We look forward to putting this year, and all its complexities behind us. I’ll quickly conclude with our financial targets, which we laid out in January. On revenue, we anticipate low single-digit growth in fiscal 2025 as our core drivers in Publishing continue to rebound, increasing to low to mid-single-digit revenue growth in fiscal 2026. Our margins are expected to expand to 23% to 24% in fiscal 2025, and then to 24% to 25% in fiscal 2026. And with our ongoing efficiency gains, and disciplined capital allocation, we’re going to continue to focus on margin expansion beyond fiscal 2026. Free cash flow is expected to step up to approximately $125 million in fiscal 2025, as we balance improved cash earnings with necessary investment in research and in infrastructure modernization.
We’re then targeting approximately $200 million in fiscal 2026 as CapEx returns to more normalized levels and restructuring payments taper off. Beyond fiscal 2026, we’re going to continue to focus on increasing our free cash flow conversion from the 45% or so we anticipate in fiscal 2026. Before I open it up for questions, I want to thank all of you for joining us today. As always, I want to thank our Wiley colleagues for their continuous drive and thoughtful collaboration. Nothing unites us more than being on a winning team. I’ll now open the floor to any comments and questions.
Operator: [Operator Instructions] And your question comes from the line of Dan Moore with CJS Securities. Your line is open.
Pete Lukas: Hi. Good morning. It’s Pete Lukas for Dan today. First congratulations on the progress made in the quarter. And just wanted to start with a question regarding Hindawi. What level of recovery or profitability is embedded in your fiscal 2025 goal of the 23% to 24% EBITDA margins?
Matt Kissner: Hi, Pete, it’s Matt. I’m going to ask Christina to respond.
Christina Van Tassell: Sure. Hi, Pete nice to speak to you, again. So we — as we’ve said before, our Hindawi recovery is a bit slower than expected, but we are expecting some future improvement in 2026 and beyond. And I don’t know, if you want to go into some detail Jay on the —
Jay Flynn: Yeah, I’m happy to. It’s Jay Flynn. So we’re clearly anticipating progress in 2025, 2026 on Hindawi. As we’ve said before, we expect growth rates there on the top line to mirror what we see in the rest of our Gold Open Access portfolio. And the margins there will reflect generally speaking the margins in our journal operations. So we haven’t broken that out specifically. As a reminder, this is not a — it’s less than 5% of total Research revenue. So, we’re not breaking that out at that level.
Pete Lukas: Perfect. And then you touched on it at the end, but one part of your recent Investor Day that maybe didn’t get enough attention is a significant improvement in free cash flow you’re targeting with expected to jump from $100 million to $200 million from 2024 to 2026. Can you just give us a little bit more detail and kind of maybe walk us through the key assumptions around the goals and what are the biggest risks in your view to achieving those goals?
Christina Van Tassell: Sure. So, yes, we are seeing us returning to approximately $200 million by fiscal year 2026 in free cash flow. The primary drivers of that are obviously our improvement in our revenue recovery as well as the impact of our cost-out programs and that taking full effect. We’ve had some lower-than-expected cash flow needs for things like restructuring payments and interest has been higher than expected. And so those things will level out. The other thing that’s going to impact our cash flow over the next two years is we’re going to see next year in fiscal 2025, a spike in CapEx from about $100 million to $130 million and that’s for some of the programs we’re talking about in terms of revenue growth items as well as optimization items as I mentioned in my prepared remarks.
The other thing to note there is that that will come back down in fiscal year 2026 as we continue to normal out. You can see a sort of a cash flow trajectory of $200 million that will be sort of our steady-state run rate going forward.
Pete Lukas: Very helpful. Thanks. And then you talked about leverage. I think you said down now to about 1.9 times. And I think it’s predicted to fall to about 1.5 times by 2026. Given your current valuation and your expectations on the free cash flow as discussed, what are your — how do you think about stock buybacks rather than continuing to delever the balance sheet at those levels?
Christina Van Tassell: Look we’re always looking at our stock buyback program. It’s something that we review with the Board annually and we’re in a transition year right now. So, we’re looking at all of our capital allocation in total as a portfolio. And so yes, we look at it every year. We continue to look at it. As I mentioned in our prepared remarks we’re $5 million ahead in share repurchases this year versus prior year and we’ll continue to keep that in mind going forward.
Pete Lukas: And then just the last one for me. I just want to make sure I caught it right from the prepared remarks. In terms of the cost savings, the $130 million 60% achieved to-date but then you see the bulk of that $50 million in 2025. So, not expecting a lot in 2026 and beyond is that correct?
Christina Van Tassell: Beyond the $130 million or within the $130 million? So, the $130 million is — sorry go ahead just to clarify that.
Pete Lukas: Yes. No, it was just the cost savings overall was using your $130 million number that you mentioned.
Christina Van Tassell: Right. So, $130 million is our run rate savings by the end of 2026. And most of that will be — most of the remaining $50 million. So, that’s the 40% left will be actioned in fiscal year 2025 and that’s — and it’s basically in three buckets the corporate savings, the business optimization, and the technology savings. Did that answer your question?
