million). We expect adjusted net
financing costs of approximately €65 million in constant
currencies3, including approximately €10 million in lease interest
charges. We expect the benchmark tax rate on adjusted pre-tax
profits to be in the range of 23.0%-24.0% for 2021. Capital
expenditure is expected to be within our normal range of 5.0%-6.0%
of total revenues (FY 2020: 5.0%). Cash repayments of lease
liabilities are expected to be in line with depreciation of
right-of-use assets (FY 2020: €73 million). We expect the full-year
cash conversion ratio to be in the range of 95%-100% in 2021 (FY
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
2021 Outlook by Division
Health: We expect full-year organic growth to
improve over 2020 levels and the adjusted operating profit margin
to be stable year-on-year as temporary cost savings fade.
Tax & Accounting: We expect organic growth
to improve from 2020 levels and the adjusted operating profit
margin to decline due to the absence of one-time benefits and the
fading of temporary cost savings.
Governance, Risk & Compliance: We now
expect the organic growth rate to be broadly in line with 2020
levels, as lower PPP transactional volumes are offset by a higher
level of Legal Services transactions. We continue to expect the
adjusted operating profit margin to improve on the back of lower
restructuring and provisions.
Legal & Regulatory: We continue to expect
the division to return to positive organic growth driven by digital
information and software revenues. We expect the adjusted operating
profit margin to improve as a result of lower restructuring.
About Wolters Kluwer
Wolters Kluwer (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 2020 annual revenues of €4.6 billion.
The group serves customers in over 180 countries, maintains
operations in over 40 countries, and employs approximately 19,200
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, follow us on
Twitter, Facebook, LinkedIn, and YouTube.
Financial CalendarMay 5, 2021
2021 Trading UpdateMay 19,
date: 2020 final dividend ordinary sharesMay 26,
date: 2020 final dividend ADRsAugust 4, 2021
Half-Year 2021 ResultsAugust 31,
date: 2021 interim dividendSeptember 1,
2021 Record date:
2021 interim dividendSeptember 23, 2021
Payment date: 2021 interim dividend ordinary
sharesSeptember 30, 2021 Payment date:
2021 interim dividend ADRsNovember 3, 2021
Nine-Month 2021 Trading UpdateFebruary 23, 2022
Full-Year 2021 Results
GeldensGlobal Branding & Communications
Investor Relationst + 31 (0)172 641 230
t + 31 (0)172 641
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 Hereinafter referred to as PPP. The U.S. Small Business
Association (SBA) Paycheck Protection Program was established by
the 2020 U.S. CARES Act. Wolters Kluwer Compliance Solutions (part
of Governance, Risk & Compliance) supports bank customers in
lending under this program. A new tranche of the U.S. PPP program
was launched by the SBA in January 2021.2 Electronic medical record
systems.3 Guidance for adjusted net financing costs in constant
currencies excludes the impact of exchange rate movements on
currency hedging and intercompany balances.
- 2021.05.05 Wolters Kluwer First-Quarter Trading Update
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