Good morning and welcome to Wiley’s First Quarter Fiscal 2018 Earnings Call. As a reminder this conference is being recorded. And at this time, I would like to introduce Wiley’s Vice President of Investor Relations, Brian Campbell. Please go ahead sir.

Good morning everyone, and welcome to our first quarter fiscal 2018 earnings review. First some housekeeping items to consider. The call is being recorded and may include forward-looking statements. You shouldn’t rely on these statements, as actual results may differ materially and are subject to factors discussed in SEC filings. The Company does not undertake any obligations to update or revise forward-looking statements to reflect subsequent events or circumstances. For those who prefer to listen to the call over the phone, but still want to view the slides, we recommend that you click on the Gears icon located on the lower portion of the left-hand side window and select Live Phone. This will eliminate any delays in viewing the slide transitions, as well as remove any potential background noise if you prefer to ask a question. After the call, a copy of this presentation and a playback of the webcast will be available on our Investor Relations page. I’ll turn the call over to Matthew Kissner, Wiley’s Interim CEO and Chairman.

Good morning and thank you for joining us. In addition to Brian, I am joined by John Kritzmacher, CFO and Executive Vice President, Technology and Operations. I will speak to business performance, and John will follow with an update on our, balance sheet, cash flow and outlook for the year. First, our CEO search is progressing nicely. The search committee involving several Board Members is pleased with the quality of the candidates that we are seeing. As a reminder, we are looking for a strong customer-centric leader with a proven track record in transforming businesses through enabling technology and new business models. Wiley has an enormous amount of potential with steady operational performance, a strong market position, an exceptional balance sheet and strong cash flow generation. Nearly 70% of our revenue is Digital. While the search progresses, the company remains on very sound footing from a leadership standpoint. John and I and the rest of the leadership team continue to make substantial progress in executing on our strategic plans including restructuring and reinvestment and empowering colleagues with the right environment tool sets and authority to make a real impact. I’ve held brown bag lunch meetings with over 100 colleagues deep in the organization and I could not be more impressed with their talent and their commitment to Wiley as a business and the purpose. Moreover, colleagues at all levels have many great ideas that we are filtering up into the organization. And finally, we are getting much better at change individually and as a unit. Now for some highlights. Thanks to favorable foreign exchange which was expected as discussed in June. Revenue and adjusted EPS rose 2% and 9% respectively. On a common currency basis, revenue rose 1%, but adjusted EPS declined 5%. We took $29 million in restructuring and…

Thank you, Matt. Net debt and net debt-to-EBITDA at quarter end were both in line with prior year. Our lower cash position was due to the repayment of debt using proceeds from our fiscal 2017 repatriation of cash from certain foreign entities. Our net debt position was flat for the year-ago period after acquiring Atypon for approximately $120 million and returning $122 million to shareholders in the form of dividend and share repurchases during the past year. The strength of our balance sheet and cash flow has enabled us to pursue synergistic acquisitions while consistently returning cash to shareholders. We continue to expect – expect continue acquiring businesses or capabilities in our core areas of expertise, particularly Research, Publishing and Digital Learning. Cash from operations improved by about $55 million as compared to the prior year due to favorable timing of payments and collections, which offset the unfavorable timing of payments and collections in our fourth quarter. With regard to free cash flow, technology, property and equipment CapEx was higher by $9 million driven primarily by our headquarters office transformation. Product development spending was down $2 million. We continued to return cash to shareholders in the form of share repurchases and dividends spending $32 million in this quarter, compared to $29 million in the prior year period. Our streak of consecutive annual dividend increases now spans 24 years. We are reaffirming our full year outlook. At constant currency, revenue and operating income are expected to be essentially even and adjusted EPS to be down by low single-digits due to non-recurring tax benefits in fiscal 2017. As noted last quarter, if current rates were to hold, we continue to expect a foreign exchange benefit from functional currency gains with an additional $25 million in revenue, $20 million in adjusted operating income…

In summary, our first quarter performance was as expected with modest growth in Research and solid growth in Solutions offsetting declines in Book Publishing. Operating income and EPS performance were also in line with expectations. We are making very good progress in terms of operational excellence and continuing to return cash to shareholders. With that as background, we welcome your comments and questions.

[Operator Instructions] And first from Stifel we will take Drew Crum

Okay, thanks. Good morning everyone. So, John, I wonder if you could address restructuring charges that you took in the quarter of $29 million what amount is cash. When does that hit the cash flow statement? And are you anticipating any more in fiscal 2018? As I look at the last four fiscal periods for the company, you’ve recognized on average close to $30 million in annual restructuring payments on the cash flow statements. So just want to get a sense of what you are anticipating through the balance of this year and beyond.

Sure. So, of the $29 million charge taken in the quarter, roughly $25 million of that charge is directly related to workforce adjustments, severance payments. Our expectation is that the actions that we have included in this charge will essentially cover the activities we have planned around restructuring for the business through the next year. And so for the near-term, we are expecting that the charge fully represents changes that we will make in the business. The timing of those payments, Drew, they will spread over the balance of this year and somewhat into next year. So expect that there is somewhere about, like an 18 months period of time over which those payments will leave.

Okay, got it. And then, there were some comments made on Society Journals. It looks like a good start to the year in terms of new business and as I look at the metrics that you guys provide on a quarterly basis, the net revenue, when you include new, plus renewed, minus the journals that you lost, trailing 12 months, about a $100 million, which is double what it was the prior 12 months. So, I guess, the question is, what are you seeing or what is allowing you to see that or experience the acceleration and when would we expect to see that flow through the journal subscription line?

Drew, I’ve got to admit it, I lost you somewhere along the way there.

Okay.

If I just explain - for a moment, we are anticipating around our business – our Journal business for the year is low single-digit growth as we’ve said before. We’ve been in the low single-digit range for some time now. Our expectation is that as we continue to invest in that business, we are going to be able to accelerate that bit and hope to move the rate above the 1% to 2% kind of range over time. Among the things that we’ve been doing, we’ve been particularly focused on customer satisfaction and retention in growth inside our Society License business. And as Matt described in his comments, we’ve been able to get from what has been a fairly neutral net win position in Society Licensing over the last couple of years to – and this year, year-to-date, we are net favorable by $11 million in terms of Society Licensing revenue. So, we think we are gaining some momentum there.

Got it. Okay, that’s helpful. Okay, I’ll jump back into the queue. Thanks guys.

Thanks.

Moving on, our next question comes from Daniel Moore with CJS Securities.

Good morning. Thanks for taking the questions.

Hi, Dan.

Thank you. I wanted to switch gears, Online Program Management or Education Services as it’s now called, now – it’s been - over the last, it’s still growing nicely at the double-digits, but in terms of new program wins and accounts kind of two steps forward, one steps back in terms of new accounts being offset by program losses. Is that do we expect more the same going forward? And I guess, in that environment, is it still reasonable to expect double-digit overall revenue growth over the next couple of years?

Daniel, it’s Matt. Let me start and then I’ll ask John to add to my comments. It’s really not about the absolute number of programs. It’s more about the quality and the scale we can get within these programs. And so, so we are emphasizing relationships where there is lots of opportunity for depth and further expansion. We’ve been focused for the past, I would say, 18 months give or take around maturing the portfolio of partners that we work with, particularly around strength of brands more on a national level than perhaps previously at more of a regional level. So we are working with partners that are - have stronger brands in an online environment and are able to support programs on the order of ten or more and able to grow significant enrollments and over time we are also retiring partnerships that don’t meet those criteria. So, partnerships that don’t have strength in terms of prints or as much strength I should say in terms of brands or are only really capable to support a few programs. They just don’t get to scale for us over the longer-term. But on balance, as we worked our rotation, while we retained about the same number of partners roughly hovering or in the high 30s, we are seeing continued growth in terms of the overall number of programs that we are supporting in that base and you should expect to see that continue.

Are you willing to share how many programs are in that sort of secondary category and that program still partners where I guess, over what timeframe - what might we should expect to see those retiring relationships start to dissipate?

So, I won’t go for numbers, but we should expect the rotation to complete itself, I would say, over the next two fiscal years. So, through 2019, maybe a bit into the fiscal 2020. But it’s a slow rotation. These are long-term relationships. So they migrate over time.

Very helpful.

[Indiscernible] Okay, go ahead.

Got it. I apologize, John. And shifting over to print books, specifically just in higher education, obviously it’s still early in the school year, still gathering data, but any update in terms of trends and as far as rate of decline, rates of penetration at the rental market, whether that’s accelerating, leveling off, any commentary for what we’ve seen so far being it’s still – we are relatively early in September obviously?

Dan, I would say, at this point, we are not seeing any material change in the trend that we observed over the past year or so. So we are still overall in higher ed looking at a double-digit decline on the combination of print and digital books and we are still seeing that substantial amount of share is going into the rental market. But we are not seeing bigger shifts at this point in time. The relative share seems to be stabilizing.

Very helpful. And Matthew, the comments on the CEO search were extremely helpful early on. So I’ll save that question. But, I did have another recent departure or retirement of Jeff Sugerman. Any comments there and plans on replacement?

Yes, that was planned. Jeff is an entrepreneur by nature and he is going to go back to his entrepreneurial roots. And at this point in time, we are not planning to replace and we have some pretty capable management that he has developed during his tenure.

Got it. And lastly, John, what was the tax rate do you used for the adjusted EPS calculation? And just update us on your embedded tax assumptions into fiscal 2018 guidance?

So the effective tax rate in the quarter was about 18%. That included the benefit of favorable mix of income in the period and also a reduction in the statutory rate in the UK. Also some favorability around the timing of certain things such as Research and Experimentation credits and production credits, the timing of deductions for equity-based compensation. So the rate in the quarter was lower than what we expect for the year. We still expect the rate for the year to be in the range of 23% to 24%.

Got it. Thank you, again.

Thanks, Dan.

Moving on, we’ll hear from Allen Klee with Sidoti.

Yes, good morning. In terms of your guidance where you say that, currency can add $0.25 if the Pound stays where it is versus the dollar. Can you give us a sensitivity for a certain percentage change in the Pound, the impact that that could have to EPS?

It’s really all a matter of the current rate for the Pound hold or does it fluctuate off of that and then I think you can look in terms of the relevant exchange rates with the US to the extent that it fluctuates. That number might move a bit. But, I think you can sort of back your way into it by looking at the relative potential change in rates. Keep in mind that that particular rate that we are talking about has to do with functional currency around our subscriptions in the UK. And so that’s fairly predictable at this point in time. Again, if the rates stay in place, then that is only around the functional currency difference there. There also is the potential for some incremental upside in our results around translational gains in FX over the course of the year and so again if the rates were to hold, we’ll see some favorability from that as well.

Okay, and then, moving on to Atypon, is there any seasonality in the quarters that we should think about or and can you remind us of how we think about sort of a growth rate and longer term margin profile for them?

We generally are forecasting down at – what I think, we should say, we are not communicating specific forecast to investors down around that level. But the business there is reasonably flat across the quarters. It’s not a particularly seasonal business. They contributed $8 million of revenue in the quarter. We expect to see some single-digit growth rate in that business for this year and then some acceleration of its growth into next year.

Okay. In the Publishing segment, there was a comment that the adjusted contribution profit was down due to lower revenue, but also the timing of development and licensing costs. Can you expand on that?

It’s really just related to the timing of production cost and composition cost that we expensed in the quarter and we think that will even itself out over the balance of the year.

Okay, thank you so much.

Thanks, Allen.

Our next question comes from Nick Dempsey with Barclays.

Hi, guys. Just first of all, going back to your comments on books within higher education where you see no material change in trend. Couple of things I wanted to check there. First of all, you said that relative share seems to be stabilizing. I didn’t fully understand that comment as to whether that meant the share of rental and the pace of whether you meant share versus competitors. So maybe if you could just clarify that? And then, I guess, looking back to last year, when you were sitting here on the 7th of September, were you able to already see at that point that this was going to – that the trend was going to be worst than perhaps everyone have expected a few months before. Well I am sort of understand your visibility sitting here on the 7th of September for you to be able to say kind of no change in trends. Do you know we have to wait for the returns to come in?

So that’s a good question. So let me clarify. In terms of – I should be clear that the – what we are seeing in the Education segment are continuing trends around pretty substantial decline in prints. Some growth in Digital, which fluctuates from period-to-period and the decline that we are seeing in print is largely being picked up on the rental side if it’s where it’s being substituted for a print alternative. So those trends are consistent going forward. We are not seeing any substantial shift. We are not seeing, I would say, an acceleration of the migration to rental nor are we seeing any slowdown in the migration to rental. So those trends are continuing. In terms of visibility into this business, if we were to go back to where we found ourselves a year ago, I would say that the decline in the Education business was accelerated from what we had anticipated somewhat, we certainly were expecting a decline. But we saw a sharper decline over the course of the year. At this point, as we’ve said, we are anticipating that that decline continues through the current fiscal year. To your question around visibility, I think, visibility in this particular domain is still very challenged. But we are – in terms of volatility around returns, you mentioned specifically, returns plan for this, I think we are seeing more prudent inventory practices that are giving rise to somewhat, not much, but somewhat less volatility around returns. And we’ll see how that plays out over the current year. But I would still say that this is – the print book business is a particular place for us where visibility is relatively low.

That’s helpful. Thank you.

All right, and we’ll move back to a follow-up question from Daniel Moore with CJS Securities.

Thank you, again. You mentioned, John, two things, one, you expect in the Solutions piece EPS turn positive in 2019. Just remind us, if you said it and I missed it I apologize, but the level of dilution embedded in the 2018 guide?

I believe we said that they would be - in combination, they would be about $0.10 dilutive for the year.

Still about $0.10, great, and you also mentioned, yes, for this year, absolutely. And then, you also said you expect looking forward into 2019 to invest in Research for growth. Are there incremental investments that we should be thinking about? Or is this more just a continuation of the current strategy?

We should think of it more as a continuation of the strategies that we are talking about previously which include Publishing more, particularly in the OA domain and also more focused on our participation in emerging markets, particularly in India and China.

Got it. But not in terms of a incremental or step function increase in investment spend that would be required to do that?

No, we anticipate that we will cover that largely with efficiency gains in other parts of the business.

Thank you.

Thanks, Dan.

And next we’ll circle back to Nick Dempsey with Barclays.

Yes. Sorry, just one more thing. When I look at your STM and Professional Book declines last year in this quarter, that’s on a high single-digit sort of region and then I got and look at the only other company that reports that sort of category which is Informa, to give you the kind of STM and well, the academic books inside their academic publishing business, that’s about a flat performance over the same period. So, is that an area where you lose share to competitors? Or is it just mix that you’ve got some things in there that are going down quite a little more all those things that are like those guys flattish?

I believe it is a reflection of the mix that we have in that particular domain which varies from publisher-to-publisher and there is also some implication from time-to-time around the timing of frontlist. We’d have to really dig it apart to better understand, but I would say, they have mostly mix.

Okay, thank you.

There is – along with that, right, some of our revenue decline is managed decline around what’s in our portfolio and what’s really adding value and profitability to our portfolio. So, there is a few factors that contributed to those relative rates.

Thanks.

Thank you.

All right, and this time, it looks like we have no further questions from the audience. I’d like to turn the floor back to Matthew Kissner, Interim CEO and Chairman for any additional or closing remarks.

We thank you for joining us on the call today and look forward to speaking with you again on our second quarter call in December. Thanks, very much.

Thank you.

And ladies and gentlemen, that does conclude today’s conference. We appreciate your participation. You may now disconnect.