Last year's acquisition of Hungry Minds continues to fuel growth at John Wiley & Sons. Total revenues for the first quarter ended July 31 rose 28%, to $206.4 million, and net income, excluding a $1.5-million relocation charge related to Wiley's move to New Jersey, increased 10%, to $21.5 million. Excluding acquisitions, organic growth rose by 8% in the period.
Revenues in the professional/trade segment jumped 78% in the quarter, to $70.2 million, due mainly to the addition of Hungry Minds. Among the categories that performed well in the period were culinary, reference, consumer (particularly the For Dummies line) as well as travel, which company CEO Will Pesce said "has recovered nicely" after slumping following September 11. He noted that Frommers.com had record sales in July. The segment also benefited from the May acquisition of teacher education titles from Prentice Hall Direct. The business book market continued to be soft in the quarter, as was the professional technology area, although consumer technology titles in such areas as digital photography and home networking sold well.
In the higher education segment, revenues rose 6%, to $44.9 million, led by sales of new editions of several key titles, as well as the addition of titles acquired from Thomson Corp. last November. Also during the quarter, Wiley acquired Fitzgerald Publishing Co., a small publisher specializing in the life sciences. Pesce said that he had "no doubt" that price sensitivity among students has increased over the last year and that after several years of little growth, used books have once again begun to capture more market share. Wiley is attempting to counter the used book market by packaging technology applications with its texts and by publishing smaller, less expensive editions.
The science, technical and medical division reported a 6% increase in sales, to $42.4 million. Wiley's journal program led the gains in the segment, offsetting some softness in book sales. Wiley's Interscience online service continued to perform well and accounted for 60% of global journal sales in the quarter. The OnlineBooks service also continued to expand and now offers 300 titles.
In the international segment, sales at Wiley Europe rose 27%, to $47.9 million, led by good results from journals, STM books and higher education programs. Sales to other international markets rose 31%, to $21.2 million, driven by a rebound in Asia.
Pesce told analysts that while the industry may experience a "very active" acquisition period over the next few months (with Houghton Mifflin and BertelsmannSpringer on the block), Wiley would pursue only acquisitions that make strategic sense in its core areas. "We are not interested in growth for growth's sake," Pesce said, adding that he feels good about the current size of Wiley. He noted that based on the results of the first quarter, Wiley is forecasting revenue growth to be in the mid-teens, while earnings per share growth will be in the high teens.
