Good morning. And welcome to Wiley's Second Quarter Fiscal 2024 Earnings Call. As a reminder, this conference is being recorded. At this time, I would like to introduce Wiley's Vice President of Investor Relations, Brian Campbell. Brian, please go ahead.

Thank you. And welcome, everyone. With me today are Matt Kissner, Wiley’s Interim President and CEO; and Christina Van Tassell, Executive Vice President and CFO. Also with us is Jay Flynn, Executive Vice President and General Manager of Research and Learning. He will be participating in our Q&A session along with Matt and Christina. Note that our comments and responses to your questions reflect management's views as of today and will include forward-looking statements. Actual results may differ materially from those statements. The company does not undertake any obligation to update them 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 US 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 held-for-sale assets and the impact of currency. Additional information is included in our filings with the SEC. A copy of this presentation and transcript will be available on our Investor Relations web page at investors.wiley.com. I will now turn the call over to Matt Kissner.

Thank you, Brian, and thank you all for joining. I'm pleased to be here with Christina and Jay. We and the rest of the leadership team are moving decisively on our value creation plan, which I'll talk about in a bit. I'll give you an update on my first 60 days and discuss my role in the transition. And of course, we'll review our second quarter performance and how we see the year shaping up. I'd like to speak a few moments about the interim CEO role in my first 60 days. The Board of Directors and I think about my role as a transition more than an interim. My responsibility is to execute the plans previously approved by the Board and improve the company's operating performance and profitability. From a personal perspective, it's a privilege to be back at Wiley during this critical juncture in our evolution. As a result of my long association with Wiley in various roles, I have an in-depth knowledge of the company's businesses, operations and markets. And I have strong relationships with Wiley colleagues across the globe. Frankly, I know our strengths and I know the areas requiring improvement. And I am in an excellent position to help drive the changes needed to significantly improve our performance. We are moving decisively to streamline the organization, divest noncore assets and rightsize Wiley for future success. During my first 60 days, we continue to execute on our reorg, announced the sale of University Services and moved aggressively on our cost base. While the leadership team and I are focused on executing, the Board is carefully considering various options for the future leadership of the company. In that regard, an important objective of mine is to assist the Board by assessing and enabling internal talent. We previously…

Thank you, Matt, and hello, everyone. We continue to move effectively through this transition year, a significant part of which is executing on our plans to make us a stronger and more profitable company. We made meaningful progress this quarter but there's still a lot of work in front of us. Let's turn to our Q2 performance for Research. Research Publishing revenue declined 7%, mainly due to Hindawi. Excluding Hindawi, Research Publishing revenue was up slightly. As Matt noted, we're seeing a pickup in submissions but output remained muted due to publication timing. Important to note, it takes on average about six months for an article submission to turn into a published article. Overall, we continue to benefit from a mixed model publishing environment that includes read only subscriptions, transformational read and publish agreements and gold open access. Models vary by customer and by region. During the quarter, we announced a new five year nationwide transformational agreement in Germany, involving more than 900 academic institutions. This agreement includes read access to all Wiley general content while providing authors at these institutions with open access publishing options. To date, Wiley has signed transformational agreements with over 80 partners worldwide covering several thousand institutions. This quarter, we continue to see double digit growth in gold OA. As a reminder, gold OA, including Hindawi, makes up about 10% of our Research Publishing revenue and is our fastest growing area in Research segment. Turning to Research Solutions. Revenue declined 3% this quarter due to softness in our recruiting business. This decline in corporate revenue offset growth in our Publishing Services business where we provide software and services to help society partners and other publishers managing peer review and other publishing processes. Adjusted EBITDA in Research this quarter declined 17% weighed down by Hindawi's $14…

Thank you, Christina. To summarize, before I open it up for questions, Q2 and year-to-date performance was mixed, but largely as expected. And we anticipate a better second half as Research output grows, comps get less challenging, Learning carries forward some of its Q2 momentum and restructuring savings kick in. We are relentlessly focused on execution and moving with certainty on our value plans, our operational improvements, our reorg and our culture. We are going to block and tackle better than we have before. We're going to look for synergies and uncover new pockets of growth within our core. I feel a real sense of energy in the place and a commitment to move forward with urgency. That said, fiscal '24 remains a transition year as we work through our structural improvements and rightsizing and as our core drivers rebound. We fully expect to deliver performance and margin improvement in fiscal '25 and '26. And finally, as a reminder, January 25 will be our virtual investor update. I want to thank all of our Wiley colleagues for their hard work and dedication, especially over these past six months. I wish them and all of you a very joyful holiday season and a happy and healthy 2024. I'll now open the floor to any comments and questions.

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

And I hope you'll indulge me, because we've got a lot of moving parts, so I'll probably ask a few questions here. But we'll start with Research. Maybe just remind us of the typical lag between submissions and publications, kind of what the outlook for submissions growth looks like over the next few quarters to the extent you have visibility there? Just trying to get a sense for what the glide path might be back toward a more normalized growth algo or outlook for the Research business?

So Dan, it's Matt and nice to meet you virtually, and there are a number of moving pieces here understood. We have the benefit of Jay Flynn participating today he's very close to these issues. Let me hand it over to Jay.

Thanks, Matt. Dan, thanks for the coverage and thanks for the question. I guess I'll start by saying let's look at where we were as we exited last fiscal year and what we saw in the prior 12 months. As we talked about in the Q4 earnings call, we experienced and the market experienced a decline in submissions by about 6% for calendar '22, and that led into our fiscal -- our last fiscal, that's driven primarily by what we call the COVID snapback during COVID, during lockdown, researchers were at home, writing papers available for peer review and kind of cleaning out their labs in terms of the research results they had to publish. What wasn't happening during that time was experiments. Experiments in the field, experiments in the lab. As researchers return to the lab, they had to restart their work. And overall in the market, it was down about 6% in our fiscal last year. We predicted and we thought we would see a return to historical norms of submission volume in the kind of mid single digit area, submission growth in that range. What we've seen so far year-to-date in our core has exceeded our expectations. So 9%, there's a little bit to unpack there. We've got really extraordinary growth in emerging markets. In India, for example, in more mature markets like China, we're seeing great growth. And in fact, across almost every mature market, excluding the United States, we are up far past our expectations in terms of submission. Now there's a lot of variability and quality of submissions depending on region, there is variability in terms of subject area and there's a lot of moving pieces in terms of transitional agreements and gold OA. Bottom line, it takes about six months for us to get that content through the mill and not every single paper is going to turn in -- every single submission is going to turn into a paper. But in terms of what we have visibility on, we now know that the top of the funnel has been filling up faster than expectations and that gives us some reinsurance about being able to not only meet our publication targets for this year, but also gives us some confidence that we're returning to those historical norms.

The other comment I would add, Dan, and then back to you is, obviously, volume that's coming in the door today is going to give us a nice kickoff point for the new fiscal year, because of that six month publication lag, it's a little late time. So we're, I'd say, encouraged that that we'll enter the new fiscal year with some decent wind behind our back in this regard.

Christina, regarding the restructuring efforts, the detail you gave is really helpful. So to summarize, we have $30 million left on the $65 million in run rate savings that you called out. And that $30 million beyond fiscal '24 is part of the $100 million that you previously targeted. And I did ask this last time, I believe, so I apologize for the repeat, but how much of the remaining $100 million beyond this year simply offsets dis-synergies following divestments or general inflation or investments versus you can maybe earmark to fall to the bottom line?

It's actually $35 million, just to correct -- that's the run rate savings that it's counting towards the future years, so it’s ‘25 and beyond, so towards the hundred. It's in two general areas. It's in the rightsizing of our corporate infrastructure, including stranded costs as well as our operating efficiencies. And we're going to talk more about this in January, but we will be reinvesting a portion of those savings back into the business. We're minimizing any kind of increased cost base outside of growth opportunities, but we are going to talk more about in the context of our formal commentary and strategy in January with what will jump the bottle went what we will be reinvested.

Certainly look forward to dissecting that in a little bit more detail. Maybe if you can give us a little bit more of a detailed update on Hindawi as granularly as possible. When we acquired it, it was a $40 million revenue business on its way to $80 million. Obviously, we've gone through all the details of what's taking place. Is it fair to assume that it's somewhat more permanently impaired relative to your initial goals for the business? In other words, now that it's being folded into the rest of research, should it grow in line with research or is there an opportunity for a more significant rebound or recovery?

I just want to state the obvious, right, the recovery is taking a little longer than we had previously envisaged. And that's down to what I would characterize as the impact of some decisions that we took to preserve the long term health of the business. So one of the things that we wanted to make sure that we really addressed head on was the business processes and the management processes that we have in place at Hindawi. So we have really tightened up our controls. We've installed a new management team and we put a team of research integrity experts in place, not just for Hindawi but across our entire research portfolio. This has had a dampening effect on article volume coming through Hindawi. As you know, I'm sure this is a model where it's entirely volume driven. And so when we look at those controls, we feel like that's the right thing to do long term for the business. We also feel very much like the portfolio will benefit from being part of the larger Wiley publishing organization. And so we've taken steps to that effect over the last six months and really bringing editorial teams together, bringing marketing teams together, bringing our operations groups together to form a single journals group. And so those decisive steps together, I think, give me confidence in where we're going to go with Hindawi. I also want to say that let's just focus again on the couple of the key numbers. It's about 10% of the total journal portfolio and about 5% of total research revenue. And so while we focus on it, I do think that where we're going to wind up is something that's more in line with overall research performance as it relates to gold open access. So not as it relates to either Hindawi priors or to subscription revenue but as it relates to gold open access, which Christina characterized already. I'll kind of leave it at that.

And then I'm just going to add just on the -- looking at a long term horizon and the recovery, I think two things. One is we didn't cut expenses in the near term in Hindawi because we're so confident that it’s temporary we wanted to fuel the recovery. But in our long term, when we recover back to our long term volume, as Jay said, is a very volume driven business. we do see margins recover to 40-plus range. We did end [Indiscernible] integrity, which is what Jay was talking about as well but we do see a very healthy margin profile business coming back.

One last comment, Dan. There's a market for gold up and access and there's a market for what these journals do. And just not to put too finer point on it, but gold, it grows in the 20s, generally speaking, for the last few years and that's sort of the profile that makes us continue to be excited about these terms.

It gives a little bit more context of where -- kind of where you're thinking right now. So I appreciate it. Shifting to the sale of University Services. I believe it's calendar '24? Is it Q1 when you likely expect to close? And maybe just talk about the conditions needed to achieve -- to receive the first $110 million proceeds from the seller financing and then the additional $40 million earn-out. Is there a -- obviously, I know you don't want to get tied to a specific time frame, but just how should we be kind of framing or thinking about the timetable to actually achieving proceeds from that sale?

We are working to close early in the calendar of 24. And so as we noted and I think in our previous announcement we'll have $110 million, do a close payable in either cash or a promissory note and that's going to depend on the availability of proceeds from any third party debt financing from our buyer, which is America -- Academic Partnerships. On the earnout, it's a $40 million earnout and that's achieved based on mutually freed revenue targets over the next two fiscals, so that's May 1st of ‘24 through April 30th of ‘26 and then we also received 10% of the buyers' equity as well.

Last for me, and I'll jump out again. For a long time, the goal or part of the goal, it was always a balanced capital allocation, but was to take the exceptional or extraordinary cash flow generated from research and use it to grow in other areas. What is the plan for capital allocation going forward? Is it to growth dividend and buy back stock and invest to protect the core as the Board laid out or do you plan to pursue further M&A opportunities once the restructuring and divestments are complete?

I'll begin and then ask Christina to comment. We are refocused on the core business here. Reflecting back, I think, would be probably -- could have done more around our core business. There are opportunities that Jay is already uncovering as he's running these two now unified business units. So anything we do will be focused around that core. And in terms of what we're doing in terms of cash allocation, I'll ask Christina to comment on that.

I'll just say, as always, our capital allocation strategy is a balanced one. You're not likely to see any M&A as I'm sure you've heard, very focused in the near term on divestitures and rightsizing. We will have opportunistic organic investments in research to scale publishing as well as our solutions. We'll talk more about that in January. We're always managing our debt. This is a really important one for us as Wiley, obviously, in the marketplace. We're in really good shape financially. But the interest costs are higher and we're looking to manage that. And yes, our dividend is the 30th consecutive year of increasing our dividend. It's been at $77 million a year, that 2020. So we've been managing that with share repurchases, which, again, we're actively managing as well. So those are our capital allocation elements. And we're always looking a tweak before, after and during these portfolio moves. So we'll talk more about that again in January.

[Operator Instructions] Your next question comes from the line of Sami Kassab from BNP Paribas.

I have two questions, please. The first one is on academic learning. Could you share with us the share of revenues coming from Inclusive Access? And where do you see that number going to in the next few years? And the second question is on Research Publishing. Would you be able to comment on the revenue growth trends within the general subscription business versus the gold open access business for the quarter, and how you see general subscription revenue trends going forward midterm?

So as we mentioned in the in the first part of the call, we did see positive momentum with our Inclusive Access models, it's a small percentage of the revenue. We don't break it out publicly. But what I would say is it's a sign of an increasing customer demand for that product. And we feel good about both the digital growth of our courseware program inside of academic learning but also about our ability to innovate around business models. And I think that this is a trend in academic for a variety of reasons and all benefit students and learners. And so we're going to continue to participate in that. It's a low base and it will continue to grow from that base in line with the market expectation. And in the context of your question about research publishing, let me just take a step back and reiterate that this is a very mixed market right now as Christina said. We have some markets that are subscription only. We have many which are much further ahead on the OA transition. And then that can be cut by geography, for example, in Europe, we've got a much more OA centric market, whereas in, for example, the Asia Pacific region, it remains primarily a subscription market for us. And in the United States, it's very, very mixed. And so for those reasons, we generally tend to think about it as a left pocket, right pocket and the movement of revenue between a pure subscription model and a transitional agreement for us is it’s really about business model and meeting the customer where they are, it's about pricing models and meeting the customer where they are and it's by responding to what I think is a good trend in the market to make sure that anybody can read the content that we've moved outside of the paywall with our open access publishing model. So while we don't break those two numbers out, I think it's important to say that we continue to benefit from participation in this mixed model economy and that as we indicated earlier in the call, we expect performance to improve in H2 as volumes begin to improve, and we already talked about what those indicators look like on a go-forward basis with some submission volumes returning to historical norm.

And we have no further questions in our queue at this time. I will now turn the call back over to Mr. Kissner for closing remarks.

Thank you all for joining the call today. We look forward to sharing more at our January 25th Investor Update, and then again at our Q3 earnings call in March. Have a good day.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.