Good morning everyone and welcome to the Wiley's Fourth Quarter and Year End Earnings Call. Today's conference is being recorded. For opening remarks and introductions, I will turn the call over to Wiley's Vice President of Investor Relations, Mr. Brian Campbell. Brian, please go ahead.

Thank you. Good morning everyone and welcome to our fourth quarter and fiscal year 2015 earnings call. On June 1, Mark Allin became Wiley's 12th President and CEO since the company's founding in 1807. Mark was previously Chief Operating Officer and before that, Executive Vice President in charge of the Professional Development segment, where he oversaw the divestiture of consumer publishing assets, the acquisitions of Inscape, eLS, Elan Guides, Profiles International and CrossKnowledge, and has transitioned to digital learning experiences and solutions. He joined Wiley with the acquisition of Capstone Publishing in 2000, a company he founded. He went on to serve as Managing Director of Wiley Asia, with oversight of all three business lines in a rapidly growing region. Simultaneously, Steve Smith has retired from Wiley after 23 years at the company, and four years as President and CEO. Mark will be talking about that in a few minutes. Before I pass the call over to him, I'd like to remind you that this call is being recorded and may include forward-looking statements. You should not rely on such statements as actual results may differ materially and are subject to factors that are discussed in detail in the company's 10-K and 10-Q filings with the SEC. 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 would like to still view the slides, we recommend clicking on the gears icon located on the lower portion on the left-hand side window and selecting Live Phone. This will eliminate any delays you may experience in viewing the slide transitions as well as remove any potential background noise should you ask a question on the call. A copy of this presentation will be available on our Investor Relations page at the conclusion of the call. Thank you. I'd now like to turn the call over to Mark.

Good morning everyone. I'd like to start out by saying that Steve is doing exceptionally well. In fact, he has a 300 mile cycling trip for charity planned through India, which is typical of Steve. On behalf of all our colleagues, the Board of Directors, John and I would like to thank Steve for his extraordinary contributions over 23 years. He was instrumental in the development of Wiley's international operations. He played a key role in our largest ever acquisition, Blackwell Publishing, and led to company during a key phase of our transition to digital content and solutions. Steve made a lasting impact, and we have the better for it. As usual, I will begin the call by discussing business performance and then John will follow with an update on operations and finance. We will follow those updates with our guidance for fiscal 2016. Unless otherwise noted, I will be excluding the impact of foreign exchange when commenting on all variances, to give a consistent measure of operational performance. Also note, that adjusted numbers exclude the impact of restructuring charges and unusual items in the current period and the previous year. Unless otherwise noted, I will be discussing numbers on an adjusted basis. Fiscal year 2015 was a good year for Wiley. We achieved both our revenue guidance on a constant currency basis, and our earnings guidance, even with a significant foreign exchange headwind. In fact, we would have exceeded our EPS guidance range, if not for the adverse impact of a stronger dollar. Research journals, our largest and most profitable business line, showed steady growth of 4%, with subscriptions, funded access and backfiles, all contributing. Talent Solutions revenue from our recent acquisition achieved double digit growth rates. Education Services, formerly Deltak, saw considerable progress with larger university partnerships, in…

Thank you, Mark. Picking up on the next slide, adjusted shared services costs were flat with prior year, as the 10% decline in distribution and operation services and a 1% decline in finance costs, offset increases in technology and content management and other administration costs. Technology, excluding content management increased 10% for the year, as we continue to invest in platform enhancement and expand our solutions businesses. Cost reductions across distributions and operation services and content management, were driven by restructuring savings, and the benefits of our shift to a more variable cost structure to track with declining print volumes. The noteworthy increase in other administration expenses, reflects the expiration of a real estate tax incentive for our Hoboken headquarters. Some early stage investment in our multiyear global ERP implementation, and occupancy costs related to our recent acquisitions. Turning to the balance sheet, net debt grew $79 million over prior year, due to our CrossKnowledge acquisition. Our net debt-to-EBITDA ratio on a trailing 12 month basis remains very low at 0.7, providing us with significant capacity to make further strategic acquisitions. Areas of acquisition interest include talent management, with a focus on learning and development solutions for enterprise customers. Technology enabled services targeting educational institutions, including additional scale and online program management, and finally journal's content and journal related technology. Our strong interest in talent management and Education Services acquisition is consistent with our overall strategy to offer solutions spanning education to employment. Free cash flow of $247 million was $3 million lower than prior year, driven by a $12 million increase in capital investment and technology, and higher cash payments related to restructuring. Cash from operations of $355 million was $7 million higher than last year. We expect higher capital expenditures for the next few years, primarily due to…

Thank you, John. I am deeply honored to hold this position. I am positive, I am committed to our future. Wiley is a unique business, with a history of performance and innovation over decades. We have tremendously powerful content, brands and relationships. We have some of the most talented people in the industry. To-date, we are at the intersection of some significant global trends, including the emergence of knowledge-based economies, the critical importance of education in research and development to economic progress, the shift to online, adaptive and outcomes based learning, and the global need for higher level skills. Companies, individuals and students, all need to differentiate themselves, in a changing global marketplace. Wiley enables them to do this. We help to develop better professionals and better scientists. No other company spans education and employment, the way we do. Our mission is to deliver the skills and knowledge people need to be successful. We will leverage our core content and capabilities, alongside our new businesses, to create lasting, competitive advantage, and we will make acquisitions to accelerate growth in scale. Looking beyond fiscal year 2016, we are expecting good underlying growth in revenue, EPS and operating margin. As a reminder, we set down goals in September 2013 that called for mid single digit revenue growth for FY 2017, as well as 10% or better EPS growth, and 17% or better operating margin. In terms of revenue, our overall book revenue has been more unfavorable than expected, and we are working to migrate that business to a higher value offering, and align our costs. In addition, we have not made any new solutions acquisitions since May 2014, which was a condition of reaching our mid-single digit growth goal, although we remain active and positive. In regards to earnings, besides the impacts…

[Operator Instructions]. And we will go first to Daniel Moore, CJS Securities.

Good morning.

Hi Dan.

First question, if FX rates stayed where they are today, what would be the estimated revenue and EPS impact on a year-over-year basis in the fiscal year 2016, relative to fiscal year 2015?

As Mark noted in his comments, the 2015 versus 2014 impacts were $27 million in revenue and $0.11 on EPS. And if the current rates were to prevail the impacts on revenue for Wiley's fiscal 2016 year-over-year, would be more on the order of approaching $40 million in revenue and approaching $0.14, $0.15 in terms of the EPS impact. So till considerable headwind at the current FX rates.

At current rates, okay. That's helpful, thank you. In terms of journals, what type of growth rate is embedded in your low single digit revenue guidance, constant currency for next year, and I think you said you're encouraged by the pipeline for calendar 2016, if you could elaborate on that, that'd be helpful?

So let me start, and then Mark can jump in if he has something to add. So with respect to our expectations around journal growth overall, we said we'd expect to see the positive journal revenue to rise in the low single digits. Inside of that, is an anticipation that we are going to see journal subscription growth on the order of 1% to 2%, probably in that lower end of the low single digit range, consistent with what we have seen in the performance that we have reported over the last few quarters.

And I would just add Dan, on the [indiscernible] wins and losses, this is a very competitive market. We have ups and downs, as we go from year-to-year, but as we look into 2016, we have a healthy pipeline. We are continuing to work that, but we are not able to say more about that at this point.

And Mark included in his comments, the balance of the Swets bankruptcy, that carries over into fiscal 2016 is about a $3 million, so that's one of the things that's putting pressure on a year-over-year growth rate for journals. And then as we have noted, we had net losses in the overall balance of calendar year 2015 this year, so that's also putting some pressure on the rate growth.

Understood. Shifting gears to Deltak, what level of EPS profitability or loss is embedded in this fiscal 2016 guidance?

I am sorry. Could you repeat that please?

In terms of Deltak, I believe it contributed a loss of about $0.14 in fiscal 2015, just wondering what that number would translate to for your 2016 guidance?

So we are not going to guide specifically at that level of detail. But I would say, Dan, for sure, that we are expecting that that will improve in our fiscal 2016 period. I think it's also worth noting, while Deltak is dilutive to the business overall and we include in the interest costs associated with the acquisition of the business. At an EBITDA level, it was just marginally negative in our fiscal 2015, and we expect that that will turn positive in fiscal 2016.

Perfect. And then -- you gave great detail on the shared services and technology. Just to clarify, the ERP investment of $75 million through 2017, is that a figure that is starting from zero -- in other words, starting from the beginning of fiscal 2016, an incremental $75 million, and do you expect that to be relatively evenly spread across the two years?

We had some investment included in our fiscal 2015 results. So the $75 is an incremental to that and more than $0.15 is again, incremental 2016 against 2015. The bulk of our investment is the $75 million, it happens inside of 2016 and 2017, and then it will begin to tail off in fiscal 2018.

Okay. I will jump back in queue. Thank you.

Thanks Dan.

[Operator Instructions]. We will go next to Drew Crum with Stifel.

Okay, thanks. Good morning everyone. And Mark, welcome. My first question pertains to the fiscal 2017 guidance. Mark, you provided some comments, some updates there. Are you guys abandoning the 17% EBIT margin target that you had established a couple of years ago?

The numbers we talked about, those were goals, Drew, and we continue to believe that those goals are attainable, and to work towards them; for the reasons that we have walked through, given the underlying strength of the journals business and the growth in the solutions business. Book performance has been more unfavorable than we expected, during that period, and we didn't make further acquisitions during the last fiscal, which was a condition of reaching those goals in 2017. Those remain our goals. We don't expect to reach them in 2017, but they remain the numbers that we are focused on, but we are not giving guidance beyond that at this point.

Okay, got it. And then, as far as CrossKnowledge and Profiles are concerned, can you talk a little more about the performance of those businesses? I think you noted that, they were modestly dilutive in fiscal 2015, what are you anticipating for fiscal 2016, in terms of accretion or dilution of the numbers?

Okay. So I will talk a little bit about the performance of the businesses, and then I will hand over to John to talk about the impact. So CrossKnowledge is performing well; but putting accounting adjustments aside, the business grew operationally around 20% during the fiscal year. Good growth in the home markets in Europe. We are making some real headway in the U.S., and we feel good about that. Operationally, Profiles actually declined by about 5% in the year. We took the decision early on to readjust the distribution model, so we could scale the business more quickly and grow the margins more quickly, in line with our existing assessment businesses. So we basically improved some lower margin business and set that business up for growth going forward. So although we underperformed in the revenue line, it actually gets better in terms of profitability. So we feel good about both going forward.

And then Drew, with respect to dilution, we said at the beginning of the year, that we expect the combination of Profiles and CrossKnowledge together to be dilutive on the order of $0.10 for the year. Our actual results for the year were just slightly favorable to that, and I am expecting that as we make our way through our fiscal 2016 period, that we will see some continued improvement. Although, as I commented around the guidance, in general, from our solutions businesses, I am expecting the improvement in profitability to be muted by our continued investment in those businesses, with a priority on gaining share. So don't expect a large improvement, but I would expect an improvement.

Okay. And then just last question from you John, the $35 million of incremental CapEx that you're anticipating in 2016, is that a run rate that we should expect beyond 2016, or does it drop off, once you get past fiscal 2016?

I am expecting that it will start to tail down a bit after 2016. So 2016 is a peak for us, and we got a lot of work to do on the ERP implementation, and the $35 million on it, keep in mind, is also a significant level of capital investment in our Hoboken facility. We hit over that peak, and in 2016, it will start to come down a bit in 2017 and then again beyond that.

Okay. Thanks guys.

Thank you.

[Operator Instructions]. We will go next to Jeffrey Matthews with RAM Partners.

Thank you for taking my question. Can you hear me?

Yes.

Great. I am just curious on two things, number one, on the ERP implementation, could you give an example or two of areas where you specifically believe that it will lead to cost savings? And number two, just in terms of acquisitions, I wonder if LinkedIn's acquisition of Lynda.com was something that maybe crossed your mind. Is that an area that might have been or might be of interest to you at some point in the future, and do you think, LinkedIn in general becomes either a partner to Wiley or a potential competitor to Wiley? Thank you very much.

All right. Thank you. This is John. Let me take the ERP question, then I will ask Mark to take question on acquisitions. So with regard to our ERP implementation, the scope of our implementation includes SAP implemented for recording core capabilities and also the implementation of a substantial element of our order to cash processes that are currently run on in-house builds and maintenance systems. Among the examples of the gains we will get from our implementation, we will migrate from what our multiple instances of JD Edwards updated platform today, to one global SAP instance for all of our records report capabilities, and then again, incorporating order cash. So we are moving to a modern platform, gives us global visibility around the business, with globally consistent data. It greatly improves the efficiency and effectiveness, for example, of the finance function, where we will have ready access to reliable consistent information around the globe, that greatly simplifies our transactional activities through automation and consolidation centralization. If you look at the results that we posted for the year, and you look at the -- we included in the slides, the amount of spend we have on the finance function, we will see that is well beyond typical benchmarks, at least as a percent of revenue for the finance function would cost. The ERP implementation will be a very-very important enabler in us taking that level of finance spend down to a level of a competitive benchmark.

Thank you that's really helpful.

Thanks for the question on LinkedIn and Lynda, which is smart. Obviously I wouldn't comment on any particular transaction and whether we are engaged or not. I would say that, that transaction and a number of others, including those we have participated in, indicate that this is a pretty hot marketplace right now, and one that I think underlines real demand worldwide for education employment solutions, and that's right in the heartland of where we are and where we are headed in the business. I'd also say that, the LinkedIn-Lynda deal, shows that there is a real premium value on high quality content, and that's what took LinkedIn to Lynda, and we have that in abundance. One of the greatest things we bring to this marketplace is, years of experience and deep reservoirs of important content. And the third, is that access to customers is important, and so is partnership. And certainly, as John and I both indicated, our pipeline is good, we continue to react here and look for both partners and acquisitions that can take the business forward. Obviously I wouldn't comment on any particular potential partner and target in doing that, that's a great question. Thank you.

Well great answers. I appreciate them both. Thank you.

Thank you.

[Operator Instructions]. And we will take a follow-up from Daniel Moore with CJS Securities.

Thank you again. You highlighted obviously the exceptionally strong balance sheet. You generated a ton of cash and the fact that you took a pause during fiscal Q4, in terms of repurchasing stock, with the stock having drifted a bit. Are you now in a position where you would be considering being more aggressive on buybacks?

Dan, what I would say is, we took a pause only for the reason that we described. So working through the CEO succession process, we felt that it was prudent for us not to be in the market, but in terms of our belief that there is value to be had in our shares that at current trading level, we continue to believe that, and we fully intend to resume share repurchases. Probably in line with our pattern over the recent years, so and be be more specific than that, but we certainly expect to resume our purchases.

Got it. Thank you.

We will take our next question from Jeffrey Matthews with RAM Partners.

Hi. Thanks again. I appreciate it. Jeff, just as a follow-up through the comments about the book publishing weakness; I just wonder if there is something new or incremental in that area or that space that has made it more difficult than in recent years in general?

Jeff, its Mark. I think what we have seen -- the few things that we are seeing consistent with the industry, one is obviously changing in consumer buying patterns, there are so many different ways to consume content than books, and that continues to pace through multiple devices and choices. That obviously has an impact, particularly on print purchases. That has a knock-on impact on the strength of retail channels, and reduces the number of outlets. And those really are continuing trends. I'd also point to some flattening out of the consumer e-book market over the last 12 months or so, which has impacted the industry. Our own digital book business is driven as much by licensing to institutions and custom deals with universities and corporations which is strong, but the underlying consumer business has also shown some weakness, which is why we have mainly withdrawn from consumer and generally into those kinds of publishing. So there is nothing new, it’s a continuing trend based on consumer demand, the consumption in the way the channels are behaving, and that's why we are moving with the pace we are, to keep up with that.

Understood. Thank you very much.

And gentlemen, with no other questions in queue, I will turn it back to you for closing remarks.

So we thank you again for joining us on the call today, and look forward to speaking to you again in September.

Ladies and gentlemen, thank you for your participation. This does conclude today's conference.