Cengage Learning Holdings II, Inc.

At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Richard Weiss. Sir, the floor is yours.

Good morning, and welcome to Cengage Group's Fiscal 2024 First Quarter Investor Update. Joining me on the call are Michael Hansen, Chief Executive Officer, and Bob Monroe, Chief Financial Officer. A copy of the slide presentation for today's call has been posted to the company's website at cengagegroup.com forward slash investors. The following discussion contains forward-looking statements within the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements can be identified by words such as believe, expect, may, will, estimate, likely, and similar words, and are neither historical facts nor assurances of future performance, and relate to future results and events, and they are based on Cengage Group's current expectations and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict, and many of which are outside of our control. Many factors could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements. You should consider such factors, many of which are subject to the risks and uncertainties discussed in the slide presentation which accompanies this call and in the risk factor section of our fiscal 2023 annual report for the year ended March 31st, 2023, as may be updated by our quarterly reports for fiscal year 2024. Any forward-looking statement made in this presentation is based on currently available information. The company disclaims any obligation to publicly update or revise any forward-looking statements except as required by law. On today's call and in our slide presentation, we will refer to certain non-GAAP financial measures, definitions, and the rationale for using these measures and reconciliations of each to its most directly comparable gap financial measure are provided in the appendix to the slide presentation. I'll now turn the call over to Michael for an update on the business, followed by Bob, who will take you through the first quarter details before we open the call for questions. Michael?

Good morning, everyone. Thank you for joining us for our fiscal 24 first quarter business update. We are pleased to share our results and continued progress against our strategic objectives. First and foremost, fiscal year 24 is off to a very solid start. We have continued the momentum we built throughout a strong fiscal 23. Our team continues to effectively execute our long-term growth strategy and it is showing in our results. In the first quarter, we generated solid top-line growth across each business unit in our portfolio. The health of our business is strong. We have proven to be highly resilient against macroeconomic and inflationary pressures. Cengage academic is up 6%, Cengage work is up 25%, And Cengage Select is up 7% year over year. Although it's still early in the fall season, our order books and sales pipelines in Cengage Academic are developing well and align with our growth expectations for the year. Our U.S. higher education business is experiencing strong momentum in institutional sales and digital offerings. We expect this to drive progressive improvement and return the business to overall growth within the next two years. Cengage Work is seeing accelerated growth from fiscal 23 with investments in Add2Go and InfoSec paying off. As planned, Cengage Work is on track for a profitable fiscal year 24 with 2 million ELPP contribution in the first quarter. Our Ready to Hire platform had a successful first quarter with healthcare pilot partners hitting key program milestones. One pilot partner selected all 10 of their pilot candidates with initial results showing improved hiring ratios, shortened time to hire, and shortened onboarding time, showcasing the impact Ready to Hire can have for employers in the healthcare field. A second pilot partner welcomed its first program candidates in June. Pilot healthcare providers have renewed their ready-to-hire agreements with more work ahead in supporting these companies in closing their skills talent gaps. Cengage Select's momentum continued through the first quarter, driven by our English language teaching business, where we also see strong digital momentum following the launch of our new global learning platform, Spark. We continue to strike a balance between strategic investments and cost savings to deliver solid profit growth. Earlier in the quarter, we announced a strategic investment in our Intro to Computing courses that will make it easier for students to clearly articulate proficiency across a range of basic computing skills often required by employers. Through Accredible, a digital credentialing platform Students who complete assessments and demonstrate proficiency will earn digital credentials that can be added to digital resumes, online portfolios, or LinkedIn profiles at no additional charge. Our focus on customer support and the service experience continues to be a clear differentiator. During the first quarter, Cengage was recognized for the sixth consecutive year by the Customer Relationship Management Institute with a top customer support award. The award is based solely on customer feedback and recognizes organizations whose exemplary service to their customers is consistently reflected in satisfaction survey results. I speak for all of us at Cengage Group that we are proud of our commitment and investment in our best-in-class service experience. As I mentioned during our Q4 update in June, we are developing specific product enhancement and productivity features using generative AI. In the past 60 days, we have developed several concepts and will start to test these in market this month. Our U.S. higher education business will introduce an AI assistant to enhance student learning in our WebAssign math readiness boot camps. The AI Assistant is grounded in Cengage content and will provide step-by-step guidance aligned with course learning objectives. The AI Assistant will offer individual recommendations based on student performance in several languages, ensuring the student continues to progress. In addition to product enhancements to advance the way students learn, we are also launching generative AI-powered enhancements to help instructors with time-consuming tasks such as syllabus creation, summarizing content, curriculum mapping, and evaluating narrative content. This free chatbot is aligned to a specific course area and will include an educational package to help instructors understand how to optimally use generative AI. This enhancement will be available to US higher ed instructors this fall. With these enhancements released as pilots, we will learn from customer use and continue to iterate on each offering with the aim of developing the best solution in the market. While these tools are initially focused on the US higher ed market, we are developing them as a common foundation that can be scaled across businesses and markets as we gain further understanding of how they can best be applied. Our recent Apollo investment is a catalyst for accelerating our strategy and growth over the medium term. The $530 million Apollo-led preferred equity issue has significantly deleveraged our business and provided us with the financial flexibility to support our strategic growth initiatives and continued evolution of our operating model. We are already leveraging Apollo's deep sector expertise, resources, and market position to accelerate our business. We have appointed two Apollo directors to our board and recently welcomed a new independent director, Dr. Christos Katsakos, further strengthening our board expertise. In summary, recognizing that the first quarter is a small quarter, we are very pleased with our continued momentum and solid financial and operating performance. We are on track to grow adjusted cash revenue and profitability. These results and our improved capital structure will support our long-term growth plans. Over the last two years, we have achieved a financial performance that has been unparalleled since the spin-out of the company from Thomson Reuters 16 years ago. Not only are we seeing this momentum continue, but we are also focused on building and improving on this track record. More to come in future quarters. I will now hand the call over to Bob to share more details about our first quarter results.