Good morning, and welcome to Wiley's Second Quarter Fiscal Year 2020 Earnings Call. As a reminder, this conference is being recorded. At this time, I'd like to introduce Wiley's Vice President, Investor Relations, Brian Campbell. Please go ahead.

Good morning, and welcome to Wiley's second quarter of fiscal 2020 earnings update. In the room with me are Brian Napack, President and CEO; and John Kritzmacher, CFO and EVP, Operations. A few reminders to start. First, 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. Second, Wiley provides non-GAAP measures as a supplement to evaluate underlying operating profitability and performance trends. Non-GAAP metrics, which generally exclude items that impact comparability, comprise the following, which generally exclude adjusted EPS, free cash flow less product development spending, adjusted operating income and margin, adjusted contribution of profit, adjusted EBITDA and results on a constant-currency basis and results excluding the impact of acquisitions. These performance measures do not have standardized meanings prescribed by U.S. GAAP, and therefore, may not be comparable to the calculation of similar measures used by other companies. This should not be viewed as alternatives to measures under GAAP. Also note we abbreviate the constant currency as CC. Please see the reconciliation and explanations of all non-GAAP financial measures presented in the supplementary information included in our press release. Important to note all variances in this presentation exclude the impact of currency, unless otherwise noted. 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 the presentation and a playback of the webcast will be available on our Investor Relations webpage. I'll now turn the call over to Brian Napack, Wiley's President and CEO.

Thanks Brian. Let me start with a brief refresher about our business and our mission. In a sentence, Wiley empowers researchers, learners, universities and corporations to achieve their goals in an ever-changing world. We do this by delivering research and education in the high-demand subjects and careers that are fueling the global knowledge economy. We deliver must-have content, platforms, and services that drive real outcomes in these areas. And we are committed to delivering a compelling value proposition to our customers with business models and pricing that meet the needs of today's demanding markets. In total, Wiley accelerates scientific discovery and advances powerful career-focused education. Our wonderful colleagues around the world are very proud of who we are and what we do. As a reminder, we operate and report in three segments. Our largest segment, Research Publishing & Platforms is a strong performer with favorable market and cash generation fundamentals. Wiley is a leader in this market, which is growing around 3% annually; the highest rate since 2011. We are investing in this business to publish more with increased quality and speed, and to support a more open research ecosystem. Through the first half, the business made up 52% of Wiley's revenue with an adjusted EBITDA margin of 34%. Our Academic & Professional Learning segment includes educational content and courseware used in both university and corporate settings. While the transition away from traditional books is weighing on results, we see increasing momentum in our shift to innovative digital courseware, especially those that target high-growth subjects and career areas. This segment represented 36% of Wiley's revenue in the first half and yielded a 24% adjusted EBITDA margin. Today, our Education Services segment engages in the comprehensive management of online degree programs for universities and has grown to include a broad array of tech-enabled service offerings that address our partners' specific pain points. Increasingly, this includes delivering full stack career credentialing education that advances specific careers with in-demand skills. We are a recognized leader in this market, which is now over $3 billion in size and is expected to approach $8 billion by 2025. Through the half, Education Services made up 12% of Wiley's revenue and generated an adjusted EBITDA margin of 8%, up from 1% in the prior-year period. Among Wiley's greatest strengths is our unparalleled network of customers and partners. This network is made up of the world's leading universities and corporations, and of course, millions of researchers, students, and professionals. We are leveraging this unique asset across all of Wiley's businesses to extend our reach, build new businesses, and better advance the goals of our customers. Now on to the quarter's results. First, note that we will be excluding the impact of currency when discussing financial performance. We continue to see good momentum in research and in education services while experiencing market-driven declines in Academic & Professional Learning, specifically in traditional books. Second quarter book publishing declines were somewhat steeper than expected, and we now anticipate revenue in this segment to be down by low-single digits for the year. We continue to sharpen our focus toward high-growth disciplines and must-have digital courseware, while also significantly enhancing our operating efficiency. That transition is progressing well. Having said that, we are seeing good underlying momentum in key areas across Wiley. In Research, we are attracting more article submissions, growing publishing volume and introducing new workflows, and new workflow tools that support our researchers. In Academic & Professional Learning, as stated, we are shifting our publishing program toward high-demand disciplines and high-impact digital courseware, and we are growing in high-potential areas like corporate training and test prep. This transition is progressing steadily, and we are seeing positive signs in these strategic parts of the segment. In Education Services, we are growing nicely by extending the core OPM business, and by delivering a broader array of essential university and career credentialing services that the market is demanding, and that leverage our core Wiley skills and assets. And across the business, we are on track to improve operating efficiency with steady progress against our stated business optimization goals. Adjusted EBITDA grew by 3%, while EPS declined modestly due to investment in growth initiatives, including acquisitions. Our Research business continues to report strong results, with revenue up 4%. We continue to see terrific growth from open access publishing models, and our subscription model remains steady. We are evolving toward a healthy blend of these complementary models. Demand metrics continue to be favorable with article submissions up 9% in the quarter and online usage continuing to grow with 3.3 billion Wiley platform sessions over the last 12 months. Researchers want to publish with Wiley, and the data shows that we're gaining share. Learning societies continue to migrate to Wiley as their publishing partners. We are the global leader in this essential part of the research publishing ecosystem. Net society wins for calendar year 2020 totaled $8 million annually, with the renewal rate of 88%. New society partnerships this quarter, included the Alzheimer's Association, the American Dental Education Association, and the International Society for Developmental Neuroscience. We're extremely proud that 12 of the recent Nobel Prize recipients were Wiley authors. This brings our total count to well over 500. Scientific discovery continues to accelerate the world over facilitated by peer-reviewed journals from Wiley. There is no substitute for the validation and promotion that our journals provide for our researchers and their discoveries. Adjusted EBITDA in Research grew 6% in the quarter, driven by revenue growth and optimization savings. We are building lasting relationships with researchers, improving the author experience and expanding to support them across the value chain. This relationship is the foundation of our growth over the long term. As Judy Verses, the Head of our Research Business, said at our recent Investor Day, researchers are our North Star, and we are maniacally focused on their evolving needs. In our many customer listening sessions, the feedback is consistent. Researchers value our journal brands, and they want their research out faster for the world to see, and we are making that happen. In fact, we reduced the number of days from acceptance to publication by 40% in the last 12 months, with more progress to come. We're giving researchers new capabilities to help them work more effectively. In the past couple of months, we have launched two exciting workflow tools, Cyprus and Manuscripts. Cyprus is a filtering tool that puts machine learning to work for every researcher, generating a personalized feed of the latest and most relevant information on topics of specific interest to their research work. Manuscripts is a research collaboration platform that enables multiple authors to work together, editing and annotating research articles in real time. Manuscripts makes it easy to share, verify and reproduce experimental results. We have also added other new capabilities, including a platform that offers continuous insights across different stages of drug development, and introduced promotional services for researchers that provide comprehensive article preparation, journal selection and article promotion support. We continue to improve the researcher experience by adding capabilities and enhance the productivity of the researcher workflow. Now onto Academic & Professional Learning, which had a difficult quarter in the first half, resulting from market-driven declines in book publishing. Challenges are most apparent in higher education publishing, as is evident across the higher ed sector. Our decline is significant, but in line with the market. While we see headwinds in the higher ed part of the Academic & Professional segment, we have strategies in place to address them, which I'll talk to in a moment. Overall, revenue in Academic & Professional was $178 million, down 5% or 9% organically. This was a result of a 12% decline in books, driven by print textbook revenue, which was down 23%. Note that print textbooks represent only about 5% of Wiley's overall revenue. Despite this, we are seeing positive signs, as we shift from high-priced books to low-cost, high-impact courseware, as we discussed at our recent Investor Day. We talked there about the significantly increased sell-through that results from the combination of lower price points and engaging effective digital courseware. An example of this is zyBooks, our newly acquired courseware for computer science and STEM disciplines, which is up 32% on a normalized basis. We are rapidly extending the zyBooks model to other high-demand career disciplines, like statistics and engineering. The integration of zyBooks and Knewton is on track, and we feel good about the trajectory of these parts of the business. We also saw a good second quarter growth in Test Prep, driven by the CMA and CFA programs, offsetting declines in CPA-related revenue, in line with our expectations. We also saw good growth in corporate training. Here we signed 90 new training partners to market our assessment-driven professional development programs and 10 new corporate partners for whom we will implement broad digital learning programs based on our cross-knowledge platform. Among the new partners is Naval Group, a European defense and energy giant. As is typical, we will help build Naval's corporate university by establishing a digital learning offering for its 20,000 people. Year-over-year EBITDA performance for the Academic & Professional segment was impacted by the book revenue declines and our investments to grow the courseware business, including zyBooks. Adjusted EBITDA was down 19% to $53 million. As indicated, we continue to see students in higher education turn away from traditional textbooks and toward required digital courseware. There is a reduced willingness to pay for non-essential content such as flat textbooks, and we continue to see the evolution of our distribution channels toward new business models and more affordable solutions. As discussed earlier, we are actively responding to these challenges by rapidly shifting the focus of our business. We are investing in publishing for the growing disciplines, skills and careers that are driving education across the economy. These include STEM, business and IT education. We are accelerating our move toward digital courseware that drives results, and we are actively driving affordability. This all has the demonstrated effect of increasing sell-through and thus revenue, while also enhancing customer satisfaction. We are also emphasizing our Test Prep and corporate training programs, where we are seeing good market-driven growth. And at the same time, we are realigning our expense base against proven opportunities and redoubling our focus on operating efficiency. We believe in education content for the long term, both for Academic & Professional markets. We have the right assets, a tight focus and a sound strategic plan to return to growth. While not a major driver of Wiley's growth plan, this business segment can provide consistent revenues and maintain highly attractive profit margins. Education Services delivered another strong quarter, with revenue up 80% or 10% organically. Note, this will be the last quarter of inorganic contribution from The Learning House. Student enrollments are up 9% year-over-year, driven by the implementation of new programs and partnerships. We added no new university partners this quarter, but the pipeline is solid and includes a broad array of schools and programs. At quarter's close, we had 65 university OPM partners, the largest OPM footprint in the industry. And we are seeing strong growth in the broader services portfolio, which I'll talk about next. Adjusted EBITDA was up significantly to $8 million. Certain one-time items and the timing of expenses boosted our EBITDA margin this quarter to 14%. For the year, we expect EBITDA margin in the mid-to-high single digits. In summary, we continue to manage this business consistently and prudently to achieve and sustain profitable growth. The core business at Wiley Education Services is performing well and is becoming a platform for even broader growth. Based on the strength of the traditional comprehensive OPM business, we continue to extend our offerings using Wiley's core skills to address the very needs of our university partners to extend to new markets and to help learners achieve their goals beyond their university degree with career credentialing services. Our targeted university services include academic design, marketing, student recruiting, student support and much more. For example, schools everywhere are struggling to compete for students. Wiley has an industry-leading ability to help these schools drive growth by identifying and attracting just the right student body that will succeed in their degree programs. It's a complex data-driven undertaking, and we do it very well. This quarter, we launched three new partners that require such targeted offering; Northern Illinois, Babson and Lindenwood. This part of the segment is showing double-digit growth. Momentum is building for Wiley in Europe, particularly in the UK with university partners, like Birmingham, Bath, Glasgow and Nottingham Trent. The international segment is an important opportunity for us, given our presence in key European markets and our reputation at global institutions worldwide. Increasingly, we are delivering career credential education to both students and professionals. Today this full stack education includes teacher professional development and IT skills training through which we develop and deliver professional credits and job placement through our 500-plus corporate partners. Our stated strategy is to actively bridge the gap between education and employment by delivering career-enhancing education through our university partners and for our corporate partners. I'll now pass the call to John to take you through our consolidated financials.

Thank you, Brian. For the quarter revenue of $466 million was up 5% driven by contributions from our Learning House, Knewton and zyBooks acquisitions. Excluding acquisitions, revenue declined 1% with challenges in Academic & Professional Learning book sales, offsetting strong organic growth in research and education services. GAAP EPS of $0.79, rose 4% with lower restructuring charges and a lower effective tax rate, offsetting higher interest expense and foreign exchange transaction losses. Adjusted EPS was down modestly, primarily due to investments in growth and optimization initiatives. Adjusted EBITDA rose 3% to $110 million and our adjusted EBITDA margin for the quarter was 24%. For the half, revenue of $890 million was up 5% in total and 0.5% organically, again driven by growth in research and education services. GAAP EPS declined by $0.36, driven by $0.15 in higher restructuring charges, investment in growth and optimization initiatives and higher interest expense. Our effective tax rate was 20% through six months, down from 22% in the year-ago period. Adjusted EPS declined 18% to $1.06, while adjusted EBITDA was down 5% to $168 million. I would note that our consolidated earnings performance was in line with our expectations for the first half of the year. Our cash flow used in operations and free cash flow results were favorable to prior year by $17 million and $7 million respectively. As a reminder, Wiley's cash flow is typically a use of cash in the first half of the fiscal year, principally due to the timing of collections for annual journal subscriptions, which is heavily skewed towards late fall and winter months. We expect free cash flow for the year to be in line with our prior guidance, up $60 million to $80 million over prior year. Capital expenditures rose $9 million to $56 million, due to investment in technology-enabled products and services. With a leverage ratio of 1.8 at quarter end, our balance sheet continues to give us the capacity to invest, acquire and return cash to shareholders. Our consistent record of returning cash to shareholders continued, with first half share repurchases and dividends totaling $63 million, in line with prior year. Our current dividend yield is roughly 3%, and 1.3 million shares remained in the current share repurchase authorization. Relative to our business plan, research and education services have performed well through the first half of our fiscal year. We originally expected Academic & Professional Learning to grow slightly this year inclusive of acquisitions. Given the market driven declines in book publishing through the second quarter though, we now expect that segment to decline at a low-single-digit rate. Overall, we are tracking to our annual financial objectives, and therefore reaffirming our full-year outlook for revenue of $1.855 billion to $1.885 billion; adjusted EBITDA of $357 million to $372 million; adjusted EPS of $2.35 to $2.45; and free cash flow of $210 million to $230 million. As a reminder, our outlook is based upon average foreign exchange rates for fiscal-year 2019 and excludes the impact of foreign exchange movements in fiscal-year 2020. It includes all acquisitions made to-date. Note that foreign exchange rate movements adversely impacted our first half revenue by $12 million and had only a small impact on our earnings. Our guidance is based upon the euro at $1.15 and the pound sterling at $1.31. If current exchange rates were to hold, we would see a full-year unfavorable impact to revenue of approximately $15 million and an immaterial impact to EPS and EBITDA. In summary, we continue to see strong momentum in Research and in Education Services, while experiencing market-driven declines in Academic & Professional Learning, particularly in traditional books. We are fully confident in our strategy to publish more in Research, migrate from content to courseware and high demand disciplines, and broaden our portfolio in Education Services, all while driving efficiency gains across the Company. We're making solid progress in each of these areas, and we remain confident in our guidance for this fiscal year, while continuing to drive towards achieving the fiscal-year 2022 targets we set out at the beginning of this year. I will now pass the call back over to Brian.

We at Wiley are making moves today that will drive profitable growth for years to come. As you know, we take a very long-term point of view. We have a terrific team, strong strategy to capitalize on the big opportunities that exist in research and education. Path forward will not always be smooth from quarter-to-quarter. We're feeling good about our markets, our direction and our progress. By now, you know that Wiley strategy is five elements; one, focused squarely on the disciplined skills and careers that the world demands; two, deliver the brands, content, platforms and services that our customers need to achieve their goals; three, enable all of our offerings with powerful technology that drives real outcomes; four, ensure a compelling price-value proposition for our customers; and five, continually optimize Wiley for efficiency and effectiveness. We see plenty of reason for optimism. Fundamentals in research and education are favorable for the long term. We see increasing momentum in many key strategic areas of the business. Our business profile is solid with 80% of our revenue coming from digital and tech-enabled services and 50% - 55% of our revenue recurring. Our balance sheet and cash flow are enduring strengths, and we continue to return cash to our shareholders while investing to grow. As always and as we enter the holiday season, I want to thank our wonderful Wiley colleagues for their great contributions to our ongoing success throughout the year. And thank you all for joining us today. For those who didn't have a chance to attend our October Investor Day, I encourage you to access the replay, which is available on our website under About Wiley. With that, as background, we welcome your comments and your questions.

Our first question comes from Daniel Moore with CJS Securities.

I wanted to start with Research, 4% underlying growth, obviously, ex-currency, a nice pickup and very healthy and you mentioned the market growing at about the fastest clip in maybe six, seven years. Was there any timing-related impacts, selling of larger newer contracts that boosted growth in the quarter? Just trying to get a handle on the sustainability of the growth that we saw.

I don't think so. No, in fact, there weren't. Basically, our growth is being driven by advances in our publishing volume. We're basically publishing more. We're expanding our publishing program. In addition, we have a set of smaller businesses such as our corporate training and digital businesses, which are growing nicely and rapidly. So, it's core underlying growth stemming from the strength of the publishing program and our move into adjacent business opportunities.

And in Education Services, what are - maybe I should be able to get back into this, but underlying organic growth for Learning House, specifically just trying to get a sense of the trends there, an acceleration or deceleration in momentum since coming under the Wiley umbrella?

This is John. I would say at this point we didn't actually break that out separately. We've integrated the operations, and so we don't really think of what we've got Learning House clients or we've got ed services clients. So organic growth overall for the Ed Services business was in the - around the 10%. So, continuing at double-digit rates consistent with our expectations. But there is not - they are not a distinguishable difference now.

And I'll just add that we've done a very good job of integrating the two businesses, so all the colleagues working on these businesses considered one business as well. So, we are not thinking of them separately anymore.

Lastly, just as far as the tax rate, a little lower than our expectations as - what's your - what are your tax rate assumptions or expectations for H2? And there have been - the full-year EPS guide is unchanged. Is there any change in the tax rate relative to the beginning of the year? Thanks.

So Dan, we've been guiding, as you know, to 22% to 23% for the full year. It's clear now at this point halfway through the year that they will be headed toward the low end of that range, but will be in that zone of 22% for the year.

Our next question comes from Drew Crum with Stifel.

So some adjustments - or maybe on the adjustment to the Academic & Professional Publishing revenue guidance for the year, but the total revenue guidance remains unchanged. So, is there any adjustments you're making to Research and/or Education Services within that?

So Drew, you are absolutely right. We have had a shift in expectations among the segments, and we noted that we're seeing a bit lighter performance out of the Academic & Professional Learning segment. But on balance, relative to our business plan overall, we're seeing some improved performance in other parts of the business, notably in the Research business. So, on balance, we're still in the zone on a consolidated view and feeling good about the year.

And then shifting over to Research. You mentioned, you achieved or you're looking for society publishing net wins of about 8 million for calendar 2020. Can you remind us what the comparison is or was for calendar 2019, and are you comfortable with that 88% renewal rate and what are the implications there on gross margin? I know royalties have been up the last couple of years, which has had a negative impact on gross margin.

So, Drew. I don't have off the top of my head what the net wins were for last year. I'm guessing it was somewhere lower than that. But yes. I think - I'm sure it was up. I just don't recall to what extent that was up in the prior year, but plus $8 million is a solid performance for calendar year 2020 for sure. And in terms of our overall renewal rate in the high 80s, I think that's quite good. We have had some fluctuation in our renewal rates over the past few years with that rate, as you know, veering toward the high-end in the past year. In fact, last year's renewal rate was in the high 90s. We're trying to balance that out a bit as we look at managing our portfolio for overall growth and profitability. And so, there were some - we're making some choices about renewals that will push that rate down a little bit, and I think we're doing a better job around reading where we need to be in the market given the quality of services that we're delivering to earn those renewals with our current clients. We've put a lot of focus on customer service in the last couple of years to help drive those renewal rates, and so I think we've begun to find a better balance there. All that said, we're managing our overall portfolio to balance out the royalty rates, ensure that we're getting the right balance there, and driving for profitable growth over time. And the net wins for the prior year, the net society wins were $3 million. So, we're up from $3 million to $8 million.

And then just last question. On Education Services, you demonstrated some nice year-on-year profit improvement. You did mention some favorable timing of expenses in the quarter. Can you address that in more detail and what the implications are for the second half of fiscal 2020? Thanks.

There were a few things that were - there was one item that was revenue related that was a matter of the timing something coming in the quarter that is non-recurring. And there was also the matter of some timing around expenses, which will probably even their way out over the balance of the year, including things like accruals for bonuses and accruals for benefits and such. So, on balance, we would say the second quarter from a profit perspective is not a trend. But if you look across the year, as Brian commented, we're expecting adjusted EBITDA for the Ed Services business to be in the mid-to-high single-digit range and that would be up from 3% for fiscal-year 2019.

And John, remind me, was that the prior guidance? I don't recall you guys giving an adjusted EBITDA margin range for fiscal 2020. Is that…

So we had - we reported, as I noted, 3% last year, and we said in our view for fiscal 2022 that we're targeting 15% adjusted EBITDA. We had not previously given a view on the year. But we are now, because we didn't want to call out that the uptick in the second quarter is not a trend in and of itself but across the full year. We are expecting to see a significant improvement in adjusted EBITDA for that part of the business.

Our next question comes from Daniel Moore with CJS Securities.

Thank you, again. And I appreciate the color, John, as it relates to FX. And I just want to make sure I'm hearing you correctly. Essentially, negligible impact year-to-date thus far on - from an earnings perspective and if we - if the rate stayed around where we are now would also be negligible relative to your full-year guide. Is that right?

Yes. That's correct. The adverse to revenue by about $15 million at the current rates. But the impact to earnings is immaterial for the year.

And if we play that out to your fiscal 2022 goals similar $3.50 adjusted EPS goal, right now there hasn't been any material impact relative to where we started?

No. We're still sticking to our fiscal-year 2022 targets. We have not made any changes there. Obviously, we've got a bit of a challenge around the Academic & Professional Learning books business. But again on balance, as we look across the first year of that three-year horizon, overall, we are performing in line with our business plan, and we've seen some improvements in other parts of the business that are helping to offset the decline in the books business.

And one more if I may, just in terms of M&A pipeline, as we look to the balance of fiscal 2020 at least, are you kind of more in the digestion mode as far as integrating Learning House and zyBooks and some of these others or are you still kind of very active near term and longer term?

Yes. We are continuing in the market to be active with looking at opportunities that can materially advance our strategy. And so that is - we certainly always continue to have a pipeline of opportunities. We are doing a very good and consistent job of integrating the acquisitions that we have. But we will continue to look at opportunities as they come up. And as I said, we have an active pipeline.

And I'm not showing any further questions at this time.

All right. Well, thank you for joining us on the call today, and we'll look forward to presenting our third quarter results in March.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.