John Wiley & Sons Inc

NYSE:WLY

Earnings Call Transcript 2019-Q4

[Operator]

Good morning, and welcome to Wiley's Fourth Quarter and Fiscal Year 2019 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.

[Brian Campbell, Vice President of Investor Relations]

Hello, everyone and welcome to Wiley's fourth quarter and fiscal 2019 earnings update. A few reminders to start, first, the call is being recorded and may include forward-looking statements. You shouldn't rely on these statements as actual results may differ materially and are subject to factors discussed in our SEC filings. The company does not undertake any obligations to update or revise forward-looking statements to reflect subsequent events or circumstances. Second, Wiley provides non-GAAP measures as a supplement 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 to profit, adjusted EBITDA and results on a constant currency basis and results excluding the impact of acquisitions. 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. Important to note all variances in this presentation exclude the impact of currency unless otherwise noted. 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, 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 & Chief Executive Officer]

Thanks, Brian, and thank you all for joining us today. Let me start by saying that, I'm proud of our team and the performance that they delivered this past fiscal year. Our mission is to support and drive research and education around the globe, and I'm very optimistic about our future. Let me quickly run through some takeaways as we end the year. First, we achieved our fiscal 2019 revenue and earnings targets. We missed on an updated cash flow target mainly due to some timing-related changes and working capital performance. We'll touch on this a bit later. We see revenue growth accelerating in fiscal 2020, 2021, and 2022 after several years of little to no growth. We're seeing strong growth in critical areas of the business and we intend to build on this momentum. We returned some businesses to growth in fiscal 2019 most notably our Test Preparation and CrossKnowledge businesses and the Professional Assessment business is growing nicely. Our multi-year business optimization program is driving significant efficiency improvement and savings across Wiley. We expect to grow savings over the three-year period to be approximately $100 million, although most of that will be reinvested to drive and sustain profitable revenue growth. As part of this initiative, we will be recording restructuring charge in the first quarter. To achieve our goals for revenue and profitability, we must invest in growth and optimization. Therefore, we will see an earnings dip in fiscal 2020 before earnings growth returns in fiscal 2021 and ramps up from there. Overall, we are pleased with the opportunities that are materializing and the momentum that we're seeing across the company. We will share more at our fiscal 2020 Analyst Day scheduled for Friday, October 4, 2019 in Hoboken, New Jersey. Brian Campbell will reach out with more details. Now on to results. The fourth quarter was very positive with good revenue and earnings growth driven by Research and strong improvement in Publishing, which we had anticipated. We're seeing strong sales momentum in key areas of the portfolio in Research Subscriptions and Open Access in Atypon, in Education Services which now includes Learning House and in Courseware, Test Prep, and Professional Assessment. We continue to see decline in our Publishing businesses, but we have realigned our high-demand disciplines and delivery models and see performance improvement going forward. Tech-enabled Education Services is a key strategic area for us. We signed Northern Illinois as a new university partner this quarter, while also adding 29 new degree programs in areas such as business, law, health care, and technology. The Wiley brand continues to be highly respected and valued by universities across the spectrum. In April, through our Software Guild unit, we launched an online software coding program with D'Youville College to meet the ever-growing need for skilled software developers. Students who complete the program will have access to our employer network of more than 450 companies. This is a good example about how Wiley is developing and delivering education that helps universities and corporations to bridge the skill gap. After the year closed, we acquired the assets of Knewton, a well-known provider of high-impact affordable courseware and leading adaptive technology. Formed in 2008, Knewton was a high-profile and ambitious EdTech startup. While it is a modest acquisition in terms of price, it should have an outsized impact across our education businesses. In addition to its powerful adaptive learning platform, Knewton elevates our strategy to lead in the high-impact, low-cost courseware market that is growing very fast. Its Alta adaptive courseware squarely addresses the need for affordable content, and it has already been adopted by over 300 colleges and universities. The near-term revenue impact is expected to be relatively small, but this disruptive model represents one of the fastest-growing segments in education. We saw good revenue growth in the quarter, up 7% or 3% backing out the contribution from Learning House. Research growth of 4% was especially noteworthy. And we saw significant bounce back in Publishing with revenue down 1% compared to a 13% decline in the third quarter. In Research, Journal Subscription revenue rose 5%, Open Access grew 19%, and Atypon grew 7%. In Publishing, Test Preparation grew 37% and WileyPLUS grew 5%, while Professional and STM Publishing recovered from a difficult third quarter and declined only 2%. Double-digit earnings growth in the quarter was driven by 6% profit growth in Research and strong double-digit profit growth in Publishing. Now, some highlights from the full year. As noted, we met our revenue earnings commitments for fiscal year 2019, with revenue growth at 0.4% compared to a flat outlook and adjusted EPS down 4% versus an anticipated mid-single-digit decline excluding the partial year impact of Learning House. Cash flow from operations was a miss, primarily due to timing-related changes in working capital performance, which John will walk through. It's important to note that we expect to recover those delays in fiscal year 2020 and return to more normalized working capital performance. Research, our largest and most profitable business, delivered another good year in fiscal year 2019. In addition to recording solid topline growth, we announced the landmark mixed model agreement in Germany that makes us a leader in Open Access publishing. This deal aligns Wiley very closely with the market and presents us with the opportunity to grow revenue through the volume of articles published. Overall, the number of articles submitted to Wiley's Journals, were up 8% this year. On top of that, we reject over 70% of the articles we received numbering in the hundreds of thousands and many of these articles get published elsewhere. Going forward, we will monetize more of this volume by cascading articles throughout our portfolio. At the same time, we will continue to maintain our strong subscription business, deliver more service to our authors and optimize our business processes. We acquired Learning House this year and the integration is nearly complete. The two teams have come together under a strong leadership team. These are highly complementary businesses. Wiley is strong in larger schools and graduate-level programs and Learning House is strong in smaller regional schools and brings a focus on undergraduate education. Since the acquisition six months ago, the combined business has signed over 170 new degree programs and 10 new university partners, schools like Michigan State, University of Kentucky, University of West Florida, and Loyola University Law School of Los Angeles, as well as Northern Illinois this quarter. Moreover, we continue to be energized by our pipeline of potential partners and programs by our leading position in the market and by the opportunities to leverage Wiley's unique institutional reputation and footprint for add-on services. We expect this business to grow at mid to high teens rates over the next three years with a target of $290 million by fiscal 2022, all while making significant adjusted EBITDA gains. Finally, over three-fourth of Wiley's revenue now comes from digital products and tech-enabled services; although, the number is even higher if you factor in a full year of Learning House. We expect this number to continue to climb. We've already noted the efficiencies and cost saving expected from our business optimization initiatives. Here you see performance for the year. The earnings decline is due to the investments we are making to improve growth in Research and Education Services and the impact of amortization related to the Learning House acquisition. I'll now pass the call over to John to take you through our segment performance.

[John Kritzmacher]

Thank you, Brian. As you mentioned, research had a strong finish to the year, with revenue growth at constant currency of 4% for the quarter and 3% for the year, with the full year driven by 33% growth in Open Access and 9% growth in our Atypon research platforms business. Our subscription business rose 5% in the quarter and was stable for the year. Looking ahead, we continue to see a steady environment for subscriptions, accompanied by rapid growth in Open Access. In addition, demand for new researcher services and corporate products, including advertising and databases, continued to grow. Atypon added eight new clients this year and we continue to see a strong pipeline of opportunities for Atypon's platform business. Adjusted CTP rose 6% in the quarter, primarily due to revenue performance, but declined 1% for the year, as we invested in new researcher services and advanced marketing capabilities to drive article volume growth and additional corporate sales. We're pleased with the continued foundational strength of our Research business and the clear opportunity to build upon our strong and unique market position. Publishing rebounded from a difficult third quarter, as we anticipated, and finished the year largely as expected, with revenue down 6%. STM and professional publishing was down 2% for the quarter, or 6% for the year, with modest gains in technology and professional education, offset by a decline in our Dummies portfolio. Education Publishing was down 14% for the year, mainly due to the continued shift away from new print textbooks. Although, we had also had a very light higher education frontlist for this year. Important to note, we have recently realigned this part of our business and are sharpening our efforts to focus on high-demand disciplines, an expanded frontlist and a more advanced WileyPLUS offering with the addition of Knewton. We see better performance ahead, with a much stronger frontlist for the fall and some good early signs around adoptions. Test Preparation continued to achieve strong double-digit growth, driven by our GMAT and ACT programs. We renewed our publishing partnership with the ACT for another five years. Our forward-looking plan is to add new exams in finance and technology and increase our emphasis on institutional marketing opportunities, partnering with both corporate and university customers. Adjusted CTP was up 23% for the quarter, due to lower employment costs, but down 8% for the year due to revenue performance. Education Services continued to scale rapidly following Learning House acquisition, adding 10 new university partners, including both national brands and regional schools. Revenue grew 70% for the quarter, or 32% for the year, although most of that was inorganic growth from Learning House, which added around $30 million of revenue in the six months. Excluding Learning House, revenue rose 11% in the quarter, or 6% for the year. As a reminder, our recent organic growth in Education Services has been muted by the pruning of underperforming partners and programs. We expect to return to double-digit growth in the year ahead. Our Professional Assessment business, which provides leadership development and pre-hire assessments, continued to be a reliable source of revenue and profit growth and we're gaining momentum in expanding our global reseller network. Revenue for the quarter and the year rose by 6% and 8%, respectively. CrossKnowledge, our corporate learning business, posted a 5% revenue decline in the quarter, but was up 6% for the year. CrossKnowledge continued to sign important new customers around the globe, adding 77 new customers in total this year, including Primark, Bombardier, GE Healthcare France, Telefônica Brasil and Novo Nordisk Canada. Adjusted CTP for Solutions was down $8 million for the quarter or $16 million for the year, mostly from increased investment in student acquisition and the near-term diluted impact of the Learning House acquisition, including the amortization of acquired intangibles. We underperformed our plan for cash flow this year. As you can see in the graphs, we reported $315 million and $382 million of cash from operations in fiscal 2017 and 2018 respectively. This year, our cash from operations declined to $251 million, driven primarily by timing-related changes and working capital performance. More specifically, cash collections and payables management were unfavorable to prior year by $57 million and $26 million respectively. Of the $57 million unfavorable collections performance, approximately $35 million reflected delays in Journal Subscription collections that were partly related to our ERP transition. We recovered more than half of that Journal collection shortfall in the month of May. Other factors in the year-over-year decline in cash from operations include lower cash earnings of $24 million, including the impact of Learning House integration and operating costs, other onetime transaction costs of $10 million related to Learning House and a tax advantage discretionary contribution to the U.S. pension plan of $10 million. Our fiscal 2020 cash from operations will clearly benefit from the expected recovery on the timing of Journal Subscription collections. We expect to substantially reduce these timing-related swings in working capital headed into fiscal year 2021. In the interim, our fundamentally favorable cash flow characteristics remain strong. Our balance sheet continues to provide significant flexibility and capacity to execute our strategic plan. Our leverage is at one times EBITDA inclusive of funding Learning House acquisition and we recently entered into a five-year credit agreement that expands our capacity to $1.5 billion, up from $1.1 billion. We are active on the acquisition front and we'll continue to pursue opportunities on both the research and education sides of our business. Meanwhile, we continue to return cash to shareholders in the form of dividends and share repurchases. We increased buybacks in the fourth quarter given the decline in our share price with full year 2019 repurchases of $60 million, up from $40 million in fiscal 2018. We have 1.9 million shares remaining in the current share repurchase authorization. As a reminder, at the beginning of the year, we extended our streak of consecutive dividend increases to 25 years. The Board's next dividend decision will occur over the coming weeks. And with that, I'll pass the call back to Brian who will take you through our outlook.

[Brian Napack, President & Chief Executive Officer]

Thanks, John. Now on to our one-year outlook and three-year target. First, we remain slightly focused on our strategy to lead in research and career-focused education and we are seeing the results of this in our outstanding growth in Open Access Research Publishing, our strong partner and program momentum in Education Services and rapid growth in other strategic parts of the portfolio. At the same time, our business optimization program is starting to drive savings and efficiency improvements across the company. Our strategic investments are gaining traction, which we will touch on later and after the noted earnings dip in fiscal 2020, profitable growth will ramp materially in fiscal 2021 and beyond with revenue, adjusted EBITDA and EPS CAGRs of 3% to 4%, 4% to 5% and 5% to 6% respectively from fiscal 2019 to fiscal 2022. Going forward, we will be aligning our reporting structure with our strategic focus areas. Research Publishing and Platforms, Education and Professional Publishing, which are our content and courseware businesses and Education Services, which is where our OPM business, technology boot camps and other rapidly growing service businesses reside. Research will be essentially the same as today, whereas Education and Professional Publishing will consist of the current Publishing segment plus our corporate training businesses CrossKnowledge and Professional Assessment. Research, our largest and most profitable business continues to enjoy a terrific market position, reputation and a top-tier journal portfolio. Over the three-year period, we expect steady revenue growth with modestly growing EBITDA margins. The macro driver here global investment in research and development remains as strong as ever, consistently growing at about 4% per year. Internally, the core drivers of our performance start with our output of research articles. As stated, submissions to Wiley were up 8% this year. At the same time, we reject 70% of the articles we received, many of which are publishable across our portfolio. With our strong journal portfolio and growing reputation in Open Access there are significant opportunity to augment growth through monetized unit volume gains and we are building capacity to do just that. We also see good opportunity in corporate research sales where we saw good growth this year in our content, advertising and database sales to corporate customers. There is a growing need for productized research as corporate R&D grows worldwide. We see good opportunities to grow our leading footprint in research content and workflow platforms including in the government and corporate sectors. Atypon remains a force and they are building solutions that empower and support researchers and authors further engraining us in the research workflow. Finally our business optimization program will continue to drive efficiencies across our portfolio with improved workflows and cycle times, enhanced researcher experiences and improved overall effectiveness. We expect significant savings over the 3-year time horizon. Education and Professional Publishing is expected to return to growth over the time horizon. There are many drivers of the long-term health of this business. Above all, there is a growing demand for career-focused content and programs that address critical skill gaps in the economy. Credentialing certification and continuous learning are now a necessity to bridge traditional education to the needs of today's companies. Therefore we are focused on publishing more in the high-demand career and skill areas that the market needs most. We are also scaling the new business models and distribution channels to broaden access to our content across both the university and corporate markets. These approaches include rental, inclusive access, subscription models and low-cost digital programs and we are increasingly selling our extensive portfolio of content and tools directly to consumers. We are seeing good momentum across all of these programs. As we have aligned our company against high-demand skills and careers we are finding increasing synergy across our publishing programs and in Wiley's many touch points in the university and corporate markets. For example, we are selling more career-focused education content to our corporate partners and integrating our Test Prep products with our higher Ed courseware in university settings. And we are also continuing to find cost savings across our publishing operations offsetting investments. A particular area of focus this year is improving the efficiency and content development and delivery. This business is improving and we now expect it to grow marginally in fiscal '21 and more meaningfully in fiscal '22. Over the time horizon, we expect EBITDA to improve as well. Education Services is a significant growth engine for Wiley and includes the delivery of online degree programs, professional services, such as enrollment marketing and recruiting short-term credentialing, such as technology boot camps and teacher training. The drivers of this business going forward include, a rapidly growing market for online education and services that help universities to succeed in today's highly competitive outcome-focused education market. At Wiley, we have a growing network of partners, schools and degree programs that will fuel enrollment growth. Our university footprint across Wiley is unmatched and continues to grow nicely. To leverage this network, we continue to scale our service portfolio including career-focused full-stack education offerings like boot camps that the market is demanding. This starts with Online Program Management and now includes the wide variety of programs and services that help universities and of course students to gain the specific skills knowledge certification and degrees that they need to bridge the skill gap. Finally as you would expect we are continually optimizing our student acquisition processes and improving the effectiveness of the student journey. We do this to drive enrollment and to reduce our cost structure. We're making great progress. Given our pipeline and existing base, we are targeting at least mid-teens revenue growth for our Education Services business with significant margin gains over the time horizon. We expect to reach $290 million in fiscal '22 with a 15% EBITDA margin. EBITDA margin should continue to improve from there. Here you will see a summary of the investments that we are making across the company to set up Wiley for long-term profitable growth along with the specific gains that we expect from these investments. I won't talk to the details because we've covered all of this elsewhere. I will reiterate that we are investing in Wiley to support our momentum in clear areas of opportunity and position this company for long-term profitable growth. And now onto the consolidated outlook for fiscal 2020 and our targets for fiscal 2022. To repeat revenue, adjusted EBITDA and adjusted EPS are expected to yield compound annual growth rates of 3% to 4%, 4% to 5% and 5% to 6% respectively from fiscal 2019 to fiscal 2022. We're confident in these numbers. Revenue is being driven by growth across all areas of Wiley with steady growth in Research, double-digit growth in Education Services, and growth recovery in Education and Professional Publishing. As noted, we will have a significant earnings dip this year, mostly related to our investments and acquisitions. In fact, incremental investments for profitable growth drive nearly $0.30 of the EPS decline in fiscal 2020. The remaining difference includes roughly $0.15 in higher depreciation and amortization and $0.07 in higher interest expense. But it gets us to a very good place in fiscal 2021 and 2022 and a foundation that we can build on in the years to come. As you can see, we are introducing adjusted EBITDA in our fiscal 2020 and fiscal 2022 – fiscal 2020 outlook and our fiscal 2022 targets defined as adjusted operating income excluding depreciation and amortization. We believe that adjusted EBITDA is a good indicator of our operating performance and eliminates the noise caused by the amortization of acquired intangibles. Our free cash flow will improve next year as we recover from the collection delays on Journal Subscriptions. Note that, free cash flow reflects projected CapEx of around $125 million. By fiscal 2022 our plan shows revenue at $2 billion, adjusted EBITDA at $440 million and adjusted EPS at $3.50 with free cash flow at $250 million. In summary, we have a very healthy set of market opportunities in front of us in research and in career-focused education. Wiley has the team, the strategy, the assets and the financial capacity to capture them. We are executing well against our plans and are already seeing the benefits in our growth engines. This team will continue to make our commitments in fiscal 2020 and beyond. With that, as background, we welcome your comments and your questions.

[Operator]

Thank you. [Operator Instructions] We will now take our first question from Drew Crum of Stifel. Please go ahead. Your line is open.

[Drew Crum, Stifel]

Okay, thanks. Good morning, guys. You mentioned that journal submissions increased 8% during fiscal 2019. How does that compare to the last couple of years? And would you anticipate any change to the 70% rejection rate you referenced going forward?

[Brian Napack, President & Chief Executive Officer]

Yeah. That's a great question Drew. Thanks for asking it. As we move through this transition where we're moving to these mixed models, the price time’s volume equation is critical, and so those two statistics are absolutely critical. First of all, we are seeing increasing submissions. We believe that we will continue to see that in the future and that's critical to that equation. The 70% rejection rate, the reason we highlight that is that it highlights the opportunity for us, the opportunity when many if not most of those articles get published elsewhere. We have a journal portfolio that includes a couple thousand, not quite, journals, and we have places in those journals for many or most of them. They won't all make the top-tier journals at the top of our pyramid, but they can certainly fit somewhere in our portfolio, and so this is part of what we're investing in. We're investing in the capacity just not – not to just get more submissions by outward reaching to researchers, but also to capitalize by channeling those articles to the editorial boards that can approve them and publish them in our terrific journal portfolio.

[Drew Crum, Stifel]

Got it. Okay. Thanks. And then just to clarify, I think you said that the organic growth that you're expecting for Education Services through fiscal 2022 is in the mid-teens range, just want to clarify that. And on a related note, is this a business you expect to be profitable during the period through fiscal 2022?

[Brian Napack, President & Chief Executive Officer]

Yeah. So, the answer is we expect to start in the low-to-mid teens and move to the high-to-mid teens through the three-year period from a growth perspective, so that provides enough clarity. John, will you handle the profit part of it?

[John Kritzmacher]

So, we are expecting over that period of time, Drew, as we scale that we're going to gain advantage and profitability making our way toward a 15% EBITDA margin that will come a bit from scale and significantly from increasing our efficiency around student acquisition. That's one of the important areas of investment that we have in fiscal year '20.

[Drew Crum, Stifel]

Got it. Okay, and then just one more. Can you talk about the nature of the $15 million to $20 million in restructuring charges you expect to incur in the fiscal first quarter? Is any of that cash related? And would you anticipate any more charges during fiscal '20? Thanks.

[John Kritzmacher]

Sure. There's -- so with regard to $15 million to $20 million in charge in the first quarter, about 75% of that is going to be severance-related and then the balance relates to the wind down of a small business, essentially non-cash charges there and the exit from our facility. And so, that's the bulk of it. And we're expecting that -- the charge that we take in the first quarter will drive on the order of $30 million in operating savings over time. We'll realize a little more than half of those savings inside of fiscal year '20 against some of the investment program that we've been talking about here. I don't anticipate that you're going to see restructuring charges in the subsequent quarters of this year; say for some additional facilities-related activity that we may have as we continue to drive some efficiency around where we're offering. But I would say this is a multi-year business optimization program, so we will have some further actions to communicate as we make our way late in this year or into fiscal '21.

[Drew Crum, Stifel]

Okay. Thanks guys.

[John Kritzmacher]

Thank you.

[Operator]

[Operator Instructions] We will now take our next question from Daniel Moore of CJS Securities. Please go ahead. Your line is open.

[Daniel Moore, CJS Securities]

Good morning. Thanks for taking the questions Brian and John. I want to start with an apology if I am reiterating parts of the last question, but just wanted to really clarify on the Education Services, all of that growth is organic or what's sort of the breakout between organic and what's been acquired recently from fiscal 2019 to 2022?

[John Kritzmacher]

The growth rate that we described would be on an organic basis.

[Daniel Moore, CJS Securities]

From based on the portfolio that we have in hand now. Great. And then...

[John Kritzmacher]

And then we continue to work adding partners, yes.

[Daniel Moore, CJS Securities]

Got it. And John you mentioned a 15% margin that EBIT or EBITDA, and maybe any additional cadence you can give in terms of the walk from kind of fiscal 2019 where we are now in terms of EBIT margins for that business and where we might be in 2022?

[John Kritzmacher]

I generally wouldn't get quite specific to what we're doing in terms of the walk in that particular business. But again, the improvement is going to come year-over-year from the levers that we'll get from revenue growth plus some improvements around the cost of student acquisition over the period. We're looking at -- as we said on an organic basis, apples-to-apples basis, we're looking at growth in that business in the low-to-mid teens. And as we make our way through that though just to be clear on an inorganic basis, we'll have a pickup of about $34 million of incremental revenue as a consequence of having the full year effect in the business. So when we look at the year-over-year comparison, revenue for the year is up $60 million, but a good $30 million plus of that is related to the inorganic growth coming from the acquisition of the Learning House.

[Daniel Moore, CJS Securities]

For the fiscal '20 guide. Right.

[John Kritzmacher]

Yes. That's correct.

[Daniel Moore, CJS Securities]

Got it. And then is there a 15% -- is that an EBITDA margin target that the -- in fiscal '22 or longer term? Just help us think about that?

[John Kritzmacher]

We're aiming for that target in fiscal '22.

[Daniel Moore, CJS Securities]

Got it, helpful. And then maybe just talk a little bit more for what you're willing to share around Knewton, a little bit of detail on how it expands your capabilities and offerings around WileyPLUS. And anything you'd be willing to give in terms of purchase price trailing revenue EBITDA margins would be helpful?

[Brian Napack, President & Chief Executive Officer]

Okay. I'll pick up the strategic parts of that. So Knewton brings to us two things. As many know, Knewton was an extremely highly funded adaptive learning platform EdTech play, very, very highly promising at one point. The technology is absolutely leading-edge technology, so among the best adaptive technologies in the marketplace and it is applicable across all of our education businesses. We -- improving the efficiency and the effectiveness of the time student spent learning is critical and so we need to rapidly -- we will succeed by rapidly moving students to that process. So in all of our education businesses, we see theoretic applicability. It will be immediately applied in our -- immediately in this year applied to our WileyPLUS offering, adding a differentiated adaptive learning technology, which gets us up to and ahead of many of our competitors. So that's great news. But in addition to bringing that adaptive learning technology, it is also bringing something to market as demanding on a net growth basis and that is this idea of low-cost, high-quality or high-impact courseware. This is a part of the market that is growing significantly. And we believe that by delivering that as a core offering through our Wiley distribution touch points, we should be able to capture a meaningful part of that in areas of the market where frankly we don't even play right now. So it's a very optimistic thing. So we get two things. We get this leading adaptive technology, which we can broadly apply, most immediately of course in our courseware business to WileyPLUS, but we also get a small, but rapidly growing business in a very disruptive part of the market, which is this low-cost high-impact courseware and that's what's known as this Alta platform.

[Daniel Moore, CJS Securities]

Got it. And lastly for me and Brian, you gave really good color here, but I'm going to ask you to give as much more as you'd be willing to because I think it's a critical point. Your -- the Education or I should say, the Professional Publishing Services or just Publishing in general has obviously been a struggle and a headwind and you're calling for that to start to grow again in the next two-plus years. So maybe just talk about the rate of decline and what's left of the traditional sort of print text business, what that glide path looks like and how we're -- and the strategic direction and ability to pivot that toward growth in the next year or two would be great. Thanks.

[Brian Napack, President & Chief Executive Officer]

Sure. So as you look across our Education Publishing and Professional Learning portfolio, which as we said are our Publishing businesses, we have several different things going on. We have our courseware business. We have our reference business, our STM business we call it and our Trade Publishing business. We also have -- it's important to note the pieces. We also have our Test Prep business and our Corporate Training businesses. The Test Prep and Corporate Training businesses are growing very nicely. They are doing very well. And so we'll leave those aside, but that's meaningful part of the equation. We have -- we believe in the long-term health of the other three segments of the business and in fact, the trade and the reference pieces have all the signs of businesses that have a long-term runway. They have separate some from the print transition, but by and large healthy. The textbook part of the business or the courseware part of the business represents around 10% of our business now. I'll ask John to check me on the percentage to make sure we get it about right, represents about 10% of Wiley overall right now. We've continued to see some declines, but as we -- in those declines, there's a lot of good things happening. We're starting -- we're not seeing cannibalization -- material cannibalization from free and we are now participating in the print models, the inclusive access models, the rental models and so forth that allow us to deliver what is high-demand content to the market. So in that part of the business, which is the part that has had the most attention, it's important to note that unit sales are actually fine. What's happened is we moved from high-priced print to lower-priced digital and not just lower-priced digital, but lower delivery models. The rental models are models we hadn't participated in before, as a company right? Other companies bought our products and rented them over and over again. We're now participating in those. So in that, A, the market continues to demand the high-quality published content from big publishers; B, that we can deliver that content through the media, through the modes and in the business models that make it very, very affordable; and C, that we now have an approach to markets many of the sub-segments that we didn't even play in before with Knewton, that allow us to deliver truly low-cost high-impact content, gives us a confidence and we see this reflected in our internal statistics that we have a good long-term runway in that 10% of the business that is the textbook or courseware part of the business. So that's where we get our confidence from. There is no evidence that the market is deteriorating in an underlying demand way. What we've seen is this transition. And I think we're now on our way through that transition.

[Daniel Moore, CJS Securities]

Go ahead. Excuse me. Very helpful. Appreciate it.

[Brian Napack, President & Chief Executive Officer]

Okay. Good. Thank you. I'm happy to take any follow-up questions. It's a complicated market, but our leadership position will allow us to do very well as the transition concludes.

[Daniel Moore, CJS Securities]

Indeed.

[Operator]

We'll now take our next question from Dan Jacome of Sidoti. Please go ahead. Your line is open.

[Dan Jacome, Sidoti]

Hi. Good morning. A couple of questions. Can you talk first a little bit about your working capital initiatives that you have in place to improve that in the next year or two, versus what was shown in the fourth quarter? I know it's a little bit tough for us to dig deeper into the acquisitions, but, look, just thinking about kind of payables, receivables, what you -- the plans for that.

[John Kritzmacher]

Sure. This is John. So here's what I would say. First, I wouldn't say that there are major, if you will, working capital initiatives, but there are certainly some things we can do to improve our management of working capital. Some of the things that are at play in the working capital movements that we reported in this period actually start back in fiscal 2017. We had -- we ended fiscal year 2017 with a particularly low position on payables outstanding and that benefited fiscal year 2018, which is the comparison that we're now making when we look at 2019. So there was a substantial uptick in fiscal 2018 year's -- 2018's results came from a payables timing shift that happened way back in fiscal 2017. And then what we saw, as I explained around this year's performance, so there are movements in working capital that had to do with not as strong performance on payables and to some degree on our overall receivables, at least in terms of the gains by comparison that we made in fiscal 2018. And again, the most important impact that we had was some issues around the timing of collections on our journal subscriptions. Those had a good bit to do, as I noted with our ERP transition. We implemented order cash on SAP for our journal subscriptions in the year and that put a bit of pressure on us, as we had noted in the third fiscal quarter report around the quoting of new subscriptions, the signing of customers and the issuing of invoicing; all of which, in terms of renewals, has done quite well, but our timing got pushed out a little bit. So we're late in invoicing and we're late on collecting. We had hoped to be further along with that by the time we made our way to the end of the fiscal year at April 30, then we actually ended up -- and as I noted, we had about $35 million of that that then slid into May in the coming fiscal year. I'm very confident that we'll pick that up in the normal course of collections. I should say, though that with regard to working capital and our ability to effectively manage working capital going forward, we reorganized our finance team to have a financial shared services unit that manages transactions. And that management includes global management of payables and global management of receivables and collections. So we have now, with our ERP implementation in that global team with global process owners, a great line of sight to how the business is performing on working capital and much more ability to effectively manage that. So you will see our performance and working capital management improve. I won't say that there's any particular big initiatives, but doing a better job around blocking and tackling after we unwind this transitional impact from our ERP implementation. And as I noted, as we make our way into fiscal year 2021, we should be in a substantially more stable state around some of the fluctuations that we've seen on working capital and you'll be able to get a more square read on how we're performing from an operating level without these timing-related swings getting in the way.

[Dan Jacome, Sidoti]

Okay. Very helpful. And then just for housekeeping purposes, I'm sorry if I missed it in the press release or the deck. Can you break out specific D&A and CapEx guidance for F '20? Or should I just back into it?

[John Kritzmacher]

We noted in the comments here that we expect CapEx will be on the order of $125 million for the coming fiscal year and we didn't call out a D&A number. But I think that Brian did note that there is some -- any change in earnings year-over-year that brings us to an estimate of about $2.50 per share earnings. Brian noted that there's an impact in there of increased D&A on the order of $0.11.

[Dan Jacome, Sidoti]

$0.11. All right. Great. Okay. Then just to be clear, the F '22 target on the revenue, the implied CAGR is about 3% to 4% that's all organic, right? You're not factoring in any other acquisitions just -- correct?

[John Kritzmacher]

That's correct. There are no additional acquisitions assumed in those numbers.

[Dan Jacome, Sidoti]

Okay. Thank you very much.

[John Kritzmacher]

Thank you, Dan.

[Operator]

We will now take our next question from Adrien de Saint Hilaire of Bank of America. Please go ahead. Your line is open.

[Adrien de Saint Hilaire, Bank of America]

Yes, thank you very much for taking the questions please. Two of them. First of all, you're guiding for about 2% growth in your Research business for fiscal 2020. Can you give us some granularity in terms of what you expect in the different buckets Journal Subscription, Open Access and Atypon? And then secondly, can you discuss the impacts that you expect in Education Publishing from the announced merger between Cengage and McGraw-Hill if you assume that it's completed? Thank you.

[John Kritzmacher]

So I'll take the first question with respect to revenue growth and then Brian can follow up on the Cengage-McGraw merger. With respect to the expectations around Research revenue growth, the CAGRs that you referenced are correct. Relatively speaking by comparison to the broader Journal Publishing business, Atypon is sort of small. So while we expect Atypon to grow at double-digit rates call it on the order of 10% revenue growth, they're not a big factor in the overall growth of the business because they are relatively small base. Important to us in terms of the market opportunities that they provide is the insights they give us around Research Publishing, but they're a big factor in terms of moving the overall progression of revenue inside the Research business. Broadly speaking, the growth rates that you described are consistent with what we expect around our Journals business. Going forward, it's likely that we're not going to distinguish as much between revenues associated with subscriptions versus Open Access. With these transitional arrangements in place and if you will blended arrangements with our customers, the line between what precisely is subscription revenue and what is Open Access revenue is going to become less clear. And frankly, I think trying to make a distinction between the two will only be more confusing to most investors. But as you look at the combination of the growth that we all see in Open Access publishing along with the revenue stability that we expect to see from subscriptions, you'll get to the 2%, 3% CAGRs that you were just describing.

[Brian Napack, President & Chief Executive Officer]

Okay. And I will pick up the Cengage-McGraw Hill question. So listen, this merger has been anticipated for a very long time. We've been operating in a market as Wiley in our higher Ed business which as you will recall in my earlier comments, represents about 10% of Wiley. We've been operating in this higher Ed courseware business for decades as a smaller focused player who concentrates on very specific disciplines. And those disciplines are disciplines where the content in the courseware is required for course credit, places like in accounting the quantitative discipline, stem and so forth. I'd say that as background because it highlights an underlying strength in our business and tells you why we've been able to compete for so long as a gold standard publisher. Having said that, we've been competing against Pearson, a 45% competitor for a long, long time for well over a decade, in fact quite a lot more than a decade. This is not a business. This textbook and courseware business, where you win or lose based upon the overall volume of your titles. You win – or the size of your revenue line. You win in this business based upon a course-by-course winning, where you get adopted by a professor based upon the quality and now increasingly the effectiveness and impact of your product. And so we've been operating in an environment with a 45% competitor. Now, we have a 40% roughly speaking competitor that will, if the merger gets approved by the – I think it's Justice Department that will approve it, then we will be operating against yet another large competitor. Both of those competitors, our larger competitors have significant pressures on their overall businesses and bottom lines that have prevented them from potentially investing the levels that we are investing in our focus titles. So we are very, very confident in our future in that business, and we see this having an interesting impact in the marketplace. We've already had outreach from many of our professors in the marketplace, and certainly from our authors, and from other authors who like the idea of – who don't like the idea of such a concentration in one company. And so we believe that, we will compete very, very well by doing what we have always done, which is produce the best possible content and deliver that in the means and modes that professors and students and – and institutions – institutions want.

[Adrien de Saint Hilaire, Bank of America]

Thank you very much.

[Operator]

And there are no further questions in the queue at this time.

[Brian Napack, President & Chief Executive Officer]

Okay. I just like to say – to thank you all for joining today. We are pleased to have you. We are very, very confident in our future. This a great company with great assets. We performed extremely well in fiscal 2019 according to our plans. We executed very, very well. We expect to continue to do so going forward. There's a lot more we could talk about our markets and about our businesses and we hope that you all will choose to attend our Analyst Day in October. It will be great to have you all there. We are – we'll be pleased to have you. So with that, I will thank you for joining us, and we look forward to updating you next quarter.

[Operator]

Ladies and gentlemen, that concludes the call. Thank you for your participation. You may now disconnect.