Good day and thank you for standing by. Welcome to the Wiley's Fourth Quarter and full year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to your speaker today, Mr. Brian Campbell, Vice President, Investor Relations. Please go ahead.

Thank you, Joan. Hello, everyone and thank you for joining us. With me are Brian Napack, President and Chief Executive Officer; and John Kritzmacher, Chief Financial Officer. A few reminders to start. This 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, Wiley provides non-GAAP measures as a supplement to evaluate underlying operating profitability and performance trends. These measures do not have standardized meanings prescribed by U.S. GAAP and therefore may not be comparable to similar measures used by other companies, nor should they be viewed as alternatives to measures under GAAP. Unless otherwise noted, we will refer to non-GAAP metrics on the call and variances are on a year-over-year basis and will exclude the impact of currency. After the call, a copy of this presentation and playback of the webcast will be available on our new Investor Relations web page. I'll now turn the call over to Wiley's President and CEO, Brian Napack.

Well, good morning, everyone and thanks for joining us. Let me start by acknowledging our colleagues, customers, and partners in India, Sri Lanka, and Brazil and elsewhere around the world where they are still struggling mightily with COVID-19. We all look forward to a day when this terrible crisis is behind us. This past year's profound health, economic, and social challenges continue to remind us Wiley of the importance of what we do. We enable scientific and medical discovery. We power education, and we shape the workforce of tomorrow. To our work, Wiley as a business is committed to unlocking human potential, which we need now more than ever. Fiscal 2021 was a good year for Wiley. Our consistent strategic focus on open research and career-connected education paid off, and we saw strong financial performance and increasing momentum. Our markets began to emerge from long periods of transition, and they demonstrated strong demand for fully differentiated digital products and services and for business models that works for both Wiley and for our customers. Long-term trends, such as open access and online education were pulled forward by the crisis, clarifying what the future of research and education will look like and strengthening our growth outlook. Wiley's execution in this most challenging year was exceptional. Our team around the world adapted well to a fully virtual work environment and very fast changing market conditions. They took good care of our customers during a time of great need while continuing to drive our strategy forward and improve our operations. Notably, our colleague engagement worldwide has risen significantly during this period. One reason for the high engagement is our people's deep belief and the unique impact that they have on society year in and year out. The more researchers and learners we help to…

Thank you, Brian and good morning, every one. As Brian noted, the Wiley team has made significant progress in refining and executing our growth strategies while also driving important gains in operational efficiency and effectiveness. Our improved revenue and profitability in fiscal year 2021 is clear evidence of our strong momentum. Following an extended period of limited revenue growth, we now anticipate organic revenue growth of 5% or more in the coming year. We will continue to invest in the expanding opportunities in our markets. In research, we will publish more to meet global demand, leveraging Hindawi to drive open access revenue synergies and we will go broader with publishing and platform offerings for societies and corporations. In career connected education, we will continue to expand our online degree programs and drive online enrollment, scale our digital courseware portfolio and expand the IT talent development pipeline along with our base of corporate clients. Finally, in our relentless pursuit of operational excellence, we will continue to expand publishing capacity and workflow automation, drive student acquisition improvements, and enhance our direct-to-consumer capabilities, including our ecommerce experience. Looking ahead now to fiscal 2022, total Wiley revenue is expected to exceed $2 billion for the first time in our history, growing by mid-to-high single digits to a range of $2.07 billion to $2.1 billion. For the year, we anticipate revenue growth in all three segments, including mid-to-high single-digit growth for research, low single-digit growth for academic and professional learning, and low teens growth for Education Services. Adjusted EBITDA is expected to range between $415 million and $435 million, with profit gains on higher revenue, tempered by investments to accelerate growth in Research and Education Services accompanied by higher T&E expenses through the resumption of in-person business activities. Adjusted EPS is anticipated to range between…

Thanks, John. Let me quickly summarize the key takeaways before I open it up to Q&A. Fiscal 2021 was a good year overall for Wiley, as our growth strategies and open research in career connected education took firm root. These growth strategies continued to benefit from long-term market trends, which have been pulled forward significantly in the past year. So despite COVID related headwinds, these strategies and favorable market dynamics drove strong performance and increasing momentum across the company. We expect long-term opportunities to expand in open research, online education and digital curriculum. Nonetheless, we must remain focused and vigilant as we step forward into the uncharted post-pandemic world. That said, we play in fundamentally good markets and at our core, Wiley remains a very strong company with exceptional brands, a solid financial position and powerful growth engines. And as an impact company, we're powering discovery and learning worldwide and through this unlocking human potential, all of us at Wiley are very proud of our purpose. And we're highly motivated to expand our impact by doing whatever we can to increase the success of our millions and millions of learners and researchers around the globe. In closing, I want to thank our wonderful Wiley colleagues for their truly remarkable accomplishments this past year. They demonstrated resilience and a dedication to each other, and also to our mission. They delivered results for our customers and our shareholders, all in the face of significant disruption. I'm very proud to work with each and every one of them. I'll now open the floor to any comments and questions.

[Operator Instructions] Your first question comes from Daniel Moore with CJS Securities. Your line is open. You may ask your question.

Brian, John, good morning. Thanks for the color and thanks for taking the questions.

Good morning.

Start with the -- obviously the top line outlook is really encouraging generally across the board, start with research where you raised the outlook to mid-to-high, single-digit growth. First, I guess it looks like price -- any lingering pricing pressure from colleges, universities, from COVID seems to be abating, is that correct? And second, are you seeing the increase largely from Open Access accelerating? And then I have a quick follow up on publishing as well?

Yes, absolutely. Look, Dan, it's a great question, because ultimately our future is defined by the health of our publishing programs, and the balance between our subscription businesses and our OA [ph]. I would not say that the pricing pressure has abated because the university ecosystems worldwide continue to be under significant financial pressure. Having said that, what the last year has demonstrated is that our research or high-quality essential content are something that librarians in universities are simply not willing to go without. So, we expect to see some continued financial pressure. But again, what we've said many times is that that pressure will be modest, and it will continue to be more than offset by the second half item that you referenced, which is our OA growth, which we continue to see significant growth in with submissions up in the upwards of 20% and output up in the mid teens. And as that happens, we move as you know, to a p times q environment that continues to drive revenue growth in a very direct way, especially considering, as I've noted a number of times the very solid pricing power that we have due to the high quality of our journal portfolio. So, I wouldn't say that the tough times are over for universities. And I think we're going to have to continue to work with them affirmatively like we did last year when we went out with a 0% price increase, and that's going through our P&L this year, 0% price increase. And certainly, certain institutions where research is somehow less essential, there might have been a little bit of a, little bit more pressure. But overall, our customer base and the renewal rates are extremely high, both on a gross and a net basis. So, we're very pleased with where we're coming out of this. And of course, as we move forward, it's all about the quality and the volume of our publishing program, which both undergirds our traditional subscription business and fuels the growth engine that OA has become for us.

That's great color. Switching gears to academic and professional learning, what kind of assumption or projection are we making for if you just sort of isolate the textbook portion of the business in terms of the guide? And how much of rebound or recovery are you experiencing in corporate and professional learning, you touched on it, but any more color there would be great?

Sure, sure. So, we have had the academic content business, which is sort of rightly referred to as a textbook business, has been in a period of transition for a long time, but really it is no longer the textbook business. It really is the digital content and courseware business now, where we're well over 50% of our revenue comes from digital units. That's important to note. We are seeing significant growth in our digital units. We're seeing growth in our digital revenues, and we'll continue to see some pressure in the print parts of the business, which we never expected or at least not for the next few years to go away completely. But the uptake that we've seen in the digital content courseware, which is becoming the norm, it's becoming the standard, and this last year just proved that because it not only forced people to go digital, it actually proved to them the value of these powerful, digital, interactive, personalized products where you can measure impact and you can learn whenever and wherever you want. I guess it's a long-winded way of saying we'd like the future of that business. And we like, because the high-quality content that we produce is absolutely essential to what they do, and it has been proven over and over again. So now that we're through the transition, we expect the business to behave like a modest – low-to-modest growth business and to be, nice and profitable along the way. Does that address your question Dan, on that part of it, I'll move to the corporate part next.

Yes, absolutely. And maybe corporate reopening as COVID abates.

Yes, so corporate is interesting. There’s an interesting set of dynamics going on in corporate, and it's really driven more by the skill gap, and by the need to, to get teams to be highly functioning and to get individuals to be highly performing. And what we saw on the last year was super interesting. So, we had a business, we have a business that supports in person training very directly, as you know. And needless to say, without any in person, there's no in person training, but what happened during the pandemic was quite fascinating in that there was a dramatic shift toward the virtualization of those in-person trainings. And at this point, well over 80% of our trainings remain virtual even as we're going back, because, again, people have realized this is what we mean by when we say the trends are pulled forward. They were trends, they were pulled forward, and now people are realizing, Wow, I can touch more people, have a more regular interaction, more regular trainings, up-skilling as part of my day-to-day job. So that has come back quite nicely, even as the in-person part of it has continued to be, it's growing quite well. but it's growing well compared to COVID lows, but we're seeing this virtual aspect to it and the digital aspect to it adding significant more TAM if you will, because they're -- because now I can make learning part of more people's lives in their jobs and do that throughout the year as opposed to just on single days where I have in-person training. So it's starting to come back. It's not yet back at 100%. That part of the business. But overall, this segment is an essential part of the economy that we're positioned very well to, well to participate in.

Your next question comes from the line of Greg Pendy with Sidoti. Your line is open.

Hey, guys, thanks for taking my questions. Just I wanted to make sure I understood that correctly when you said the trend is pulled forward. But for the Education and Publishing and Professional Learning segment, is it fair to say that the low single-digit guidance, the cadence throughout the year will probably be front and weighted just because of the test prep trends during COVID? Is that correct?

Now 100%, I understood the question the -- what we're seeing in the test. Go ahead if you want to clarify.

Yes, low single-digit guidance for that division. I'm assuming it's going to be front and waited, the revenues will be higher in the first half, just given the trends during COVID kind of pushed a lot of tests per barrel. Is that fair?

Right, I think I understand. The future of the businesses that were most affected by COVID, Test Prep is one of them and our in-person training, corporate training businesses was the other we will, our recovery will be a direct function of the recovery of those sectors, I just touched on the in person corporate training piece, to say that it's growing nicely back from prior year’s level, both within the traditional piece where we're getting back to our pre-pandemic levels, and also in the more new digital opportunities that are created by it, and those will develop over time. So yes, as we recover there, you'll see a direct function of that recovery show through in our growth rates compared to the year-on-year bad periods. In test prep, the same dynamic holds, but it's a little less clear. It's a little less clear how that's how and when that's coming back, because we still don't have full scale resumption of testing and the delivery of tests in test prep centers. As that comes back, we will track with it. And we're not going to predict that on an individual product line basis here. We obviously believe it's going to come back and it is coming back at some level. But we will track that. And we're we don't have pure visibility into when that's going to happen, because it's a function of, health conditions and things outside of our control.

Understood, that's very helpful. And then I just wanted to dig into just the, what was the editor capacity that kind of ramped up in the Research Division? Can you just give us a little bit of color on that? Because it seems like, you have some positive moving parts with the 40% EBITDA of the Hindawi acquisition coming in. So can you maybe give us a little bit of color on how to think about that and is it going to continue throughout 2022?

Yes, absolutely. So I can give you color on that and John can add to the answer that I will give you with some color if he feels like there's more to add. So yes, we saw unprecedented surge in demand from the very beginning of the pandemic, from what were already pretty high levels of demand. The demand in research business presents itself in the form of increased submissions and the requirement to evaluate those submissions and process them through the pipeline. And a significant portion of our, of the investment was keeping up with that demand. Naturally, what you want to see is what we're doing, which is we're investing heavily in the automation kind to streamline those processes. So while now we brought on significant capacity, in order to meet that demand, in the long run you should see and expect to see increased productivity as we process that price pipeline in a more streamlined and automated fashion. We saw growth opportunity; we did what we needed to do to capitalize on it. And that's what it comes down to, now in the longer run. We are investing in people now, but in the long run, we're investing in automation, and the streamlining of processes in order to make sure that the profitability translates straight through, over directly through, the revenue translates more directly through to profitability. And the Hindawi acquisition, you rightly note is a net contributor to our profitability because they have pioneered some very efficient streamline processes through end and grade systems for processing, increased volume of open access articles. John, is there anything you would add to that?

Yes, I just would add, Greg, when you're looking at the fourth quarter results, which I'm sure you are, you see the dip in the EBITDA margin that is significantly driven by the item I mentioned, with respect to annual incentive compensation and it being above target in the fourth quarter, that's significantly weighing on research results in the quarter. So, we expected to head back in the direction of our trend line around EBITDA margin in that business. The fourth quarter was again significantly impacted by incentive compensation.

Got it. And then just one final one, the real estate, the $8 million in I think run rate savings, has that started in this quarter or is that going to take a little bit of time until it starts to work its way in?

Greg, we're underway. We've been running last couple of quarters about, just called it around $2 million a quarter and savings.

Okay, perfect. All right, well thanks a lot. That's all I got.

Great, thank you.

Thank you.

And we have a follow up question from Daniel Moore with CJS Securities. Your line is open.

Thank you, again. I just wanted to get to the profitability portion of the guide. So on a go forward basis, EBITDA and EPS guidance implies fairly modest incremental margins you laid out in detail, obviously incremental investments in Research as well as T&E. Is there any way to quantify each of those to get a little bit of better sense for the magnitude of each? And then secondly, Hindawi, I believe we expected to be accretive by fiscal 2023 on a GAAP basis. What kind of dilution are we looking at for fiscal 2022 from Hindawi, for EPS?

So let me first respond to your comments overall about follow through on profitability. So we are investing substantially both in Research and in Education Services. All right, so it's not just Research, but we see important opportunities for strategic revenue growth across the business. But we’re most significantly we are investing in Research and in Education Services. And then along with that, we do see some pressure on T&E, call it single-digit millions of dollars, because we're going to ease our way back into this, but we are going to get back into a more in-person business activity environment. And that will drive some spending not only around travel, but also around hosting some events that add value to the business. So we'll see a combination of factors there. I do also want to call out significantly impacting our growth in EPS is that we do have higher depreciation and amortization associated with investments, and acquisitions and we are anticipating an increase in our effective tax rate from what was roughly 20.5% in fiscal year 2021 to something it will be in the 22% to 23% sort of range, so somewhere in that direction. With regard to Hindawi, we had said that Hindawi would be about $0.15 dilutive to EPS in our fiscal year 2021 and that's about where we ended up. We expect that, that level of dilution will decline significantly in fiscal 2022 and then be accretive to our earnings in fiscal 2023 as we said before. From an EBITDA and cash flow perspective though, Hindawi will be significantly accretive to Wiley in fiscal year 2022. So we're on the track we had expected.

Very helpful, and I'm going to take a quick stab, probably not, but fascinated by the automation and the investments that you are making longer term. Any kind of margin benefit that you might be willing to discuss or is it a little early or premature for that?

Well, it’s a little early. Go ahead Brian.

No, you could take it, go ahead, John.

Yes, I was just going to say, we're making these investments now with the expectation that they will both improve our top line growth. Again, we see some really strong opportunities and they're reflected already in our top line growth projections for fiscal 2022. But we certainly also expect to drive efficiency gains. I would say, most notably, as Brian commented on the Research side, where we're going to drive process efficiency and automation in Research that will help us grow rapidly in Open Access while managing the associated costs of that and improving our margin over time. So there's some work to be done, but yes, we do expect that these investments are going to improve our margin along with revenue.

Yes Dan, so what I wanted to add to that is, we are on a long-term path to two things; one is to take advantage of the opportunities that exist in the marketplace today. This gets to your earlier question as well. And these opportunities exist in Research. They exist across all of our segments. As you know, we feel very good about where our markets are going. But we're also investing in making these better businesses. And the good thing is the two things go together. In almost every case, the two things go together. And I won't do a litany of how, I'll just give you one or two examples. If we continue our investment, apart from the short-term investment I talked about earlier in terms of capitalizing on short-term opportunities, demand opportunities, as we invest in the automation of our Research publishing processes, a number of really good things happen. The first thing that happens is obvious. Right? We sort of move from manual processes to digital and automated and AI driven processes. That's good, but there's a lot of stuff that goes along with that. The investment in that automation also makes the process by definition faster, which is what the market wants, it is also what we want, because we get to put more through the system. It also allows us to move, we've talked about this issue of the cascade and the importance of being able to find a publishing home in our seven, in our 1900 journals for all high quality research that deserves to be published. And automation allows us expand to take a number that's published that sort of call it a quarter of our articles that we've published today and move that up incrementally while maintaining quality because now we have the ability to not just sort them efficiently and process them efficiently and edit them efficiently and produce them efficiently, but also in automated, also in manual ways but in automated ways to get them as quickly as we can to a home inside the portfolio, which sounds like an easy thing to do, but it's actually quite hard. My point is that, we are investing significantly in the processes and in the infrastructure in order to make sure that the business gets better and more profitable at the same time, meaning better for the customers, better for us and also generates profitability. This is why we're confident and not just the top line outlook as we pivot towards growth, but by pivoting towards growth. We're also improving the bottom line outlook. I hope that's clear Dan.

Yes, it's very helpful. And as I said at the outset, the trajectory of the business is really encouraging. So I appreciate the color and look forward to hearing more.

Great, thank you.

Thanks, Dan.

All right, no further question at this time. I'll now hand the call back to the company.

Great. I want to thank you all for joining the call today. And we will look forward to sharing our first quarter results in September. I want you all to note that our Investor Day is now scheduled for Friday, October 29. It will be a Virtual Investor Day. Please reach out to Brian Campbell for more details and we'll look forward to seeing you then. Thanks, everybody.

Thanks, everyone.

Thank you. And that concludes today's conference. Thank you all for joining. You may now disconnect.