Good morning and welcome to Wiley's Fourth Quarter and Fiscal 2022 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.

Hello, everyone. Just a few reminders to start. The call is being recorded and may include forward-looking statements. You shouldn't rely on these statements as actual results may differ materially and are subject to factors discussed in our SEC filings. The company does not undertake any obligations to update or revise forward-looking statements to reflect subsequent events or circumstances. Also, 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 the presentation and a playback of the webcast will be available on our Investor Relations web page at investors.wiley.com. I'll now turn the call over to Wiley's President and CEO, Brian Napack.

Good morning and thanks for joining us. I'm pleased to report that in fiscal year '22, the Wiley team delivered another year of revenue and earnings growth with continuing strong free cash flow. As a reminder, this year marked Wiley's 215th anniversary. And to mark the occasion, we surpassed $2 billion in annual revenue for the first time. What began in 1807 as a print shop in Lower Manhattan is now one of America's oldest public companies, standing out as a global leader in scientific research and career-connected education. Our legacy is more than just a narrative. The Wiley brand is respected worldwide and our reputation is a unique advantage that helps us to win and retain customers, partners, authors and great talent across all of our lines of business. Wiley has been unlocking human potential by advancing knowledge for over two centuries and it has done so through many economic cycles and periods of disruption. In good times and bad, Wiley delivers consistent financial performance by serving the world's researchers and learners. Today, we are growing well based upon our strong competitive position, must-have products, a strong balance sheet and consistent cash flow. Wiley's revenue is now 83% digital and tech-enabled and 58% of our revenue is recurring. We have delivered 28 consecutive years of dividend increases. And we've recently been named the most trusted company in media according to a survey by Newsweek. All of this underscores the fact that Wiley is a strong and special company and I'm proud to be part of it, especially now. As you know, Wiley is a critical player in the global knowledge ecosystem, performing essential roles in scientific research and education. Our strategy remains to lead the market by addressing two very strong trends. The first is the rapid growth of…

Thank you, Brian and good morning, everyone. I want to start by acknowledging the Wiley team for delivering another solid year overall. First, let's talk about Q4. Note that all variances exclude currency impact. For the quarter, Wiley delivered revenue growth of 4% or 2% organic, with continued momentum in Research and corporate talent development. This offset market-driven declines in University Services, Education Publishing and Professional Publishing. Adjusted EBITDA was flat to prior year and adjusted EPS was down 6%, mainly due to the revenue decline in Academic & Professional Learning, or APL and planned second half investments in key growth areas. Before I dive into our market performance, I want to comment on our current macroeconomic conditions and geopolitical uncertainties and how they relate to Wiley. As a reminder, both Russia and Ukraine are very small markets for us, so we do not expect any material revenue impact from the crisis. Wiley does have a technology development center in Russia, one of several around the world and we've exercised contingency plans to ensure business continuity. With regard to inflation, I would expect wage pressure in fiscal year '23 and some inflationary pressure on print publishing costs, both of which are reflected in our outlook. In terms of other supply chain issues, none have yet to be material and are largely digital in nature and limits any significant impact. As a reminder, physical products make up only about 17% of revenue. We are also closely monitoring inflationary impacts on consumer spending which would impact more discretionary parts of our business such as professional books. As Brian noted, historically speaking, Wiley has held up well through difficult economic periods. This is because we're at the center of the global research ecosystem, delivering must-have content and platforms. And while we're currently working…

Thanks, Christina. Let me briefly summarize where we're headed in FY '23. First, we expect Wiley's solid revenue growth to continue, driven mainly by strong market fundamentals and the tight fit of our business with the core demand trends in Research and Education. We have transformed the Research business over the past few years, achieving growth while driving strong margins and cash generation, we expect this to continue. We also expect rapid growth to continuing corporate talent development, driven by our ability to solve some of the corporate world's biggest skill and talent gaps. In Academic Education, we'll navigate the current cyclical enrollment challenges while watching for any slowdown in consumer spending which could impact some of our publishing lines. We will continue to invest in both organic growth and seek strategic acquisitions but we'll narrowly direct capital allocation toward our proven opportunities in areas such as our Research Publishing, Research Solutions and corporate talent development lines. As Christina mentioned, we are significantly emphasizing operational excellence throughout Wiley in FY '23. The clear goal is to increase profitability and expand margins while powering our growth strategy. While always a focus, the current economic environment dictates that we elevate our productivity and efficiency. To repeat, our go-forward objective is to invest in our proven strategies while simplifying and streamlining Wiley. By doing so, we expect to continue our growth trajectory while growing profitability beyond fiscal '23. Building on this, let me walk through our most critical priorities for fiscal '23. In Research, we will continue to drive publishing APL growth to meet growing global demand. We will transition more customers to our transformational read and publishing agreements. We will continue to expand Research Solutions, actively signing new society and corporate partnerships and cross-selling our full offering to the growing Wiley network.…

[Operator Instructions] Your question comes from the line of Daniel Moore with CJS Securities.

Apologize in advance, as I've got -- I'm going to ask a few different routes here but appreciate patience and the color. First, on a constant currency basis, what are the implied EBITDA margins for fiscal '23 across segments, if not exact terms, then at least directionally? What do we expect for Research APL and services before currency?

I appreciate the question, Dan and I always appreciate your smart incisive approach. I will say that at this point in time, we are not providing particular segment information. You can see that currency has had a significant impact on our projections due to the large swings. We're feeling that because over 50% of our business is outside the U.S. But for now, we're going to hold tight on the specific margin projections within the individual segments.

Okay. The -- in terms of spending, you obviously have been spending aggressively for some time on growth initiatives. And certainly, in research, you've seen a really significant benefit, higher organic growth. What are some of the specific investments that you're making or areas of spend that are increasing as it relates to Research and talent development as we look to fiscal '23?

Yes. Well, as you know, the approach that we've taken over time is to identify where we think the growth and profit opportunities are across our business and to focus our time and our investment in those areas. And I think you've seen over the past few years that this is bearing fruit. We are -- we've narrowed our focus significantly to areas that are clearly both strengths and big market opportunities. Those areas are Research Publishing, the overall partner solutions in research. And then on the Education side, the areas that focus on career-connected education specifically with respect to the fast-growing opportunities in the market and here, of course, I'm talking about our growing talent development initiatives across the company and we're seeing those bear fruit. Specifically, in the area of Publishing, we continue to invest at a steady rate in this proven, profitable and now after the repositioning growing business. In Research Solutions, we are continuing to invest in the areas that are demanded by our corporate clients, our partners in our associations and our society partners and as well as our publishing partners, where, as you know, we're powering the ecosystem. So that's where we're investing from a market-facing perspective. Internally, we're continuing to work on the simplification, automation, streamlining of all our processes and systems so that we can continue to maintain the great margins that we have in publishing and also the great margins we have in partner solutions as this business becomes more of a significant resource to clients. In talent development, it's very clear where we need to focus. We need to focus on expanding the incredibly successful offerings we have for the marketplace and getting it to more segments of the marketplace, more geographies and ultimately, to broaden it to even more of the key areas where the corporate world is demanding talent. You'll even see this, of course, in our businesses where we're not expanding investment but we're continuing investment in areas like edge services, where we are focused on standing up and delivering the degree programs, the certifications that people need to succeed in this economy. I use that as an example because even in the businesses that we're not identifying as significant growth investments, any capital that we do allocate is focused on the same areas of concrete opportunity and proven strength. And I will say across the business, we continue to modernize and optimize, Dan, our systems and to make sure that we are less labor intensive, more automated, quicker in our cycle times. Ultimately delivering better products faster, more repeatable, more reusable content. And of course, all of that would be more profitable at the end of the day.

Very helpful. And recognizing not giving specific segment or subsegment guide but in talent development, just remind me or remind us, as you accelerate, you mentioned multiple new partnerships and client signings. Does that typically come with an upfront spend for a quarter or two or three in addition to the increased just general investment for growth? Just the cadence of as we've kind of run faster, is that a little bit dilutive initially? Just kind of thinking about the cadence over multiple quarters.

Absolutely, good question -- not absolutely, actually no, Dan. These businesses are -- these opportunities that we're pursuing, the addition of new clients, they're expanding to new geographies, there may be a little bit of go-to-market because we are of course, pursuing those clients aggressively in the places in the world where they exist. But there is no -- unlike certain other businesses, there is no significant upfront development investment. We have the product. We can develop what we don't have quickly and we -- based upon the cash dynamics of that business when we get paid, how we get paid, there isn't a big upfront investment. A little bit but not a lot. We basically see these as very nicely cash-generative businesses, very close to the point of transaction.

Got it. And probably a question for your upcoming Analyst Day but you obviously -- in your prepared remarks, you're still very committed to the old OPM piece or the Ed Services -- piece of Ed Services. Mid-teens margins still achievable in your mind and given the kind of near-term macro challenges, is there a time frame that we have in mind?

Yes. Well, the answer is they are at mid-teens now. We -- well and Christina mentioned this in her remarks, while the overall segment revenue -- EBITDA margin, I think, was 12% and we're actually still operating at 15% or above in the services or OPM part of that business. What happened, of course, is we have invested in the growth of talent development and that has weighed down a little bit the overall profitability of that group in the short term as we race to capitalize on that opportunity. But yes, of course, when we see a cyclical enrollment challenges like the challenges we face, it most certainly has an effect on both revenue and profit but we are committed and have proven that we can operate our Education Services business, particularly our University Services business at a healthy profit. We don't see a need a need to refocus because we've always focused on that and we believe it's a good consistent business from that perspective.

Great. Last for me is, I think you gave great color around capital allocation, leverage ticking lower down to 1.6x. Is that still a focus continuing to drive that down lower or likely to be more aggressive in terms of returning capital to shareholders, absent larger M&A, especially kind of where the stock being around current levels?

Yes. Thanks, Dan and thanks always for the great questions. I'll just make a comment or two and then pass it to Christina on this important topic. So we've taken the perspective of a consistent approach to capital allocation for a long time that balances internal investments and return of capital to our shareholders. And we continue to do so. Our debt levels are an important part of that equation and we are comfortable where we are. We are not looking to increase or decrease it. We view our -- this is really important point from the perspective of our investors. We view that we've been on a journey for a long time. That journey was a journey that required us or that asked us to find the opportunities of growth and the massive opportunities in the marketplace of Research and Education. We've now identified those areas of opportunity. Those areas of opportunity we've outlined specifically in our script and I won't repeat them now but they're paying off. And so Wiley over the last four or five years, has transformed itself from a company where we didn't know where the growth was going to come from, to a company that has clear and identified opportunities for growth. And we have invested in those opportunities. Those opportunities are paying off. You've seen our growth tick up. And over the last couple of years, as per the metrics that Christina had outlined, we've been growing our top line and our bottom line. Now we are at the point in this journey when we need to start to return margin to our investors. We have to start to convert that growth into free cash flow. And that is an increasing volumes and increasing percentages. And we are definitively committed to that. Now,…

Thanks, Brian. I think it's very well said. Just to reiterate, we are comfortable with where we are at 1.6%, down from 1.7% last year. We've got room to go higher over 2% but there's no plan to do that. It's really going to be -- we're going to be very mindful of interest expense, our macro environment and really the opportunities in front of us. So we feel very good. We have a good buyback program and we continue to say the course there as well and we will adjust as necessary but very good shape.

[Operator Instructions] There are no further questions at this time. I will turn the call back over to Mr. Napack for closing remarks.

Yes. So I'll make a few closing remarks before I move on -- to looking toward the future. So while we haven't provided any long-term guidance, we do expect to provide long-term guidance at our Investor Day that is coming up which I hope you will all attend. We're very excited about the future of this company. We look forward to talking to you. At that time, we're going to be talking about this trajectory we're on to turn our growth which we're confident in, into increasing operating leverage. And as you look across our segments, what you will see is that we have increasing -- we have consistent confidence in our ability to maintain our margins, our EBITDA margins and our operating income margins in the Research Publishing business. We've proven that we can do that as we move through the transformation. We've found growth. We have found it at consistent margins. We like the look of the partner solutions business and where that's going. These are businesses that are software and tech-enabled services where we expect to generate very good operating return. And at our Investor Day, we'll talk more about that. As we look across our other segments on our -- on the APL side, we have businesses that tend to return over time, very good, consistent earnings back to the company, they've dipped a little as we have gone through some of these cyclical trends with regard to enrollment and even longer as we've gone through transformations of those businesses. And while we're not providing outlook on the future of, say, our Ed Pub business, what I am saying is we like the way that business fits into our portfolio and we like the fact we are confident in the fact that we can continue to…

This concludes today's conference call. You may now disconnect.