John Wiley & Sons Inc

NYSE:WLY

Earnings Call Transcript 2019-Q2

[Operator]

Good day everyone and welcome to Wiley's Second Quarter Earnings Call for Fiscal Year 2019. As a reminder, this conference is being recorded. And now at this time, I would like to turn the call over to Wiley's Vice President of Investor Relations, Brian Campbell. Please go ahead.

[Brian Campbell, VP, IR]

Thank you, and welcome to Wiley's second quarter fiscal 2019 earnings update. 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 SEC filings. The company does not undertake any obligations to update or revise forward-looking statements to reflect subsequent events or circumstances. Wiley provides non-GAAP measures as a means to evaluate underlying operating profitability and performance trends. Non-GAAP metrics which generally exclude items that impact comparability comprise the following: adjusted EPS, free cash flow less product development spending, adjusted operating income and margin, adjusted contribution of profit and results on a constant currency basis. These performance measures do not have standardized meanings prescribed by U.S. GAAP and therefore may not be comparable to the calculation of similar measures used by other companies. This should not be viewed as alternatives to measures under GAAP. Also note, we abbreviate constant currency as CC. Please see the reconciliation and explanations of all non-GAAP financial measures presented in the supplementary information, included in our press release. 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 webpage. I'll now turn the call over to Brian Napack, Wiley's President and CEO.

[Brian Napack, President and CEO]

Hello everyone, and thanks for joining our call. With me as always is John Kritzmacher, our CFO and Executive Vice President of Operations. Let me start with a quick reminder about Wiley. Simply stated, Wiley is research and education. Our customers are the world’s researchers and learners and its universities and corporations, and our mission is to help them achieve their ambitious research and education focused goals. How do we do that? In many ways, but overall Wiley delivers the must have content platforms and tech-enabled services that fuel the global knowledge economy. More specifically in our research businesses, we publish, validate, and disseminate a major portion of the world's most important discoveries, and we host nearly half of the world's English language research through our publishing platforms. Our goal is to accelerate discovery and amplify the impact of research. In education, we power career enhancing degrees from top universities through our tech enabled education services, and we publish gold standard academic content and courseware that helps learners to succeed in school, pass high-stakes certification exams, and gain important skills throughout their careers. We also deliver award winning e-learning programs, platforms, and assessments that ensure major companies always have the skilled workforce they need to win in the global economy. The world invests in research and education because they are the twin engines that drive economic growth and human advancement. Wiley invests in research and education because we see lots of opportunity today and for the long term, and because our customers, researchers, learners, universities, and corporations depend on our great content platforms and services to succeed. Across our portfolio of high impact businesses, Wiley moves the needle for our customers while delivering a healthy balance of profitability, cash flow, and growth potential for our shareholders. I'll highlight four key points for the quarter. First, our results were very much in line with our expectations, good steady growth in research and strong growth in solutions offset continued declines in print textbook publishing. We believe in the long-term prospects for Wiley's Higher-Ed content and courseware, and we're making good progress in delivering our content with enhanced affordability and accessibility. As expected, earnings performance in the quarter was down due to our investments in growth initiatives such as expanding, publishing and research and driving enrollment in education services. Second point, our growth investments are gaining traction. For example, key objectives in research are to increase publishing volume and to become a leader in open access. We are doing very well here. Article growth of 6% calendar year to date culminated in a record breaking October, the first month in our long history that we published more than 20,000 articles. This is big news for us. I'm pleased to report that our revenue in Open Access was up 50% for the quarter. This is very important because the market is demanding new business models that include both traditional subscriptions or pay-to-read models and Open Access or pay-to-publish models. In education, we're building momentum through our content and technology investments. We are extending our publishing program in select high demand, must have disciplines. We are building test prep momentum both in finance and accounting certifications and actively expanding in critical tech-skill areas. We're launching new learning platforms such as a powerful new version of WileyPLUS, which is just beginning to roll out in the market, and we are enhancing our go-to-market capabilities and rolling out new business models to get learners the content they need in the formats they want at the price points they demand. We are seeing significant momentum in education services, which presents some of our most interesting growth opportunities, enrollment in our degree programs is growing well at our partner schools, and we have renewed important long-term agreements with some of our best partners. Signed up several important new universities in the first half, including Michigan State University of Glasgow, and the University of Bath in the U.K. Point three, we're making important strides as an organization. We’re significantly enhancing our skillsets, and we are improving our focus, our speed, and our efficiency. We've just launched a new business optimization initiative under John's direction that will accelerate improvement in each of these areas while generating significant run rate savings. Fourth, we are energized by the recent acquisition of the Learning House. The combination with Wiley Education Services has created a $200 million leader in the $2 billion degree program services market also known as the OPM business. Wiley now has the largest network of university partners and online programs and an unmatched range of service offerings that widen our directly addressable market significantly. Now on to research. Whereas you know we're a leading player in the $10 billion research publishing market which is growing at 1% to 2% a year. We're making good progress. Subscriptions, making up 72% of Wiley research revenue continue to be consistent growth areas for us. Calendar year 2018 subscription billings finished up 2%, and 2019 is just getting underway. We continue to see good momentum in our society publishing business with society retention rates at 97%, and net wins totaling $3 million for the calendar year 2019. In the quarter, we announced the following new partnerships, The Royal Entomological Society, The European Association of Geoscientists and Engineers, The Water Environment Federation, and The International Association of Plant Taxonomy. As noted, the research industry is evolving to incorporate some new and innovative distribution models. Subscriptions remain for the foreseeable future the dominant model worldwide while Open Access and Hybrid Models will continue to grow. As noted, Open Access revenues rose 50% for the quarter and 36% for the first half. In the quarter, Atypon signed three new partners, renewed a three-year agreement with a key publishing client and grew revenue by 10%. Going forward, there'll be a mix of business models in research that co-exist. Wiley continues to engage productively with the research community to ensure a healthy research ecosystem that works for researchers, libraries, consortia, societies, funders, and publishers. But regardless of the business model, the fundamental value of our portfolio peer reviewed prominent and reputable journals will endure. We have one of the largest and best journal portfolios in the world with 27 Wiley journals ranked number one and 349 ranked in the top 10 of the annual journal citation reports released in June Our strategic focus is the continuing enhancement of end growth of our publishing portfolio while increasing article volume and diversifying our distribution model. Simply put, we will publish more and we will publish better. We see clear line of sight to this goal. For example, nearly two-thirds of the articles we receive every year are not accepted by our individual journals. Many of these articles are high quality and ultimately find their way into our competitors’ journals. Our plan is to keep these articles in house, finding a home for them inside the vast Wiley portfolio of 1,600 journals. We are actively developing new products. One such product is Wiley digital archives program where we are seeing good early traction. We are also planning new software and tech-enabled services to enhance the speed and effectiveness of the research workflow. The innovative team inside of Atypon is spearheading much of this exciting work more on this in future calls. We're also making excellent progress in re-engineering our research publishing business. For example, we have recently piloted process to simplify and cut more than 50% out of the except two publish cycle time. This is going to make our researchers very happy by getting their work out there in the world faster and it will also lower our publishing cost. Education is a big profitable market for Wiley, but has been delivering uneven results due to the market transition in Higher-Ed publishing. On the positive side, we are on plan overall and there's plenty of good news. Test Prep is growing nicely this year at trade publishing where we are leaders in business and professional books is seeing good performance and seems to be on the rise. With reference publishing, which includes our STM books is steady and continues to generate strong earnings. At the same time, Higher-Ed publishing is down again this year as print textbook sales decline and the market migrates to digital content and courseware with lower price points and new distribution models. Wiley remains a leader in critical high demand career focused disciplines, Wiley’s core areas of strength such as business, finance, accounting and stem are disciplines that require course materials, online homework and test prep systems for students to complete their courses and pass their test. As such, Wiley’s high quality curated content remains in high demand even while the formats and business models change. We see long-term opportunity amid the transition. Thus, we will continue to invest in gold standard content and do so by leveraging the most powerful learning technologies available. For example, we are expanding our test prep offerings in hot tech skill areas such as cyber security, networking and IT service. We continue rolling out enhancements to our digital learning platforms which include WileyPLUS, Wiley Efficient Learning, our test preparation platform and our ebook programs. We are actively implementing affordability initiatives such as inclusive access and content rental programs. As a reminder inclusive access is where we work with a university or department to ensure that all students gain access to digital course material in exchange for a lowered retail price. This improves affordability for students while giving us full sell through. Wiley remains intently focused on operational effectiveness and publishing, streamlining workflows and modernizing our content development and go-to-market approaches. We are optimizing our pricing and reducing costs throughout. We've been adding through our internal talent base significantly in areas such as product management, digital development, digital marketing, e-commerce and pricing. Now onto solutions. In short, our solutions segment had a terrific first half. Revenue grew 8% and adjusted contribution to profit grew 47%. In ED services, we saw 7% enrollment growth in our existing degree programs. The same-store sales growth is central to our improving profitability. As stated, we also signed Michigan State as a partner and two major institutions in the United Kingdom. We continue to add new degree programs on a net basis, while pruning the portfolio of underperformers. We continue to renew long-term partnerships in the lucrative regional school space, our pipelines are robust. In corporate learning and professional assessment we saw a good performance in our core businesses with core CrossKnowledge up 18% and core workforce learning solutions up 17%. We are achieving great customer and partner growth including 41 new clients this quarter for CrossKnowledge many of them global brand names and a record setting 86 new corporate training partners in our assessment business. In all, we continue to meet our expectations and solutions driving both growth and margin enhancement through top line growth and efficiency gains across the business. Through the first six months of 2019 we've made substantial strides at the corporate level in areas critical to our long-term success. These include strategic planning, technology capabilities and talent development. On the strategy front, we've implemented a data driven approach to strategic planning that has already yielded great improvement in our focus, the impact of our plans and the effectiveness of our operations. Powered by better customer insight and business analytics, Wiley is now tightly aligned while moving faster and more confidently than ever. I'm very pleased with the progress we're making in technology. We have made great strides to becoming a unified data driven technology company with industry leading development capabilities. Each of our business unit leaders has recently noted to me, their growing confidence in our ability to develop and support high impact customer focused products and platforms. We expect that enhancements in the technology organization will yield significant ongoing cost savings. Wiley’s people is the foundation of our success past, present, and future. Thus we continue to invest in them to enhance our talent base and our culture. Thus far this year we have completed a variety of important projects that are enabling us to shape our talent pool, while delivering compelling career pathways for our Wiley colleagues. We are building a high performing organization that is people centric, future focused and outcome oriented, said differently Wiley colleagues like where they work, they buy into our vision and they believe that together we can succeed. We survey our team regularly and happily we are seeing healthy increases in colleague engagement confidence and satisfaction. John will talk a bit more about this but we are embarking on an operational excellence initiative to drive more profitability speed and cost savings throughout the organization. A real high point for us has been the acquisition of the Learning House, a dynamic growth company that fortifies our leadership position in a highly fragmented $2 billion education services market. Learning House brings a diverse and complementary range of university partners and education services and a job placement network of over 450 corporations, combined we now have more than 60 partners, 800 degree programs and a full range of service offerings including traditional program services and non-degree programs, short courses and credentialing. Student pathway services continuing education and corporate learning. We closed this deal on November 1 and are well on our way to fully integrating Learning House and Wiley Education Services. I must say that throughout the acquisition and integration process I have been truly impressed with the professionalism of the Learning House team led by Todd Zipper and the quality of the businesses that they have built. Wiley Education Services and Learning House are excellent complements Wiley is focused on strong national and regional institutions, Learning House is a leader in high quality small to mid-size regional schools. Wiley is skewed toward graduate programs while Learning House is split nearly half and half between undergraduate and graduate. Together they present a full range of university partnerships including big names such as George Mason and Michigan State and great regional schools like Concordia University St. Paul and the University of West Alabama. As you know the regional market is highly attractive and lucrative with without a national brand our regional partners will lie on us very heavily to attract and retain students. This regional portfolio diversifies our business nicely. The financial characteristics of the degree program services business are highly favorable with dynamic growth, long-term contracts typically 7 to 10 years, recurring revenue with terrific visibility, attractive operating margins when mature and high switching cost. Beyond our bundled OPM services, some of our party universities like to order services a la carte such as marketing and recruiting services and we provide that as well. These deals are typically fee for service and thus, have no upfront capital and good cash flow characteristics. The efficiency of the Learning House operating model was a big draw for us. They are able to service low enrollment programs in a very cost-effective way and we will benefit greatly from their expertise. The projected operating margin of the combined business is 15% to 20% once mature. We’re still in the early stage of development in this market, but we are already seeing improving margins and are highly confident in the outcome. OPM is an attractive $2 billion market with double-digit growth and with penetration still only around 15%. And it’s just one slice of a very large services and delivery pie. The addition of Learning House adds $10 billion of addressable market for other education services. Beyond that it is a much bigger market for all higher education services and software, which covers the continuum of post-secondary education from University Learning to credentialing to continuing education, and corporate training in which Wiley is already a leader through cross knowledge and or talent solutions businesses. The trends in this space are exceptional. Universities and corporations are heavily investing to solve the skills and talent gap. Universities are seeking to deliver better career outcomes for their students and corporations are spending billions to find up-skill and re-skill their workforces and students and professionals are more focused than ever on ROI of their investment in education. At Wiley, we serve over 10,000 universities and over 1,000 corporations. Going forward, we will take full advantage of the Wiley network effect that help bridge the gap between school and work. With our broad range of learning services we are uniquely capable of supporting students from institutional education through their ongoing career success. In other words, Wiley’s plan is to literally bridge the skill gap, and to do so from both sides of the labor market equation. The university side, which supplies skilled labor, and the corporate or demand side which requires it to succeed, by helping supply and meet demand, we will deliver real outcomes to our partners, drive significant impact for students and professionals and create significant value for our shareholders. With that, I'll pass the call over to John to take you through our financials and our optimization and reengineering initiative.

[John Kritzmacher, CFO and EVP, Operations]

Thank you, Brian. And good morning, everyone. As Brian noted, performance in the quarter was in line with our expectations for the quarter and for the full year. Revenue was down 1% on a U.S. GAAP basis, but up 1% at constant currency with 3% growth in research and 9% growth in solutions offsetting a 3% decline in publishing. GAAP operating income and EPS were down 29% and 27% respectively, primarily due to restructuring charges in this period totaling $10 million, and unfavorable foreign exchange impacts of $4 million. Adjusted operating income and adjusted EPS declined 10% and 9% respectively, driven by investments in editorial and sales resources to enable growth in research, and increased spending on marketing to accelerate enrollment growth in education services. The $10 million in restructuring charges in the quarter reflect continued cost reduction actions across the business. The charges are primarily related to severance. Savings from these actions will ramp up over time are primarily related to severance. Savings from these actions will ramp up over time and reach approximately $15 million in run rate savings in the second half of fiscal 2020. Through the first six months of the fiscal year, our finance results were again in line with our expectations. 1% revenue growth in research and 8% growth in solutions offset a 4% decline in Publishing. Overall, revenue growth in Research and Solutions have been steady and the decline in Publishing continued to be driven by lower demand for print textbooks. Total Wiley adjusted operating income and adjusted EPS were down 16% and 17% respectively. As previously noted, our business plan for fiscal 2019 included higher spending for editorial and sales resources in Research and increased marketing spending in Education Services. Although these investments will continue at pace, our plan for the second half of fiscal 2019 reflects overall spending that is roughly in line with the second half of fiscal 2018. From this point on, I'll be talking to segment results on a constant currency and adjusted basis unless otherwise noted. Research revenue was up 3% overall driven by high double digit growth in open access and in our Atypon publishing platform business. Journal revenue overall increased 2% for the quarter. Our society publishing business has secured more than $3 million in net new business for calendar year 2019 and we achieved a 97% retention rate for publishing partnership renewals. Adjusted CTP was down 7% in the quarter primarily due to higher royalties and investments in editorial and sales resources to expand journal article production and accelerate Journal revenue growth. Year-to-date, research revenue was up 1% and adjusted CTP declined 10% reflecting similar pressures on royalties and investment in editorial and sales resources to fuel growth. Publishing revenue was lower by 3%, reflecting an 8% decline in education publishing and a 5% decline in STM and professional publishing. WileyPLUS revenue was higher by 14% due in large part to higher prior year revenue deferrals for courses extending across two semesters. Test Preparation realized 7% growth in the quarter driven by our CPA and ACT programs. Higher education publishing which has over time declined to about 10% of Wiley revenue continues to experience weak demand for print textbooks. As Brian noted, we are working to introduce new formats, business models and pricing models to more broadly serve instructors and students with our industry leading content. Our other publishing business, STM and professional publishing has delivered steadier results through the half with revenue down 1% overall and sustained growth in some disciplines such as business and education. We are prudently investing to publish more in these high demand disciplines. Adjusted CTP was down 2% mainly due to lower revenue. Year-to-date, results are in line with expectations with revenue down 4% and adjusted CTP lower by 6%. Solutions delivered 9% revenue growth in the quarter delivered by, I'm sorry driven by 28% growth in corporate learning and 9% growth in professional assessment. Education services growth of 1% was muted by previously reported partner terminations, which wound down last quarter in line with our ongoing efforts to optimize our partner portfolio. Brian spoke at length about Learning House, the progress we've been making with new university partners and programs and some of the momentum we're gaining in both corporate learning and professional assessment. So I won't repeat that detail here. We continue to drive improvements in profit contributions for the Solutions segment. Adjusted CTP was up 22% for the quarter and 47% through the half. We are undertaking a companywide business optimization initiatives centered on enabling the successful implementation of our strategic initiatives on improving the way we work redesigning legacy processes and reshaping parts of our organization to drive greater operating efficiency and effectiveness. This initiative will deliver sustainable improvements in both the speed of our business processes and the quality of product and service experiences for our customers. Our optimization efforts will be heavily centered on achieving breakthrough improvements in our publishing editing and content management functions across both of our largest business segments. We are also very focused on reshaping our IT and software development organization through skill upgrades and critical functions and in-sourcing of several IT and software development activities. Our investment in business optimization includes the establishment of a permanent business process optimization team, staff to enable continuous improvement initiatives across all of Wiley. Over time the business optimization initiative is expected to yield tens of millions of dollars in expense savings. We’ll be more specific about those expected savings as our work progresses over the balance of this fiscal year. The operational strength of our business and the limited debt on our balance sheet continues to provide significant capacity for strategic investment. The $200 million acquisition of Learning House which was funded through our revolving credit facility is not reflected here as it closed just after the quarter on November 1. Net cash used in operating activities was $121 million compared to $46 million in the prior year, largely due to swings in working capital and particularly due to a delay in journal subscription billings and subsequent collections for calendar year 2019, and to a lesser extent higher payments for expenses. We expect much of the unfavorable working capital swing to reverse in the coming months as we make our way through the peak of journal subscription collections. As a reminder, cash flow in the first half of Wiley’s fiscal year is consistently a use of cash principally due to the timing of collections for annual journal subscriptions. Free cash flow, less product development spending performance was unfavorable due to higher cash used in operating activities. Capital expenditures including technology, property and equipment and product development spending declined $29 million to $42 million due to the completion of Wylie's headquarters renovations and May 2018 implementation of our ERP order to cash release for general subscriptions and reporting changes from the adoption of ASC 606. In the first six months, the company utilized $38 million in cash for dividends and approximately $25 million for share repurchases at an average per share cost of $58.79. As a reminder, we increased our quarterly dividend in June for the 25th consecutive year, a 3% increase to $0.33 per share. And now on to our outlook for the year. As noted earlier, we are tracking to our internal expectations through the second quarter and continue to have full confidence in achieving our guidance for the year. Setting aside the impacts of the Learning House acquisition we are reaffirming guidance for flat revenue, a mid-single digit decline in adjusted EPS and a high single digit decline in cash from operations. We expect CapEx to be lowered by approximately $40 million including $30 million of lower spend for technology, property and equipment and product development accompanied by a $10 million shift from CapEx to cash from operating activities due to ASC 606 reporting changes. For the remainder of the fiscal year we continue to anticipate that revenue growth in research and solutions will be offset by declines in publishing. Similar to the first half of the year we will continue to invest in growth initiatives in the second half particularly in support of our research and solutions businesses. By comparison to prior year though our total Wiley spending will be roughly flat and our second half earnings will be modestly favorable to the second half of fiscal 2018. Also note for fiscal 2019 we anticipate Learning House to contribute approximately $30 million in revenue and to be dilutive to EPS by approximately $0.10. Again please note that Learning House is excluded from our guidance. Briefly summarize then results in the quarter were in line with expectations. Organic investments are gaining traction across all three segments of our business. Our strategic acquisition of Learning House fortifies our leadership position in a rapidly growing education services market and we are launching a companywide business optimization initiative which will yield meaningful improvements in our competitive position and generate significant savings over time. And with that as background we welcome your comments and questions

[Operator]

[Operator Instructions] And we'll first hear from Drew Crum of Stifel Nicolaus.

[Drew Crum, Stifel Nicolaus]

So, I want to ask about the Learning House acquisition, the $30 million that you're projecting for fiscal 2019 would seem to imply a slowdown relative to the $70 million that's forecasted for calendar 2018, which is up 17% year-on-year. So just want to understand kind of the dynamics behind what you're assuming in terms of contribution from that acquisition.

[Brian Napack, President and CEO]

Drew, we're expecting operationally for the year that the Learning House performance is on the order of $70 million, that expectation is unchanged. What you're seeing in lower number for the back half of the year is really the impact of acquisition accounting, where we take a bit of a haircut under acquisition accounting for revenue that had been deferred in their business. So, that's really what you're seeing there, but the business has actually got operationally really strong momentum, continues to add really solid new partnerships, and we’re very excited about having them as part of the team.

[Drew Crum, Stifel Nicolaus]

And then shifting gears to Open Access, it's a part of the research business that continues to grow at a very high rate. How big do you envision that part of the business becoming as a percent of the total over the next couple of years, and related what does the margin profile look like on open access journals relative to the wholly owned or society journals that you're publishing?

[Brian Napack, President and CEO]

Well, I'll handle the projection for the business. Look, it's growing very rapidly. The market is in transition. It's unclear today exactly where we will settle in terms of the preference for researchers and others for the publishing model whether they're publishing Open Access or under a traditional free model of publishing supported by subscriptions. We see tremendous velocity, we see a lot of continued growth. We're not prepared to make a commitment about where we think it will wind up because there are some significant variables including again researcher demand, but also some of the larger initiatives going on to migrate to more blended models in certain regions of the world. So, we do see significant business. I'll let John speak to the margin issue.

[John Kritzmacher, CFO and EVP, Operations]

So, Drew on the profit size of this business, I would say that we continue to believe that the profit in the journal publication, article called - research article publication part of our business is sustainable, our historical margins are sustainable. Demand is high. The opportunity for growth is high, key to the long-term performance in this business is driving operating efficiency around article publication, so you see prominent in our comments today that we are focusing resources on simplification, standardization, and automation of the processes around research article publication, and that will include heavy emphasis on how we make that process particularly efficient for Open Access, but we believe that the margins that we are in that business today and have traditionally earned in that business are sustainable in an Open Access environment.

[Drew Crum, Stifel Nicolaus]

And then John, the $10 million of restructuring charges you recognized in the fiscal second quarter, I assume that's all cash or the majority of that is cash, and what are you anticipating in the second half of fiscal 2019 in terms of [multiple speakers] charges?

[John Kritzmacher, CFO and EVP, Operations]

So the charge, that -- the $10 million charge is essentially all severance and essentially all cash, will incur that expenditure over most - most likely over the coming three quarters or four quarters, but it's a relatively short period of time for that to roll-out.

[Drew Crum, Stifel Nicolaus]

Would you anticipate more restructuring charges in the second half?

[John Kritzmacher, CFO and EVP, Operations]

We don't presently anticipate more restructuring charges in the second half,. We’re going to work our way through the business optimization initiatives. As I described and those may in some period of time give rise to further restructuring charges but we don't have anything slated for the second half of the year.

[Drew Crum, Stifel Nicolaus]

And then on the Solutions business, can you comment more on the flattish sales performance for Ed Services against the 9% same school growth that you recognized. Is that indicative of what you should expect to see for the business ex-Learning House of course through the balance of fiscal 2019 or do those converge over time?

[Brian Napack, President and CEO]

So, as we noted in our comments through the 1% growth in the period reflects muted performance as a consequence of winding down a few partnerships that were in our line of sight and we have previously spoken to those in prior reports, underlying growth, if you will, ex those terminations is on the order of 10%, and we expect to deliver double-digit growth in Education Services business on a go-forward basis in combination with Learning House but I want to be clear that that's operational performance when I say double-digit growth in the combination that's not a comment about the step-up that we get from having an incremental part year effect of Learning House in our results. Operationally, that business is going to grow -- our business and Ed services are going to grow at double-digit rates.

[Drew Crum, Stifel Nicolaus]

And then just one last one for me, where do you see peak and trough leverage for the business over the next 12 months, and how do you see that influencing decisions around redeployment of cash flow?

[Brian Napack, President and CEO]

We're making our way through our normal seasonal pattern, albeit I noted we're a little bit behind on general subscription collections, which will pick up in the next couple of months. But in terms of overall liquidity for the business, we have a lot of capacity on our revolver. Our $1.1 billion [ph]. We've got significant room there to take on some additional, if you will, bolt-on acquisitions. But we - absent some larger scale acquisitions, we expect to be able to manage liquidity well within the current revolving facility that we have, so nothing particularly unusual going on over the coming months.

[Operator]

[Operator Instructions] Next we'll hear from Dan Moore of CJS Securities.

[Peter Lukas]

It's Peter Lucas for Dan. Just a couple of questions on Learning House. Now that the acquisition is closed, can you tell us a bit about the potential revenue and your cost synergies between Learning House and your legacy online programming business?

[John Kritzmacher, CFO and EVP, Operations]

The business is, as Brian described them are in many respects very complimentary. So, in terms of customers we serve, there is not much overlap. And so, we gained quite a bit of scale and diversity with the customer basis of the two different operations. One of the comments Brian noted is that Learning House serves the undergrad market far more than the Wiley does, so that's a significant complimentary piece in terms of our top line and creates new revenue opportunities for us with our university partners in that respect and they also have some new product offerings that we hope to begin to accelerate in the marketplace as well. So, there's lots of revenue potential from our customer reach and the power of the two organizations together. Cost synergies will come in the form of combining some of the operational activities such as student support, some of the marketing services, so we've already begun to interleave pieces of our organization to work as one online programs, business and we’ll gain more advantage from that over time. We're not banking on major cost savings between the two groups, but it's certainly the combination of their capabilities and Wiley’s capabilities gives us greater opportunity to scale within our current footprint.

[Peter Lukas]

And as far as, can you talk about market growth for short courses and learning boot camps over the past several years and who were the key competitors for Learning House in that space, and are - is Learning House taking share. And if so, from whom?

[Brian Napack, President and CEO]

Yes. So, that's an early stage business for Learning House representing a reasonably small portion of their business. They're just scaling it now. There are a variety of competitors that provide these non-degree up skilling programs. They range from the boot camp community that include companies like general assembly and galvanized to online - to finishing schools like the Revature models where they are taking college graduates and upskilling them and trilogy which provide add on services to universities that allow them to again upskill students to provide - to give them jobs and pathways to direct jobs, there are a variety of players in this market. And so it's hard to put a single figure on it what we know as we see significant growth in all of these competitors they're starting to become scaled companies meaning companies that are approaching or above $100 million and we see a lot of momentum and enthusiasm in the area. We believe that there is significant synergy to be brought to the market by having a full range of offerings, so that we can go to university partners with both services that help them in their core degree programs and then help them provide the additional services or at least the students to help to provide to corporations entry level employees with the specific skills they need to succeed. So there's - and then on the corporate side we see the similar synergy of being able to bring to corporations fully skilled entry level employees whether they’d be directly out of school or via one of these non-degree programs that these companies like ours are providing. So we believe that that the connection between as I stated earlier between the supply side or university side and the demand side or corporate side is - presents a profound opportunity exact growth rate remains to be seen. What we know is that both sides are spending billions trying to solve this problem of an under skilled workforce. And we feel that that the range of alternatives we have is rather unique in helping to solve that problem.

[Peter Lukas]

And does the acquisition of Learning House signal a greater appetite for M&A and online program management, corporate learning or both and are you seeing opportunities, more opportunities come to market and any change you're seeing in those multiples for ones that are coming?

[Brian Napack, President and CEO]

Very good question, I will say it, it clearly has signaled an increased interest in the space. We think that there's a lot of opportunity for growth and profitability in it. We will be opportunistic in our approach to M&A. We believe that there are assets on the market that would nicely complement our own, we're not going to overpay for them, we have seen a certainly a variety of assets come to market with varying degrees of success in achieving transaction, the multiples are all over the map ranging from multiples that Wiley will never pay down to assets that are having trouble moving because they're in parts of the market that are a little bit more speculative. So the market is quite active, we're looking at a variety of things but we're only going to do things that strategically make sense at a price point that makes sense. We believe that we have the skills, the assets and the available capital to grow dramatically organically. But of course with a - with our - we will - of course we will continue to evaluate opportunities as they come up.

[John Kritzmacher, CFO and EVP, Operations]

And if I could Brian if I could just add, important to note that our interest in acquisition for growth, strategic acquisition for growth is not limited to the services side of our business, we are also very much interested in opportunities to gain further competitive advantage whether it would be scale or breadth of our reach our technology to enhance our research business. So don't take recent action around Learning House as we've shifted all of our focus in the services direction, we are - our strategy includes a broad look at opportunities for growth as well in the research business.

[Peter Lukas]

Last one for me, jumping to textbooks. Are you seeing the moderation in the rate of declines from the past few years and how much opportunity do you still have remaining to take out costs assuming volumes continue to decline?

[Brian Napack, President and CEO]

I would certainly answer the same way I've answered this question before. I believe in the long-term - the long term potential in the courseware and content businesses aka the textbook business. The marketplace needs the content. There is no evidence that they are finding in scale alternatives attractive. The rate of decline varies, but varies by segment. We're seeing growth in digital pieces, we're seeing decline in print pieces and we have to acknowledge and be humble about the fact that we're not exactly sure where this is going to wind up, but we are confident in the long-term potential attractiveness of that business. And one also has to remember when you're looking at the textbook business that what's happening is we are migrating from high priced print products to much lower priced digital products where we had very little sell through of those print products due to used rental and other alternatives that students had to a digital world where students absolutely need and require the homework systems that come along with these products to succeed, but we're switching high price print products for low price digital products and so what we're really concerned about here is the long term earnings growth of that business. And we believe that there is significant potential there. In terms of increased efficiency in that business, we do believe that there remains a significant amount of inefficiency in the way we produce and bring content to market and we're going to continue to John's business optimization initiative to find those opportunities. We can't put a specific number on it but we're very optimistic that we will continue to preserve our margins in that business and that we will increase our production going forward.

[Operator]

[Operator Instructions] It appears there are no further questions at this time. I'd like to turn the conference back over to our presenters for any additional or closing comments.

[Brian Napack, President and CEO]

Well, I just want to thank everyone for joining us today and we'll look forward to seeing you again in March.

[John Kritzmacher, CFO and EVP, Operations]

Take care, everyone. Thank you. Bye

[Operator]

That does conclude today's conference. Thank you all for your participation. You may now disconnect.