Good morning, and welcome to Wiley’s Third Quarter Earnings 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.

Good morning, everyone, and welcome to our third quarter 2017 earnings call. Just some housekeeping items before we begin. 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 filings with the SEC. The company does not undertake any obligations to update or revise forward-looking statements to reflect any 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 the presentation and a playback of the webcast will be available on our Investor Relations page. I’ll now turn the call over to Mark Allin, Wiley’s President and CEO.

Thank you, Brian, and good morning, everyone. Joining us on the call today is John Kritzmacher, CFO and Executive Vice President, Technology & Operations. I will speak to business performance, and John will follow with an update on operations, balance sheet, cash flow and outlook. Before talking about results, note that I will be excluding the impact of foreign exchange when commenting on all variances. Foreign exchange continues to be a revenue headwind, particularly in light of the Brexit decision. The unfavorable impact to revenue is approximately $13 million for the quarter and $37 million for the nine months. In terms of EPS, the currency impact was neutral in the quarter but unfavorable by $0.05 for the nine months. Please note the impact of FX on our EPS is somewhat naturally hedged by the global footprint of our operations, particularly in the UK. Now onto results. Revenue for the quarter was up 3%, which is primarily due to the $29 million favorable impact of the shift to time-based journal subscriptions. As a reminder, while the transition from issue-based to time-based digital journal subscriptions for calendar year 2016 to simplify the contracting and administration of these agreements, approximately $34 million of revenue and $0.38 of EPS shifted from fiscal year 2016 to this fiscal year with most of it showing up in this quarter. Note the original projection was for $37 million and $0.42 but the numbers have changed a bit due to foreign exchange impacts, primarily weakness in the British pound. Also contributing to revenue growth was an $8 million contribution from the Atypon acquisition, steady performance from journal subscriptions and a double-digit growth from the Solutions segment which helped offset a market driven 18% decline in book publishing revenue and the impact of an unusually large one-time $10 million…

Thank you, Mark. Adjusted shared services costs declined 4% in the quarter driven by 5% declines across distribution and operations and technology and content management. We continue to make real improvements in our operational effectiveness as an organization with more opportunities still ahead. Technology, excluding content management, was down 5% in the quarter due to lower applications development expense, including lower ERP spending. We expect technology spend, which includes our ERP investment, to be up about 5% for the full year. Looking more broadly, we continue taking actions to drive operational excellence and cost efficiencies across all our businesses. Towards that end, we incurred a $9 million restructuring charge in the quarter. Approximately 6 million of the charge relates to facilities consolidations with near-term paybacks. Another 3 million of the charge covers severance related to additional workforce efficiency gains. Our balance sheet continues to provide us with the flexibility and capacity to prudently invest in our business while also returning capital to shareholders. At the end of the third quarter, net debt had been reduced to 383 million from 429 million in the prior year period. On a trailing 12-month basis, net debt to EBITDA was 1.1 and also 1.1 at the end of the prior year period. With respect to potential acquisitions, our interest remained focused on enablers for profitable growth in digital, research and learning solutions. These opportunities would include adding highly synergistic products and services and increasing scale in our growth businesses. Cash flow is up sharply year-to-date with operating cash flow at 229 million versus 117 million in the prior year and free cash flow, less composition spending, at 120 million versus 19 million in the prior year. Note that we have expanded the free cash flow label for clarity but the underlying metric is unchanged.…

Thanks, John. In summary, Research and Solutions continue to perform well and as expected. We are focused on improving top line growth in the former and profitability in the latter. Atypon is a key strategic focus for us allowing us to blend together content and service in this global digital and dynamic marketplace. It immediately positions us as an innovative leader in this space. Our focus is to improve top line performance in this all-important segment and we believe we have the assets to do that. Our online program management business is showing very strong momentum with the signing of four new partners and 19 new programs. The partnerships are getting larger as evidenced by our George Mason announcement. Corporate learning continues to make good progress on two continents with new corporate clients signed in the U.S., UK, France and Germany. In addition, the year-to-date profit contribution for the Solutions segment has risen from $500,000 in the prior year to nearly $11 million today. We are addressing the issues in book publishing. We will provide more detail on performance and remedial actions during our year-end conference call. We recognize the problems, we’re addressing them and we’ll share more information as we finalize our plans. Our content is still in demand but the market is evolving rapidly presenting both challenges and opportunities, which we are moving to address at pace. Our operational revenue outlook for this year has been revised downward but adjusted EPS is reaffirmed. While fiscal 2017 is an investment year and books are challenged, our foundation in research and learning services remains on very solid ground. Our strong cash flow generation should only improve over time and our focus on operational excellence and investment should yield significant long-term benefit. We have work to do but we remain fully confident in our asset base, including both content and platforms, in our market position and in our people. With that as background, we welcome your questions.

[Operator Instructions]. We’ll take our first question from Dan Moore with CJS Securities.

Good morning. It’s actually Robert Majek filling in for Dan today.

Hi, Robert.

Looking at education textbooks, it is a bit unusual to see an acceleration in the rate of decline at this point in the academic year. Are there specific channels where you’re seeing more weakness and is rental penetration accelerating?

So I think there are three – if we step back from one quarter, I think it’s always important with the education business to look across 9 to 12 months partly because the timing of ordering, the shift to digital ordering which moves further up in the cycle and much closer to the start of the semester can all impact it. But the same basic trends applied in this quarter is applied through the rest of the year and it’s roughly an even mix between adjustment in inventory in the channel, which turns up for us in the form of returns, the impact of rental as a lower cost option for students and the softening of enrollments. So I think what you’re seeing primarily in this quarter is the continued inventory correction piece of that whilst on a lower base of enrollments with rentals still an impact. So there’s no real shift between those drivers. They just continue to intensify as they have done over the last nine months.

And is there a base level of revenue for education texts once you reach, you kind of foresee the rate of decline leveling off?

That’s harder to project forward at this point. I think there are so many things at play including student behavior, the level of enrollments, the mix between the use of digital core solutions which is obviously where we are anticipating the market to go over time and where our investment is. But in the meantime we’re still facing particularly the impact of lower cost options. So at this point I wouldn’t speculate about that.

Okay, thank you. And just lastly for me on online program management, congratulations on signing the four new partners. Just in terms of contribution to earnings with dilution, should we still expect profitability in the segment to improve in fiscal '18, or will start-up costs related to new partners pushed out further a bit to the right?

Robert, this is John Kritzmacher. We are expecting as we’ve said throughout the year that for fiscal '17, the performance in terms of profitability for the online programs business will improve substantially. Last year, we were on the order of $0.16, $0.17 dilution where we have said throughout this year that we expect dilution for the online programs business to be somewhere on the order of $0.10 and we’re making steady progress towards that in our results through the third quarter.

Thank you.

Thank you.

Thanks.

We’ll take our next question from Drew Crum with Stifel.

Okay. Thanks. Good morning, guys.

Hi, Drew.

On the calendar '17 journal subscription renewals being up 5% year-to-date, can you talk about the nature of the remaining 13% you got contract for? The math would suggest that that part of business would be down pretty significantly year-on-year, but just want to make sure that’s accurate and understand how you get to up only 1% when you’re up 5% year-to-date.

So, Drew, what we’re seeing principally at this point in time is timing differences that we are attributing to our move of our largest and most mature customers on to a database model, which essentially is providing unrestricted access to our library rather than highly specified title by title sorts of subscription decisions. That approach to contracting subscriptions with our larger customers has greatly simplified the whole administrative cycle and selling cycle around those subscriptions. So what we’re seeing is renewals happening earlier and that’s providing us with growth at this stage. But we essentially see that as a pull-forward in time from subscriptions that would have largely closed in the quarter that we are now in, in the fourth quarter. So it’s timing for the most part.

Okay. And then two other housekeeping items on Research. The Atypon dilution that you’re expecting now $0.10, I believe it was previously $0.15. Can you confirm that and what’s driven the change in the expected dilution?

So yes, it was previously – we had seen it as being on the order of $0.15. It’s now favorable to that. Much of the favorability comes from the integration costs that we anticipated being lower so far and what we expect for the balance of the year. That’s the most important part of it.

Okay. And John, can you remind us the impact that the backfile sale had in the year ago period in terms of accretion to earnings?

So the backfile sale in the year-ago period was 10 million in terms of revenue and it was about $0.10 in terms of its impact on earnings.

Okay. And then just one last question for me in terms of the online program management deals that you announced, without getting into specifics with respected terms and economics, any commentary on how these compare to the 10-year partnership you signed with George Mason?

We’ve talked for a little while about evolving this business towards bigger more recognizable national brand partners with whom we can develop longer term relationships across a broad number of programs which we develop over time and programs which we believe would drive higher average enrollments over time as well as the core driver. And all four of the relationships that we’ve signed, obviously three in the U.S., one’s a very recognized brand in Europe, represent the kind of partners who we think give us that market reach brand recognition in the kinds of programs which will attract students looking for education solutions to their employment needs and professional growth. So these are the right kind of partners developing the right kind of programs over time.

And Mark, just to finish the question, the duration of the George Mason deal, are you guys sacrificing economics in favor of longer duration partnerships or no?

No. I think the basic economics of per program that we’ve talked about before, the upfront investment in marketing have moved towards economic productivity over a two to three-year period applies. The 10-year relationship here is really about us developing a broad set of programs over time and having confidence that we can do that. It doesn’t really shift the economics on a program basis and therefore on a partner basis overall.

Okay, all right. Thanks, guys.

Thanks, Drew.

Thank you.

[Operator Instructions]. We’ll take our next question from Allen Klee with Sidoti & Company.

Yes, hi. During the Analyst Day, you talked about longer term goals of growing research at faster than the market rate. Can you talk a little about your thoughts of when you might start to see that and the actions you’re taking to get to those goals? Thank you.

Sure and I can talk about it roughly in the same way as we did in the Investor Day. So there are three key drivers. One is continuing to grow our output in publishing footprint, so capturing a greater share of output; continuing to grow our market footprint in terms of customers, particularly global; and obviously leveraging the investment in Atypon to position us both to compete and win society business and to grow services that we offer towards some partners more generally. Those are multiyear investments but we’re putting those in place now and we expect to see the benefits of those begin to show up in the way that we’re performing and in our results over a two to three-year period and beyond. But they’re investments for the long term.

Okay. Thank you. Also just a question on the tax rate. Can you talk about the – it looked like it was kind of low for the quarter and what was behind that, and does that change anything going forward?

Sure, Allen. So we had about $0.12 in non-recurring tax benefits in the quarter. Those relate to foreign tax credits and they are tied to some actions that we took to lower our external debt by taking advantage of cash balances. So that had the effect of lowering our tax rate year-to-date to about 19%. And we’re expecting for the year it will end up somewhere right around 20% give or take.

Okay. Thank you very much.

Thanks, Allen.

Thank you.

[Operator Instructions]. We’ll go back to Dan Moore with CJS Securities.

Good morning. Thank you. I apologize if you’ve covered these previously but just looking at corporate learning and online test prep, both had sort of nice upticks. Just talk about what you’re seeing there, what areas of the market or disciplines you’re seeing growth and your outlook for the remainder of this year but the rest of calendar '17?

Hi, Dan. So the corporate learning business which is built primarily around the CrossKnowledge acquisition that we made a couple of years ago, so our focus continues to be on securing three-year subscription deals with large enterprise customers to provide customized and focused learning for their workforces globally. And a demand for that continues to grow. We have a small but growing footprint in the U.S. and we continue to consolidate our position in Europe. It’s a market that is – the digital corporate learning market continues to grow globally. It’s somewhat fragmented but we now have a pretty significant market position and continue to see a good pipeline of potential clients going forward and to be confident in the ongoing growth for that business. And in the test preparation business, the focus there is really on growing students for the existing programs that we have, particularly the core CPA and accounting and finance programs. And we’re seeing those students come from all over the world. But we’re also adding programs. We talked about the ACT program on this course and we continue to add new courses at a clip through the next 12 months, so feel good about the growth story there as well.

Got it. And then maybe just a housekeeping in terms of the shift to time-based journals, $0.33 this quarter. How much of the $0.38 EPS benefit for the full year is left or remains to be achieved in fiscal Q4?

So Dan, we’re done. There was $0.05 in the first quarter, $0.33 in the third quarter and that’s it now.

Got it. And no remaining impact as we think about fiscal '18, correct?

Correct.

Perfect. Thank you.

We can stop talking about this. After almost two years, we can stop talking about this starting next fiscal year.

Sounds good. Thank you.

Thank you.

And there are no further questions at this time. I’d like to turn it back over to Mark Allin.

So thank you everybody for joining us today and we look forward to speaking with you again at our year-end call in June.