JW.A - Earnings call transcript Q2 2018

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Operator

Good morning. And welcome to Wiley’s Second Quarter Fiscal 2018 Earnings Call.

As a reminder, this conference is being recorded. And at this time, I would like to introduce Wiley’s Vice President of Investor Relations, Brian Campbell. Please go ahead, sir.

Brian Campbell

everyone. morning, Good our to fiscal earnings XXXX And second review. welcome quarter

to Some is start. being items recorded statements. call forward-looking The housekeeping include and may

differ revise The Company on in actual not undertake to rely statements to does to discussed materially update reflect obligations which as circumstances. may or financial factors filings. shouldn’t which subject find statements measures as and described adjusted SEC provide more schedules, You note, credits referred and in we any are excludes forward-looking these press while Also results charges you as events subsequent on or site. unusual release our our fully to can Web

well we icon left-hand side the lower those over This to but the the recommend prefer located portion any click of Kissner, select playback phone, potential the call, the and as slides, will want remove be over I’ll After of presentation this turn Relations transitions any in copy that the Investor on the on eliminate listen Matthew question. For the delays if a you webcast our who the and Gears to Phone. background you to to available will a Live call a Wiley’s still window the as page. slide Chairman. of to prefer view viewing ask on call noise

Matthew Kissner

Good morning.

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Brian Napack

I world this time. admiration critical conviction about class has important for organization and great an known markets. services that strength. also exceptional content, reputation and moment company these and names, publishing Matt. a It I say for quality deal Wiley is high brand years financial and I in joining with and products extraordinary in of couldn't this be commitment can Thanks, many to that people, at a truly more and gold it. have the with services excited great have matter respect standard

For future. business and our price I will achieve look this using and compelling if that mostly disruption so you work to view strategies, to my but customers help more behalf research, day definition to we sharing capital goals, the three deliver me deliver the The seven pass the along back are belief of am value We've human do of the past initiatives models at before and accomplishments for is mode. want brings on will in in excellence and a but if understand that and changing. publisher we All needs I team as to with but word to innovate thrive. Wiley, relentlessly remarkable the services I'll a the as the deliver, with the is the our of months. it them progress, opportunity. content brings do real Matt, for tools and do, that at on our all fascinating we the much of of that communities. this management services him over get listen-and-learn I meeting challenges in time I we education operational to it deeply is me my our publisher, customers, rapidly very our of It's truly thank products changing needs real reporting platform, portfolio proposition, call their Company forward the

Wiley consistent leadership been years will outside to critical Company, stewardship and obvious Thanks position to for While progress John's we're his as not and those building, come. such in made the forward. move excellenct areas necessarily has progress very team to great in a that engagement significant many operational employee to benefit numerous

Matthew Kissner

to We're evolution. Brian. important fortunate this very team our at in Thank you leading you, have our time

revenue hands a a and ago, with Q&A. back quarter cash good and As he performance summary our follow update it before We for Brian only performance me across businesses, expected is months will a outlook had in with research, the up Free year a excellence by I for constant-currency our and operational profit initiatives. will book flow second a on three to balance six cash up days improvement were then speak few XX% adjusted growth John driven result started as segments better the for basis. an well. to tracking flow our X% ongoing than EPS on business Results sheet, our of and in brief and

of have CEO, Brian opportune capacities. and Publishing, need Reed In served we President us class change leaders Balagula Elsevier, of addition Ella we our President us time. to kind she Brian at exactly are Vice new Executive as comes Both Senior joining Ella to who Executive this where and numerous in a world the

over birthday happy knowledge year. Nobel legacy forefront proud and of XXX the We're turned our us; to Finally, technology Wiley years being a includes this publishing economies. history, that shift at the to of and Laureates industrial based XXX age, the age, old immensely the

exchange foreign both to to performance, to major tailwind quarterly million second for XXXX, to EPS revenue, fiscal year-over-year and Moving in X a continues operating a the $X.XX million us changes in XX income quarter. be of result in U.S. commenting of functional euro in against the year is the of currency general the contributing will all rates, when impact subscriptions calendar variances. UK. related foreign the and importantly more and excluding dollar-denominated dollar I be weaker exchange notably This on gains XXXX to pound exchange

Operating by education lower Atypon. professional X% see including contribution a quarter was EPS growth all in of XX% well technology from revenue year-over-year of was XX% due implementation. and periods as income publishing result and STM on Atypon. to was of mainly that or interest management, ERP CTP $X operating online comparable driven research largely Second for increase in the to income as forward journals, expenses, higher million Note and spending or Note will that services increased and the for growth going revenue lower contribution expense. growth program our we profit segments. Adjusted growth of lower three adjusted

journals solutions. of GAAP pension charge, million increase. adjusted, to XX the a driven services to first which tax program decline adjusted online unfavorable segment an income income X% one-time XX% was X% or half Operating revenue and and X% restructuring there terms significant standpoint in year, performance From operational test revenue growth services acquisition management including by profit X%, revenue decision tax terminated employees year-over-year $X.XX notably shared Atypon income and double-digit excellence prior in improvement due items growth rose growth $X.XX $X.XX offset for In and German Revenue in $X.XX savings preparation, initiatives, respectively. was and education deferred contributed was and The the in settlement the contribution operating growth benefit. restructuring to in tax from in in in and unusual charges performance, research particularly book publishing. and EPS

was growth expense a income points basis XXX XXXX. by improved stronger a result the margin operating of half and EPS effective XX.X% operating XX% of interest Adjusted lower first adjusted Our rate. to tax for of lower performance,

For a $XX six exchange and months, respectively. $XX revenue, and the operating foreign million, income million to by benefit EPS was $X.XX

Licensing million Moving continues growth to while of be year-over-year, Open growth due X% X% to in results, onto from was revenue plan, to as even. well new journal existing the Atypon landing generating additional rose subscription continues backfiles clients. related growing and Atypon. journals story second research and XX% other from revenue quarter revenue a well business to as reprints track research $X Access positive was clients XX%.

calendar online platform XXXX. to transitioning world-class is year platform Wiley reminder, in a Wiley Atypon’s As early its Literatum

Beyond offer new to partners, features. cost our and and and very technology provide synergies excited that partners the services customers new by us anticipated enabled Literatum to the enabling society and business, are services we bring efficiencies, and content enhanced operating society to existing opportunities win

two were While early library us to season, society momentum will XX by STM, book second licensing publishing were in calendar continue amortization year. worth and up digital Net publishing Research CTP in calendar the or professional which renewal to calendar favorable XX% were to rose to across royalties coming due revenue quarter X% due Atypon $X timing in to benefit business, expected In higher print. down and driven year society this performed year licensing semesters. revenue the and sales business. subscription contracts expected WileyPLUS reflected our investment periods longer X% for up it XXXX growth comment wins Workflow last in society Course XXXX is lower growing $X in of we million quarter. was Results after see related adjusted education overall. which society with about were offset too on $X recognition, million growth lost. none million being than extending by the renewed X% and than better for declines our quarter

basis, continues strong a be quarter net for opportunity WileyPLUS returns. with Preparation Test on to However, growing deferral impact, Certification the revenue sales actual excluding XX% an revenue of rose X% X% operational year-to-date. the and and

our from excellence initiatives. savings Importantly, adjusted operational to CTP rose XX% due

Balagula noted, Ella of As Vice Publishing. President new we welcome Executive as our

by digital to excited experience growth. Ella out building the and innovative product generate development, developing new brings, revenue are profitable We transforming successful business helping models, partnerships

due challenged and up expect Solutions business muted of schools. down due X%. X% in perform part funding enable I through where that who growth our unemployment Adjusted had growth be Learning balance CrossKnowledge story the will and in efficiency call profitable in to decline quarter we program CTP Government a or growing that will and programs, intermediaries now to for revenue over X% shift Learning Professional French in partnerships Wiley a remains Assessment. slowdown a sheet, channel outlook. well. quarter for online benefits only We learning now to for pre-hire Corporate to here, cash growth by pass John education Assessment decline continued take universities Professional the a leverage in with continue was very as XX% offset blended continues management business assessments. single-digit through business to post or a year. good and Growth for will you The the hire services flow initiatives Corporate with to gains.

John Kritzmacher

you, Thank Matt.

a continues acquisitions shareholders. us sheet while balance consistently be pursue Our strength to of returning cash foundational enabling to synergistic to the Company,

low; technology, fourth free improved performance, repatriation of the property Our quarter end XXXX; less working operations to was lower driven debt investments net cash business improved by million due the CapEx million; proceeds recovery of the EBITDA primarily in of by the the from from prior using considerably quite quarter debt spending, and in debt to following Net cash and prior at applications. in year of fiscal expected product for the $XX year due our leverage first fiscal XXXX. and cash an improved was $X repayment half to position product close by remains flow, technology, development over equipment capital million, higher cash over and $XX

cash spending period. and form of half We in million the repurchases continue million year to the the in dividends, of compared share first $XX $XX as the through year to return to prior shareholders

outlook. our year We are reaffirming full

As low single-digits taxes. are prior with year a reminder, be even and at expected to the expected constant-currency, is revenue down by EPS and adjusted operating to due income to higher be essentially

tracking favorably prior included an our half to of unfavorable we're year that the While in recorded quarter. I guidance, challenged share note benefits second which by will be per to $X.XX year, discreet would full tax comparison tax the third

due Journals will In cash for functionality ERP investments, second to spending be year addition, the timing planned half order including than of technology our our deployment higher prior of business.

of benefit gains adjusted from year, approximately were trending million as income, shifts is current in hold, rates adjusted in expect functional exchange $XX the revenue, we $XX and $X.XX for exchange operating story EPS. positive currency and in foreign rate million to Foreign toward the a

the is the operations background, dollar our you, pound is denominated benefit expectations. currency CapEx subscriptions line are functional our and in finally, earned to prior U.S. sterling where tracking And UK to are Back specific Matt. that the As cash from with functional journal currency. in

Matthew Kissner

of well pleased Thanks, and are our the to EPS, flow through we tracking this and half performance and positive adjusted were guidance. quarter with are John. year. In very cash Revenue, first summary, the

by are We energized addition course new of leadership. the of

half With comments reaffirming on were we background, we While questions. based guidance welcome see numbers as good, the first your very the are second and we for half. that what

Operator

first Dan Moore from our CJS take will question with we And Instructions] Securities. [Operator

Unidentified Analyst

It’s you to and Brian, some actually Brian attracted his skill-sets bring thought -- I'd way. know Company? the throw Dan. a there that a to the talk I of for I got little bit Chris just question you about just unique maybe Wiley what further

Brian Napack

to. things; invest. one my me happy this big of is It next decide big my it career for passion two down to The am spaces for in all comes decision company, a that in. we're I was the chunk to to

pursue many talent been an brands, long long-standing an reputation, relationship the are I I’ve opportunity. these research rapidly. and Company, globe, strength, content, incredible including it's it that, say enormous IP very spaces, amount think And But than this workforce space long-term assets a legendary financial a very higher I spaces. for growth incredibly and about from incredible ability talking brings space, Company market and enormous had throughout spaces. It the the with change Company. am relationships years. gives education with a to changing known sheet and it I've us reach balance and the afar. impressed the They're company the is important of when fantastic I've the development more an incredible I of that has these that strong a And amount with profitability. that are of strong a company, of company brings to portfolio unique the strategy distribution game. across and the

belief of can Company's the I me, my comes opportunity and for the and history opportunity my skills the to not apply portfolio was these we opportunity an spaces assets to the passion an unique my combination but that only that me out its career. up space good and consider of pace that highlight to to this for of So and those legendary

Unidentified Analyst

approach program like range the management. the most in their your Can mid-teens To of online competitor comparison bit -- guys the versus been you two? from growing visible little the about a Maybe a XX% perspective, different Wiley. questions few on you, talk for looks the is mid

John Kritzmacher

focus you a for on There scale partners larger diversified sure. to to Wiley much And of tends list the shorter toward tended with comparison are go of to market programs, partners. our by to differences in some we’ve to approach base more

are We unique more under XX to we’re universities with. partners just have now, partnering that programs and the tailored that

growth driving is the of what on doing In years rates couple the in emphasis profitability. terms to of been growth, balance past of the we've with

our of that number all will or portfolio a and partners And programs that national programs at of scale. students, XX partners so that support programs support been brands, and partners programs and of have hundreds portfolio more looking evolving that can they we’ve strong toward drive

that efficiency. our results, what bit and students you us will an evolution portfolio growth balancing programs we profitability and in work over toward of in drive can with our numbers performance we there’s period that grow grow; as with larger bit attract toward at focus partnerships operational also dimension you so of a you the And a the can on are if we a see And partners our profitability them time; can help those that and partners look that of on see overtime.

terms If $X associated to profit business after at basis. with you and business look amortization acquired of an year, at will that million profitability, our the neutral be results amortization for of annual that essentially contribution in intangibles on about this of there's

you see into a our earnings. contributing move position to starting it So we of will are to

Unidentified Analyst

just already question business, looking investments to have last potential publishing know partnerships. at few you One I explored

Beyond take what current at should margins, this incremental levers of cost much out maintain to volume or have can the pull rate declines how initiatives, pace? you continue current are the to restructuring you the

John Kritzmacher

opportunities publishing operational our the say efficiency the would continue we improve part to to of I that business. of have

is workflows moving where towards We are associated publishing working, centered of a around frankly processes. in the much and particular, would say with work and model content digital duration I print-oriented on improving creation and our

paper we course, move going opportunities should then digital like gains overall and continue some and cost to We’ve significant outsourced with continue ago. to process partners We’ve time for in per things efficiency work in us the to to entirely And and unit to us redesign variable around of find are the will lower supply outsourced we of manage first strong that investing distribution production production environment overtime. continue managing that all of tools environment. to for some our that we’re activities our provide So enable toward model. an us

to So opportunity of the I evolution for is us substantial say still flex print. to with there would continue

Operator

We will Crum take our question Drew next from Stifel. with

Drew Crum

for acquisition? to and tracking Atypon. dilution kind expectations fiscal again your remind us respect assuming you’re what John, I and ‘XX housekeeping to with of fiscal item or that us are in that ’XX, with how -- for Remind want just you’re what accretion

John Kritzmacher

sure But would Generally, on I not business neutral us of the is from I is about if as per point what talk our library roughly making Atypon. online profit say to the about I’m itself, say are actually dilution would toward say, much implementation platform. we current our way we Literatum at a this perspective,

commented also platform And on to million operational our a launched in is Literatum of the to early own of library year the our in once in $XX platform way we its as As And contribution business. we migration prepared launch down own. to make calendar onto significant notes, continue online there’s we terms to next of our and bottom-line. that step expect comes then Wiley drive growth we’re that Wiley But year. wind annual going about savings in expected we to to up

Drew Crum

order your that been for gears to or on I the quarters. number, or several shifting university partners your adding the you pipeline Management Can in threshold you may improve to profitability? guys have aspirations Online and Program up at be number then And reducing business, that that about and of talk around somewhere last following XX guess

John Kritzmacher

would watch we of seeing a of I would that are partners. flat number programs, rotation in participating a to of you’re total four environment, the relatively online at in a instead of to of scale. like significant balance, of of all had also On number pipeline good the importantly, not we’ve those total overall. way be where haven’t students Drew, a to tend the are partners. more to potential off, direction taking is of some probably relatively and continues effective some new and taking bit flat, partners partners strength grow the but number but are very again year from is on say, there per really on on along we’re year-over-year the Frankly, that something increasing new on programs be in there. the But the partners with been coming I effect which the se, we brand

Drew Crum

number the that you And think I reference expectations release just to in made relative any quantify of costs. 'XX to for technology implementation the fiscal the what Can ERP fiscal in quarter? that be the will in press including you 'XX? was terms lower And expenses, where

John Kritzmacher

for the single with millions, first of on the that's the the high associated in spending half technology was on So, year-over-year lower pretty the a substantial year, based timing. basis half

to way on out a in of make As our will half to be total even on going year flat. year, the across little half actually that's the be spending the the for spending back we back technology about because is higher and going

Drew Crum

Can company to pursuing efforts maintaining One last for presence for brands about print the question trying the of legacy part publishing this that's perhaps programs. been for your or the to this at Brian. digital for same Wiley, and has time, in Brian, not a importance of to print talk but manage company. vision years some transition from you print of

So there. interested your I'd just views in be

Brian Napack

apparent; it do, to to pursue marketplace; we our not that company; achieve by core make our the those content, days, the valuable and this folks my to be for opining it's we're objectives. future is -- of that as from premature to stuff. that I our for and enhanced value such users be to on our them at all us selling customers look its to of Yes, look, job partners, What the strategies on tools me products valuable what is very the going very, has incredibly price to mission I our proposition three that is the partners and important also would it's say the tactics and content am important or for just services perspective, that

expect the future be in of done will specific things we've about very you on tell to So those valuable things future. but building And historically. this I the can be well strategies, I I very, company that can't speak

Operator

now next question [Operator Instructions] to Dempsey We'll Barclays. our with go from Nick

Nick Dempsey

to about First comfortable heavy destocking declining, XXXX with the bang comps in the about bookstore then going is you their is back in easier sensible six just subscribers to has as because Does that of expected, comp seven think number, how better about the question, your Or easy talked than that textbooks because being talking give down from XXXX; you market things? in growth to being the market shapes that previously trajectory? don't do believe to and anymore. Pearson college XXXX, effect reaching a the better

Matthew Kissner

say would market. now, what's hard it's right on tell I the to going in

We are seeing low returns.

titles down. would to this such are and in not to seems returns an a trend. our in finance and I business a future and development. backlist be right we're seen franchise environment particular And results We’ve point and So volatile industry now. our professional strong really But better in

John Kritzmacher

the decline though, from what hearing do we To in add comments. just you’re continued to similar Matt's clear be to would Pearson, overall see I expect to textbooks.

We’re not that seeing a or decline. flattening -- growing, been it’s continued anticipating

Nick Dempsey

year? anything had. we you currently next in Have growth similar to the for to seen renewal up. I the year's is late we you’re referred short-term Relics’ just as expect one in a just to the saw as that renewal last 'XX environments quick in them broadly fall 'XX, compared to meant the to And being of what think difference CFO you journal generally same follow be end environment which

John Kritzmacher

the say market. see in would I steadiness we that No,

Operator

there are further no appears It questions.

conference So this any will Chairman, at Kissner, final remarks. the I to time, Matthew return for

Matthew Kissner

Brian Thank March. Have you third great for joining in Wiley's holiday. again to on on a call quarter the look John speaking and today. us with forward call you

Operator

you This today's for does Thank conference. your participation. conclude

now disconnect. may You

John Wiley & Sons (WLY) 6 Dec 172018 Q2 Earnings call transcript