Brian Campbell - IR Matthew Kissner - Interim CEO & Chairman John Kritzmacher - CFO & EVP Technology and Operations.

Daniel Moore - CJS Securities Allen Klee - Sidoti.

Good morning, and welcome to Wiley’s Fourth Quarter and Fiscal Year 2017 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..

Good morning, everyone, and welcome to our fourth quarter fiscal 2017 earnings call. First some housekeeping items to be consider. 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.

Presenting our results today will be Matthew Kissner, Interim CEO and Chairman, and John Kritzmacher, CFO and Executive Vice President Technology and Operations. As announced back on May, the Mark Allin President and CEO resigns from the company. And Wiley's Board of Directors is conducting a thorough search for his successor.

As a 14 year veteran of the board and is current Chairman Matt will lead the company during this transition period. Working closely with John and rest of the executive team to execute on its long-term plan and achieve short-term objectives. I’ll now turn the call over to Matthew Kissner, Wiley’s Interim CEO and Chairman..

Thank you, Brian and good morning everyone.

I’d like to take this opportunity to thank Mark Allin for his 20 years of service and dedication to Wiley and the enormous contribution he had made as a leader in the different process of business, from his time as Managing Director of the Asia Pacific region to his role as Head of the Professional Development segment and of course as President and CEO.

Mark was always a driving force of change, [indiscernible] acquisitions, divestitures and major internal improvements like our ERP and deployment and office transformation. We wish him the very best. A quick background on me.

I join the Board of Directors in 2003 and was named Chairman in 2015, during my Wiley tenure, I have had the privilege of chairing the executive governance, audits and compensation committees of the Board.

Prior to Wiley, I was an Executive Vice President and Group President at Pitney Bowes and I've held a number of leadership positions in the financial services industry.

To say that I'm deeply honored to be a part of Wiley is an understatement, from our people to our lasting worldwide contributions to scientific, technical, medical and educational progress, to the opportunities to grow and thrive for another 200 years it is truly something special.

John and I and the leadership team have been working very closely and diligently to execute on our strategic plans and operational excellence initiatives. There're things to celebrate, things to reinvest in and things to improve. The search for a permanent CEO is underway and is being managed by a Search Committee of the Board.

Before jumping into results note that I will be excluding impact of foreign exchange when commenting on all variances. Foreign exchange was a headwind yet again this year. The unfavorable impact of revenue and EPS was approximately 43 million and $0.04 respectively.

As a reminder, the impact of foreign exchange on our EPS is somewhat naturally hedged by the global footprint of our operations, particularly in the UK. Revenue at constant-currency declined 1% excluding the 34 million favorable impact of our shift to time based journal subscriptions and the 19 million partial year impact from the Atypon acquisition.

Underlying revenue performance was driven by 14% growth from the Solutions segment and steady performance from research, offset by a 7% decline in publishing due to continued print book challenges. If you include this subscription shift and contributions from Atypon revenue for the year rose 2%.

Adjusted EPS for the year was up 1% excluding the favorable $0.38 impact from the shift to time based subscriptions and the combined dilution of $0.08 coming from Atypon and Ranku, a small acquisition we made in the online program management space. This compares favorably to our guidance of the mid single-digit decline.

Contributing to the results was $0.12 in tax benefits booked in the third quarter related to global tax planning and efficiency gains both of which helped offset a large high margin back-file sale in the prior year and continued weakness in book publishing.

Including the subscription shift and the Atypon and Ranku dilution, adjusted EPS rose 13% for the year. Importantly, we continue to make significant strides in our digital transformation; 68% of our revenue is now from digital sources, up from 63% last year.

This was the result of several factors including the Atypon acquisition, strong growth in our Solutions businesses and continued declines in print book sales.

While both cash from operations and free cash flow were lower this year, much of the decline can be attributed to working capital timing and on-budgeted $7 million contribution to our UK Pension Plan just before year end and the unusual product mix that occurred in the fourth quarter notably that print book sales were much better than expected.

Also contributing to the free cash flow variance was $17 million in planned CapEx related to our office transformation. It goes without saying that fiscal 2017 was an eventful year for the company, our Atypon acquisition in the second quarter of fiscal 2017 was in important step in advancing our digital capabilities.

We are migrating our online library to Atypon Literatum platform which immediately accelerates our technology roadmap and provide considerable cost savings and efficiency gains. Atypon also provides potentials for new revenue opportunities as we continue to enhance and expense our business for authors and for society authors [ph].

I have been having what I called Brown Bag Lunch Meetings with groups of Wiley colleges to gauge their sentiment and get their insight. I couldn’t be more impressed with the talent we have in place at all levels, we are getting better and change and that is not an easy transition.

We are becoming more efficient and productive, making more informed decisions, removing some of the bureaucracy and improving our speed to market and finally becoming sharper and more focus as an organization, which has led to our company wide operational excellence initiative which John Kritzmacher is driving.

He will talk more about that later in the presentation. To avoid reputation, I'll touch briefly on the next couple of slides.

For the year, revenue, adjusted operating income and adjusted EPS were up 2%, 7% and 13% respectively, excluding the subscription shift and the impact of the Atypon and Ranku acquisitions as well as all adjusted our charges, credits and settlements. The underlying performance for revenue was a decline of 1%.

Adjusted operating income declined 4%, while adjusted EPS rose 1%. As noted, steady research performance and strong solutions growth were more than offset by the continuing market driven decline in print book publishing.

Full year operating income performance was impacted by revenue performance and a large high margin back-file sale in the prior year, while earnings performance was positively impacted by tax planning and efficiency gains. The fourth quarter saw a significant increase in both revenue and earnings.

For the quarter, revenue adjusted operating income and adjusted EPS were up 6%, 16%, 19% respectively excluding the impact of the Atypon and Ranku acquisitions as well as all adjusted out charges, credits and settlements; revenue adjusted operating income and adjusted EPS were up 4%, 21% and 24% respectively.

Publishing drove results although much of the growth within the quarter is due to favorable timing of orders and lower book returns. Solutions continue to show double-digit top line growth and finally strong earnings performance in the quarter was the result of significant profit improvement in the publishing and solutions segment.

Moving next to our research segment, which accounts for 50% of total Wiley revenue and 64% of totaling adjusted contribution to profit or adjusted CTP.

Full year revenue increased 7% primarily due to the shift to time based subscriptions and the Atypon contribution excluding those items revenue was marginally higher with steady journal subscription performance and strong growth at author funded access partially offset by a large back-file sale in the prior year.

Calendar year 2017 subscription billings are up 1% with 97% of business closed which is consistent with growth rates over the past few years. Our society licensing business also remains steady. We have renewed or extended 91 society publishing contracts in calendar year 2017 we were at 67 million and we're even in terms of contracts won and lost.

We continue to believe that Atypon will greatly enhance our research business. We're confident about our opposition and academic research marketplace given our next generation Literatum platform and the technology leadership coming from Atypon.

As a reminder Literatum is the most widely used and fully featured online publishing platform within the professional and scholarly publishing industry, hosting one-third of the world's English language journals. Revenue for the quarter grew 3% primarily due to the contribution from Atypon.

Research adjusted CTP was up 2% due to the favorable $29 million shift of gross profit related to time based subscriptions which offset the Atypon investment of 4 million.

Excluding those items adjusted CTP declined 8% for the year due to a high margin $10 million back-file sale last year, investment in technology, increased article production and higher royalties related to our society business. For the quarter adjusted CTP was down 3% due to investments related to Atypon.

Overall, we're pleased with the consistent performance and research, our largest and most profitable segment and we see considerable opportunity to enhance revenue and profit growth with targeted investment, operational excellence and our next generation technology platform.

Onto the publishing segment which accounts for 37% of total Wiley revenue and 32% of total adjusted CTP. For the year publishing revenue declined 7% with books declining 11% due to print weakness across most categories.

Digital book revenue which makes up approximately 24% of total book revenue was a better story rising modestly overall and growing 18% in education. Course Workflow/WileyPLUS, and Online Test Preparation continued to perform well for us up 7% and 27% for the year respectively. They've been consistent bright spots of us.

Publishing ended the year stronger than expected; in the fourth quarter revenue rose 7% with overall books up 6% and education books up 28%. However, we do not expect this growth to continue as favorable timing and lower returns play the dominant role. Finally, Online Test Preparation had an exceptional quarter growing 52% over the prior year period.

We continue to work towards offsetting print revenue declines with cost improvements and focusing our efforts on growing our digital lines of businesses; to that end the adjusted CTP for the year was flat with savings from restructuring and efficiency gains offsetting lower revenue. For the quarter CTP rose 117%.

We are continuing our strategic work on the publishing business including portfolio review, work force realignment and restructuring and operational excellence initiatives. In certain areas we will explore new formats or promote digital only.

In other areas we will rationalize our portfolio, our approach is to continue to realign our cost structure to help mitigate the revenue decline, sharpen our focus on high performing areas and digital opportunities and improve operating efficiency.

Solutions, which accounts for 13% of total Wiley revenue and 4% of total adjusted CTP had another good year from a growth perspective and showed significant profit improvement. All three solutions businesses reported solid growth with online program management, corporate learning and professional assessment up 16%, 20%, and 5% respectively.

Online program management signed four new university partners in the year and 24 net new programs for a total 39 partners and 25 programs.

Our unique position as a top online program management provider, a leading academic research publisher and premier provider of course material continues to benefit us as we add bigger partnerships and increase the number of programs per partner and students per program.

Corporate learning continues to see double-digit growth from new and existing corporate clients across Europe and North America. In April Course Knowledge was selected is one of the world's Top 20 training outsource companies by trainingindustry.com. Professional assessment remains a consistent highly profitable growth area for us up 5% for the year.

Adjusted CTP tripled to $17 million due to improved operating efficiencies particularly in the online program management business. We expect this progress to continue. For the quarter, revenue and adjusted CTP were up 14% and 27% respectively.

I will now pass the call over to John, who will take you through our shared services costs, balance sheet, cash flow and outlook..

Thank you, Matt. Overall, adjusted shared services cost were even with prior year. Other administration cost declined 9% primarily due to the certain onetime employment costs and higher legal provisions in the prior year. Distribution and operations cost declined 1% primarily due to facilities consolidations.

These savings effectively offset a 5% increase in technology and content management spending related to our ERP and other systems. Operationally, we are making real progress in improving the effectiveness and efficiency of our shared services functions and we still have considerable opportunity ahead.

Our balance sheet continues to provide us with the capacity to invest in the business while also returning capital to shareholders. Net debt at yearend was $307 million compared to $241 million in the prior year. On a trailing 12-month basis, net debt-to-EBITDA was 0.8 compared to 0.7 at the end of prior year.

Our lower cash position was due to repayment of debt using proceeds from the repatriation of cash from some of our foreign entities. During the fiscal year we repatriated more than $500 million with effectively no incremental tax impact. At yearend outstanding debt was $365 million, and our non-U.S. cash balances were reduced to only $47 million.

As part of the repatriation activity we realized a $60 million cash benefit on a hedge covering a pound sterling denominated intercompany loan that originated few months prior to Brexit.

The proceeds from that hedge were received in the fourth quarter of fiscal 2016 and are recorded on our cash flow statement under other investing and financing activities. Our acquisition strategy remains -- targeted at adding businesses or capabilities in our core areas of expertise, particularly research and digital and online learning.

Atypon which we acquired this year for approximately $120 million is a good example of our focused interest. That acquisition was carefully targeted and will be highly beneficial from both a technology roadmap and cost perspective. It also opens doors for new publishing services revenue streams.

Cash from operations was about 35 million lower than prior year largely due to unfavorable working capital performance and an unbudgeted $7 million contribution to our UK Pension just before year end. The adverse working capital performance included the unfavorable timing of end-of-year payments in fiscal '17 as compared to fiscal '16.

We also lagged on collections due to strong book sales in April. Those impacts will unwind in fiscal 2018. With regard to free cash flow CapEx was higher by $17 million driven by our headquarters office transformation. As noted we utilized 155 million in cash for acquisitions compared to 20 million in the prior year.

The Atypon acquisition at a 120 million represents the majority of this investment. We continue to return cash to shareholders in the form of share repurchases and dividends. We repurchased nearly 1 million shares in fiscal 2017 and we raised our dividend for the 23rd straight year. Our next annual dividend review will be conducted next week.

We've launched a number of investments in operational excellence initiatives that will reach across the entire organization. These initiatives include targeted investments to improve revenue growth and achieved significant efficiency gains. In research we're investing in additional journal publishing resources to increase our article output.

We're also investing in advanced digital journal production and workflow tools that will significantly improve our efficiency. We expect to increase article output worldwide with particular emphasis on fast growing markets in China and India. We're also developing new services for academic societies and researchers using Atypon's capabilities.

Through these actions we believe we can increase our sustainable revenue growth rate above 1% to 2% overtime. In our Solutions businesses we'll continue to focus on realizing profitable growth. In addition to gaining scale in these businesses we're driving process improvements and leveraging technology to achieve efficiency gains.

We will continue to invest in customer facing technologies as well, among these investments we expect to complete the migration of our Wiley Online Journal Library to Literatum early in calendar 2018. We expect considerable savings from indiscernible] our proprietary online lever platform at that time.

We’re also developing a next generation WileyPLUS product for introduction in the fall of 2018. We are investing in process optimization and business systems including our ERP deployment for greatly improved efficiency across the enterprise.

We’ve already began to make important strides towards operational excellence in our shared services functions including IT and finance and we are now gaining broader momentum across the business segments. We are confident that our focus on operational excellence will yield better performance at lower cost overtime.

As Matt discussed the review of our publishing business is still a process, but we continue to sharpen the portfolio and realign our cost. Our publishing segment will be restructured and refocused to improve digital capabilities for content production and alternative models for digital delivery and consumption.

Our operational excellence initiatives will result in restructuring charges primarily severance cost to be reflected in the first quarter charge of approximately $25 million. These restructuring actions will yield run-rate savings of approximately $45 million beginning in fiscal 2019.

About half of that will be realized in this coming fiscal year and about half of the savings will be reinvested in the initiatives I just mentioned. Looking ahead to fiscal 2018, we expect the business overall to be steady but still challenge by market conditions in books.

In terms of high level trends, in constant currency terms, we expect revenue and operating income to be approximately even with fiscal 2017. Adjusted EPS performance at constant currency is expected to be down low single-digits mostly due to a $0.12 benefit in non-recurring tax benefits realized in fiscal 2018.

I should note that at current exchange rates we will see a positive FX year-over-year impact to our fiscal 2018 revenue and operating income of $25 million and $20 million respectively. The flow through benefit to EPS would be about $0.25.

Underlying the overall revenue trends, we’re expecting research revenue to grow at 1% to 2% and solutions revenue to grow in the low teens. Our publishing segment revenue is expected to continue declining in the high single-digit range.

As I noted earlier, cash from operations was down this year mostly due to unfavorable working capital performance and a yearends pension contribution. In fiscal 2018, we will turn that working capital performance back around and we expect cash from operations to be approximately $350 million or higher up from $315 million.

Capital expenditures are projected to be modestly lower than fiscal 2017. Our ERP implementation will continue to through the fiscal yearend as we implement order-to-cash functionality to support our journals business.

As our headquarters renovation nears completion in the coming months, the decline in investment and our headquarter will be partly offset by investment in new products and technology. For example, we are planning to launch our next generation WileyPLUS platform in time for the fall 2018 semester.

We do still expect CapEx to decline in fiscal 2019, following this period of higher investment in our ERP and headquarters. In summary, we expect steady underlying performance as we make substantial progress towards improving revenue growth and research and driving profitable growth and solutions.

Sharpening our portfolio and publishing and investing in operational excellence across the organization. The actions we're taking now will provide strong benefits in fiscal 2019 and beyond, as noted we're confident we can improve top line growth in research which will have a meaningful impact on our overall performance.

Our publishing segment will be restructured and refocused to improve digital capabilities for content production and alternative models for digital delivery and consumption. We expect solutions to continue to benefit from rapidly growing market, targeted growth strategies and efficiency gains.

Across the business we expect considerable savings from our operational excellence initiatives and workforce realignment. Collectively these efforts are expected to enable us to hold our operating expense relatively flat while returning to overall revenue growth.

This elevated period of capital spending on our ERP and headquarters will wind down resulting in significant free cash flow improvements over time.

Our online library migration to Literatum will conclude in 2018 and finally I would note that our balance sheet and cash flow generation provided solid foundation for investments and our long-term success.

In short through targeted reinvestments and an obsession with operational excellence we expect to see meaningful and sustained improvements in operating income, EPS and cash flow starting in fiscal 2019.

In summary fiscal 2017 was a challenging but productive year for Wiley, revenue growth remained constrained by the market decline in print books, but we've plans in place to achieve overall top line growth over time. Our digital transformation is progressing nicely with over two thirds of our revenue coming from digital content and services.

Earnings performance for fiscal 2017 was better than expected, but mostly due to successful tax planning and the timing of book sales at year end. Our outlook for fiscal year 2018 is steady as modest revenue growth in Research and strong growth in Solutions will offset continued market challenges in books.

Our earnings performance will be limited by flat revenue and large one-time tax benefits realized in fiscal 2017. Cash from operations and free cash flow are expected to improve considerably over 2017 as operating performance improves and capital expenditures moderates slightly.

Beyond fiscal 2018 we expect to see meaningful earnings and cash flow improvements as major investments such as our online library platform migration, ERP deployment and headquarters office transformation are completed and begin to provide important gains in quality, speed, agility and customer service.

And with that as background we welcome your comments and questions..

Thank you. [Operator Instructions] And we'll go to Daniel Moore with CJS Securities..

I wanted to ask a couple of quick ones if I might, I just want to clarify the guidance for fiscal '18, the adjusted operating income, flat, I'm assuming that's off the base of roughly 228 million excluding currency, is that correct?.

Yes, that's our reported result, that correct..

And in the prepared remarks you mentioned you're typically naturally hedged to some extent and yet at current FX rates you could see a $25 million revenue benefit and the $20 million operating income benefit in fiscal '18 and just wondering what the decoupling of that, it's sort of typically naturally hedged, why that might be the case?.

So, that’s a good question, Dan. So, the nature of the benefit we're anticipating from foreign exchange had specifically to do our journals business and the nature of that business being the subscription are paid in advance.

What we'll see in actually calendar 2017 is that the benefit of the dollar appreciating against the pounds sterling, making its way back into journal revenues earned in our UK entity where the pound sterling is the functional currency.

So, this impact that we’re just driving for the coming fiscal year has actually begun to realize part of itself in the tail end of fiscal 2017 and it will carry through into next year, but it is an element of the functional currency specific to earning U.S. denominated journal revenue in the UK. .

That’s helpful. I appreciate it.

And when you report adjusted for fiscal '18, will you actually back that out?.

We will..

Okay.

And then last one -- last housekeeping I apologize, but tax rate continues to come in lower, what was the effective tax rate used for the $3 adjusted EPS this year and what do you expect for fiscal 2018?.

The effective tax rate for the year was above 18% and for fiscal '18 we're expecting that the tax rate will be somewhere around 23% to 24%..

Got it. Okay. More interesting topics.

Online program management, what was the contribution in '17, and what should the ramp look like towards either breakeven or profitability in fiscal '18 and even any comments that you might have on fiscal '19?.

Since we’ve talked about the relatively recent acquisitions commonly I'll speak to, Dan, both the OPM business as well as our e-Learning business and cross knowledge. We have said for fiscal 2017 that we expected the two combines to be diluted to earnings by about $0.20 and so they each peak somewhere around $0.10.

We came in a little bit below that combines, but the dilution for '17 was $0.18. And as we look into fiscal '18 and we’re expecting that dilution to come down to something closer to $0.10, combined..

Got it. .

Yeah..

Very helpful. And you touched upon the cost savings, John you mentioned maybe roughly half of the $45 million projected cost savings would be targeted for reinvestment.

So, that does give some color, just want to -- getting a better sense of how much of that you are targeting to drop to the bottom line in '18 and '19?.

So, I think Dan you should think about this as we described. We’re going at reinvest about half back into the business. I would say that the remainder of that that we take through savings you have to be thinking of as also than offsetting cost of inflation and cost of compensation programs and so forth over the course of the time.

So, in terms of flow through reduction to our ongoing expense, I don’t think you should expecting a reduction, you should be expecting to see that we’re essentially flattening as I described in my comments, flattening the progress of operating expense across the business..

Perfect. Lastly, John just any comments, update, et cetera.

on timing expectations as far as the CEO search goes?.

This is Matt, I'll comment on that. As I mentioned in my prepared remarks we've a Board Search Committee, a subset of the Board, managing the search. We're working with leading search firm in that regard.

We are under no time pressure here, we're going to get this right and find the right individual, so we're going to take our time and do it in the usual thorough way that Wiley does things..

Thank you. And we'll go next to Allen Klee from Sidoti..

You just answered that you thought that some of the growth areas would go to $0.10 dilutive from $0.18 in last year, a similar question on Atypon of that would go to in '18 and then what the cost are also related to in '18 for the headquarters transformation and operational excellence?.

So, let me start with that and then I'll go through the investment programs.

So Atypon turned out to be less dilutive in fiscal '17 then we initially anticipated, of course we're still working our way through all of the purchase accounting and so forth for the initial integration, but Atypon was just under $0.10 dilutive to the business, $0.08 dilutive actually for the year.

And we're expecting its dilution in fiscal '18 will be about the same and then in '19 we expect it to be neutral to positive, '18 is the period where we'll complete, as I was describing earlier, the migration from our proprietary Wiley Online Library platform over to Literatum and then that's a big part of this step over for the acquisition then to be accretive to Wiley in the future.

So '19 is the point where we cross that period.

With respect to investment, the investment in headquarters in 2017 was mostly CapEx, not so much of impact on OpEx, the net impact CapEx was about $17 million in the year and then we've got follow on spend, the total spend on the facility is about $30 million for the balance of that $30 million from '17 will occur inside of our fiscal 2018..

And then in terms of your journal business how do you think -- I'm sorry, your research business, excluding Atypon for everything else prior to that, how do you think about what the growth rate would be in '18 and kind of how the transformation to the Atypon business, maybe if you can explain a little how you think that accelerates the growth longer term?.

So, a little bit of context, so fiscal 2017 our journals business if you will ex-Atypon just the core journals business and research, from a revenue perspective was marginally positive, as Matt noted in his commentary.

Underneath that we've pointed a couple of times, important to note this in the prior year fiscal '16 there was a very unusual $10 million back-file sale, so we had a 10 million unfavorable comparison, otherwise we would have seen revenue growth in the research business that went something slightly north of 1%.

For the coming fiscal year, we're expecting to see in the research business revenue growth is in the 1% to 2% range. So, we’re anticipating some improvement and of course we know or have the difficult comparison to the year with a large back-file sale.

So we expect this time around the growth that's naturally occurring in the business that will -- that it will flow through.

With respect to Atypon, it is a complementary to our business not only with respect to the capabilities that it brings to the delivery of our entire online library, but it also -- it has tool sets our particularly efficient with respect to billing websites, which is a common area for demand in support our journals and our society partners.

We also are, with Atypon, building new capabilities that will provide services, researches and societies, among the important services we’re preparing to offer are services with respect to peer review that we believe will be highly attractive to researchers and will continue to draw researchers to Atypon and Wiley for their publishing needs and interest..

Okay. And on the books segment, you mentioned that due to some timing that it is a little better than expected. Could you maybe elaborate on that? And then kind of just maybe a little bit also on the strategic review and what -- how that can be maybe make things look different in the future? Thank you..

So, sure.

As you noted the number of times in the prior calls, we know again when we think about the publishing business and its performance of publishing business principally being our -- the center of our books business, that really need to look at that business over a period of time, typically look at trends over a couple of quarters or a year to really see how things unfold, because events that occur just prior the quarter end can have a significant impact events in particular being significant quarters happening during the quarter.

We saw a number of orders come in in the fourth quarter that were unusual, not sort of typical ebb and flow, some transactions that we’ve been working on for some time around old books sales for example. So, we thought the quarter was lumpy and it was particularly positive by comparison to prior periods.

We also saw lower returns in the period and returns have an important impact on the performance and revenue from quarter-to-quarter.

So, timing around orders favorited the fourth quarter for us, timing around returns similarly seem to favor the quarter and we see just that you look for the trends and the performance of that business over a longer of period of time for the year our publishing segment revenue was down 7% and as we said you should anticipate high single-digit revenue decline in that segment for the coming period that’s all we’re projecting..

In terms of the strategic work going on, overtime the profile of that business will change you'll see much stronger digital presence and we’re building our digital capabilities in that regard as well as a more cost-effective infrastructure..

Thank you. And then for your testing business, that have very strong growth. Could you kind of go into what was behind that and kind of your outlook there? Thanks..

I would say the overall rate of growth for the test front business which includes a number of finance disappointments, it continues to be steady.

I don’t think there are any particular events that were unique to this quarter that caused it to be higher, but the growth rates that we're seeing in the 25% to 30% kind of range have been pretty consistent for this business and we expect that to continue going forward..

[Operator Instructions] And we'll go back to Daniel Moore from CJS Securities..

Just one or two follow-ups, in regards to this strategic review, I'm hearing more on this call about sort of fixing the businesses rather than divestments of potential partnerships, has there been any change in your view or outlook, or is that still very much influx?.

So Dan, I would say that what we've discussed in the past has been the need for us to take a careful review a portfolio inside of our publishing business given what we've seen as a pretty steady phase of decline and determine if in fact there are other opportunities to leverage those assets with partners or perhaps they'd be of more value to others and so we've been working on that review.

But all along I think we've been reasonably clear that the intellectual property that we have in the part of the business and the skill sets that we have publishing those disciplines are really valuable and as we've worked our way through the review and we're continuing to do that; we're finding that there are significant opportunities to continue to realize value of that portfolio to be successful in the publishing space we need to introduce new capabilities around digital content production and delivery that'll enable us to deliver content in different formats, not just books, but really with an emphasis on digital consumption and so we're working on plans to do that, but we believe certainly in the near term that there is still a lot of value in those assets and that frankly we can do a better job realizing the value of those assets by focusing in particular on our digital capabilities..

And lastly the cadence of guidance, down high single-digits as far as print publishing is concerned.

Last couple of years we've seen a bigger drop in the beginning of the year, or at least this past year certainly followed by a little bit more of an offset as returns normalize, do you think that's the new normal or is that just reading too much into it?.

Dan, I would again suggest that we not read too much into individual quarters given how things may flow from and slip if you will forward or backward from one quarter to next when it comes to the publishing business. I've looked again over the longer-term trends and I wouldn't begin to try to predict seasonality.

There are events aside from what might be normal seasonality in this business such as consolidation among retailers and their efforts to effectively manage their inventory, we saw some destocking happening during the past fiscal year that caused swings in revenue.

So there are so many variables to drive it, I think you really have the sort of smooth it out over a period of time in terms of guiding your expectations for what will continue to be a decline in that business, hopefully one that moderates a bit, but we still see a decline there..

At this time we will turn the conference back over to Matthew Kissner for any additional or closing remarks.

Well, we thank you for joining us on the call today. And look forward to speaking with you again on the first quarter of fall in September. Thank you. .

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