Good morning, and welcome to Wiley's Fourth Quarter and Fiscal Year 2018 Earnings Conference Call. As a reminder, this conference is being recorded. At this time, I'd like to introduce Wiley's Vice President of Investor Relations, Brian Campbell. Please go ahead, sir.

Hello, everyone. And welcome to our fourth quarter and fiscal 2018 earnings call. Just a few housekeeping items to start. 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 our SEC filings. The company does not undertake any obligations to update or revise forward-looking statements to reflect subsequent events or circumstances. Also note, Wiley provides non-GAAP measures as a means to evaluate underlying operating profitability and performance trends. Non-GAAP metrics, which generally exclude items that impact comparability, comprise the following: adjusted EPS, free cash flow less product development spending, adjusted operating income and margin, adjusted contribution or profit, and results on a constant currency basis. These performance measures do not have standardized meanings described by US GAAP and therefore may not be comparable to the calculation of similar measures used by other companies. They should not be viewed as alternatives to measures under GAAP. Also note, we abbreviate constant currency as CC. Please see the reconciliation and explanations of all non-GAAP financial measures presented in the supplementary information, including our press release. 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 doing the slide transitions as well as remove any potential background noise if you prefer to ask a question. After the call, a copy of the presentation and a playback of the webcast will be available on our Investor Relations page. I'll now turn the call over to Brian Napack, Wiley's President and CEO.

Thanks, Brian. And good morning, everyone. I would like to start off today by sharing some general thoughts about our markets, the company, and the year’s performance. John will walk you through our financial results, business optimization efforts, and financial position before handing it back to me for some thoughts about where we’re headed as a company. Then we will open it up as always for Q&A. For the past several years, Wiley has made substantial progress against two critical goals. One, positioning ourselves for success in the changing markets for research and education. And two, enhancing our efficiency and effectiveness through operational excellence initiatives. On the first goal, we’ve put ourselves in a very good position to succeed in today’s market through both organic initiatives and targeted acquisition. On the second goal, we’ve realized considerable efficiency gains, improving margins in many parts of the business, lowering shared service costs, deploying critical systems, acquiring new platforms and skill sets and transforming our working environments. While revenue growth remains an issue, 1% growth this year with next year’s performance expected to be flat. We see many opportunities to improve our growth profile over time within, across, and adjacent to our businesses while continuing to improve our earnings growth. The good news is that our markets, research, and education are in various stages of transformation, and this change creates opportunity. For example, China and India continue to break out in the global economy and have thus become major growth areas. China recently passed the US in terms of research article output for the very first time. India, which already accounts 36 million college students across 700 universities in 36,000 colleges is now the second largest distance-learning market in the world behind the US, and the government aims to grow both traditional and…

Thank you, Brian. GAAP results improved considerably this year with revenue, operating income and EPS rising 5%, 16% and 70% respectively. Revenue growth included favorable foreign exchange of approximately 60 million. Operating income growth was largely the result of higher revenue and savings from business optimization and restructuring initiatives. EPS growth was due to higher operating income as well as a non-cash tax benefit of 25 million or $0.43 per share resulting from US tax reform enacted in December. Other notable year-over-year variances include the higher restructuring charges in the current year, offset by significant charges in the prior year for an unfavorable tax ruling in Germany and a US pension settlement. On a constant currency basis, revenue rose 1%, adjusted operating income rose 7% and adjusted EPS rose 3%. The muted growth in adjusted EPS as compared to growth in adjusted operating income was due to discrete tax credits of $0.12 per share recorded in the prior year. Fourth quarter performance was also positive on a GAAP basis, with revenue, operating income and EPS up 6%, 18% and 16% respectively. Revenue growth was mainly due to favorable foreign exchange. Operating income and EPS growth also reflected efficiency gains and restructuring savings which offset a 3.7 million unfavorable variance and restructuring charges. Fourth quarter revenue, adjusted operating income and adjusted EPS on a constant currency basis were up 1%, 18% and 16% respectively. Adjusted operating income and adjusted EPS growth were driven by revenue growth and efficiency gains. Moving on to segment results, from this point forward, I will be talking to results on a constant currency basis unless otherwise noted. Our research segment includes, world renowned Journal content, tools and services in the areas of science, technical, medical and scholarly research. Overall, research revenue for the year rose 4%,…

Thanks, John. So last year was a very good year for Wiley and I am optimistic about what’s to come. Our growth profile needs to improve and we’ll acquire targeted investment and continued focus on business optimization. Areas of current focus and research include publishing more as the research market continues to grow with an eye on increasing article output, launching new journals and growing our share in the Open Access publishing market. We will continue building out our China and India footprints, adding leadership, sales and editorial resources, we will focus on optimizing our industry leading society business and signing up new partners. The team, myself included will continue to sit down with our customers and partners to understand their evolving needs. We will develop new products that fit those needs such as the recently launched digital archives product which makes unique and rare primary historical information and artifacts from the archive of our partners society available to researchers and readers around the world. In education, as you can tell I’m using the term education to cover the full spectrum of our consumer, institutional and corporate learning businesses, we’re focused on delivering a full range of content, courseware and services that drive outcomes and meet the changing career focus needs of learners. This will include the broad rollout of our new WileyPLUS courseware platform, the extension of our test prep and certifications business and the continued commitment to the highest quality publishing across all of our education businesses. We’ll be innovating in higher Ed publishing to attractive new distribution and pricing models such as inclusive access and expanding our book rental programs to ensure that students have affordable options to support their studies. We are also investing to enhance growth in our Wiley education services business. We expect good…

Thank you. [Operator Instructions]. And first we’ll go to Drew Crum with Stifel.

I have a couple of questions on the research segment. Maybe just starting with the fiscal fourth quarter performance, the revenue was up 10%, but the adjusted contribution, the profit down 2% on an adjusted basis, and at least in the press release you cited higher royalty costs from society journals. Was that something unique in the quarter or something that we should anticipate on a go-forward basis?

So, Drew, good morning. On a constant currency basis, revenue for research was up 5% in the quarter, and we were up 3% for the year. I think we’ve been talking about during the year along with that revenue growth, we are seeing some incremental competitive pressure on royalty. So, it’s not new, it may have been a little more concentrated in the fourth quarter just around timing, but there clearly is pressure on royalties, it puts pressure on our margins. As we’ve said in the past, in response to that pressure, we believe that we can drive additional operating efficiencies in the business, particularly around editorial and content management in the business, some standardization and simplification of the way we do things around the globe, and a bit of automation that we need to invest in that will help us offset that pressure. But it’s steady, it’s not new and it is not directionally shifting I would say.

And Brian, I think you've characterized your expectations for Research Journals in fiscal ’19 is steady. Any additional color or detail you can provide behind that comment would be of interest to us.

Yes. The research publishing business is a significant substantial business as you know. It is not growing dramatically. There are many puts and takes across the business as we change business models and as we evolved our business models to meet the needs of our customers worldwide. So, there is a steady nature to the market itself and underneath the surface there are some puts and takes between subscriptions, Open Access models, our corporate business, and other segments, so that’s basically what’s behind the comment.

Okay. And then John just shifting gears to the cash flow, could you comment on the working capital benefit for the quarter or for the year and just working some rough math here if cash flow from operating activities is down high-single digits and you’re expecting CapEx to be down modestly, should we assume free cash flow is going to be around that $200 million threshold?

So, Drew, you are in the zone. So, as we commented earlier, cash from ops was up about 59 million, free cash flow up about 58 million, the change year-over-year in CapEx was only up 1 million. More than half of the improvement in cash flow came from working capital gains, and you’ll recall that we actually -- was the opposite way, we underperformed on the working capital at the end of fiscal ’17. So, we had indicated in our guidance that in ’18 we would recapture that underperformance on our working capital. So, we did and it contributed substantially to the improvement in cash flow for this year, and then next year we moved back into a more steady state.

Okay, okay. And then just one last housekeeping item from me. What should we assume for a tax rate in fiscal ’19, a book tax rate?

We’re expecting the tax rate will be in the range of 23% to 24%.

Okay, got it. Okay, thanks guys.

[Operator Instructions]. Moving on, we’ll go to Daniel Moore with CJS Securities.

Good morning Brad and good morning John.

Good morning.

I wanted to start with housekeeping and then work back to strategy. Based on FX rates right now, what would be the impact of revenue and EPS for Q1 and fiscal ’19?

If the current rates were to hold for the year, we would expect for the year to have an adverse impact of about 10 million to revenue and about $0.10 to EPS.

Perfect, okay. And then switching gears, as it relates to trends but also guide solutions specifically, can we talk a little bit about online program management and professional assessment, the growth is still positive obviously but not enough to offset what’s going on in corporate learning, and so we’re looking it's kind of low-single digit growth overall? Maybe just dig into each of those two pieces, those two businesses, what your outlook is for FX adjusted growth for each, and I think they may be a little bit slower than we had thought at least looking -- turning the calendar back a couple of years?

So, let’s start with the online programs business and then we can talk about assessments. So, in the online programs business, as you know for some time now, we’ve been working through a rotation in the portfolio of partners and programs to focus on opportunities where we could have partners that will be able to support and thrive with more programs and programs that will also be able to support more students. And so, we’ve been working through that rotation and that has largely driven what for us has been a decrease in the overall number of partners and programs in the short-term. We are, as commented, investing for growth, and we in fact expect to invest a bit more to accelerate growth in the year ahead. Our intent is to push the growth rate and the online programs part of our business back into double-digit rates and to do that in the coming year, but we’ve got some work to do there as you know. On the professional assessment side, we’ve been working through a bit of a pruning around the portfolio acquired in our profile's international acquisition, that’s the pre-hire part of our business, and we’ve also been working through some challenges around our go-to-market strategy there. We think we have about bottomed that out but that’s been drag on the professional assessment business, that part of the business as we’ve been pruning it, we’ve been taking out revenue, we’ve been actually improving profitability there as you’ll see in our results, but it’s been at the expense of some top-line performance. We’re expecting to bottom that out in the next year we’re about there. And then beyond that we should see that part of our business, it’s moved back in the direction of growth in the mid-single-digit kind of range.

Got it. That dove tails well into my next question which is, specifically what are the investments on the research side of the business that you intend to make in fiscal ’19 to accelerate growth?

So, the most important investments that we’re making in the research business are around growth in article output, and that includes particularly growth in our participation in Open Access, which we believe is great opportunity as Brian noted in his comments to publish more research that is certainly worthy of publication but doesn’t get published in the current environment. So, an emphasis around supporting Open Access growth and also emphasis around growing article output, in particular in China and in India. We also see opportunities to introduce new platforms and services in our Atypon business or as parts of our research business and we’ll roll those out in more detail as we come around with strategy discussion later in the summer or early fall. And finally, we’re making significant investments around editorial and content process as we said over the coming months so that we can enhance those processes streamline and accelerate the publishing process. And that’s going to require a little bit of upfront investment for us to do some of that reengineering work. Those are the key components of investment for research in the coming year.

And is it possible to quantify the roughly speaking amount of incremental spend you intend to make both in research and education?

I think, I prefer that we come back to that when we talk about strategy in the fall rather than get specific about it now. I think, we’ll be able to -- we take a little further along in where we are on some of the programs that we intend to implement before we get more specific about what that investment looks like. We've accommodated what we think is a reasonable placeholder if you will for investment in the current plan but we will get a little more detail to work through there.

And is that intended to be largely one-time in nature or are most of these investments we think of as recurring beyond fiscal ’19?

I would say that there is a mix, right, things like investing for growth in OA, are going to require a step up in spend that will have a continuing element about it. On the other hand, investment for improving our business performance, our operational performance in editorial and content will require some upfront investment and then it will pay it back in savings overtime. So, it’s a little of each Dan.

Okay. And lastly from me, a lot of great color Brian around strategy, around your place in the global education marketplace, around where you see Wiley fitting in and on a go forward basis. In terms of kind of longer term financial goals, is there a timeframe around which we should think about you providing whether its 2022 view or just long-term growth and margin expectations. Is that something we should expect some time in future?

Well look we’re in the middle of going through our strategic process. We’re having great progress, we are seeing significant opportunity in and around all of our businesses, we do expect those initiatives or those -- the initiatives that we pursue as a result of that planning process to generate growth and improve profitability. Very optimistic about that. I don’t see us providing a long-term view specific financial view anytime in the near future, but as we come to September and the months that follow, we will start to be able to discuss in greater detail what the specific directions are, where we are planning to invest any adjustments we might make to our allocation of capital across portfolio and things like that. But I don’t anticipate us providing a longer term financial view per se at that point.

Got it, thank you guys for the color.

[Operator Instructions]. And it appears there are no further questions at this point in time. We’ll turn the call back to Mr. Napack.

Thanks for joining us on the call today. Appreciate you’re joining us, we’ll talk to you when we issue our first quarter results in September.

Thank you. And this does conclude today’s conference. We’d like to thank everyone for their participation. You may now disconnect.