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Graham Holdings Company Reports First Quarter Earnings

Graham Holdings Company (NYSE: GHC) today reported its financial results for the first quarter of 2024. The Company also filed its Form 10-Q today for the quarter ended March 31, 2024 with the Securities and Exchange Commission.

Division Operating Results

Revenue for the first quarter of 2024 was $1,152.7 million, up 12% from $1,031.5 million in the first quarter of 2023. Revenues increased at education, healthcare and automotive, partially offset by declines at manufacturing and other businesses. The Company reported operating income of $35.4 million for the first quarter of 2024, compared to $27.7 million for the first quarter of 2023. The improvement in operating results is due to increases at education, television broadcasting and healthcare, and reduced losses at other businesses, partially offset by declines at manufacturing and automotive. The Company reported adjusted operating cash flow (non-GAAP) for 2024 of $82.8 million for the first quarter of 2024, compared to $71.6 million for the first quarter of 2023. Adjusted operating cash flow improved at education, television broadcasting, healthcare and other businesses, partially offset by declines at manufacturing and automotive. Capital expenditures totaled $21.5 million and $22.3 million for the first quarter of 2024 and 2023, respectively.

Acquisitions and Dispositions of Businesses

There were no significant business acquisitions or dispositions during the first quarter of 2024.

Debt, Cash and Marketable Equity Securities

At March 31, 2024, the Company had $815.6 million in borrowings outstanding at an average interest rate of 6.4%, including $108.1 million outstanding on its $300 million revolving credit facility. Cash, marketable equity securities and other investments totaled $981.9 million at March 31, 2024.

Overall, the Company recognized $104.2 million and $18.0 million in net gains on marketable equity securities in the first quarter of 2024 and 2023, respectively.

Common Stock Repurchases

During the first quarter of 2024, the Company purchased a total of 28,606 shares of its Class B common stock at a cost of $20.0 million. At March 31, 2024, there were 4,450,593 shares outstanding. On May 4, 2023, the Board of Directors authorized the Company to acquire up to 500,000 shares of its Class B common stock; the Company has remaining authorization for 207,797 shares as of March 31, 2024.

Overall Company Results

The Company reported net income attributable to common shares of $124.4 million ($27.72 per share) for the first quarter of 2024, compared to $52.3 million ($10.88 per share) for the first quarter of 2023.

The results for the first quarter of 2024 and 2023 were affected by a number of items as described in the Non-GAAP Financial Information schedule attached to this release. Excluding these items, net income attributable to common shares was $50.4 million ($11.24 per share) for the first quarter of 2024, compared to $40.2 million ($8.36 per share) for the first quarter of 2023.

* * * * * * * * * * * *

Forward-Looking Statements

All public statements made by the Company and its representatives that are not statements of historical fact, including certain statements in this press release, in the Company’s Annual Report on Form 10-K and in the Company’s 2023 Annual Report to Stockholders, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by the Company’s management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ from those stated, including, without limitation, comments about expectations related to acquisitions or dispositions or related business activities, the Company’s business strategies and objectives, the prospects for growth in the Company’s various business operations, the Company’s future financial performance, and the risks and uncertainties described in Item 1A of the Company’s Annual Report on Form 10-K. Accordingly, undue reliance should not be placed on any forward-looking statement made by or on behalf of the Company. The Company assumes no obligation to update any forward-looking statement after the date on which such statement is made, even if new information subsequently becomes available.

GRAHAM HOLDINGS COMPANY

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Unaudited)

 

 

 

 

 

Three Months Ended

 

 

March 31

%

(in thousands, except per share amounts)

2024

 

2023

Change

Operating revenues

$

1,152,662

 

 

$

1,031,546

 

12

 

Operating expenses

 

1,083,942

 

 

 

969,176

 

12

 

Depreciation of property, plant and equipment

 

22,527

 

 

 

20,025

 

12

 

Amortization of intangible assets

 

10,751

 

 

 

13,944

 

(23

)

Impairment of long-lived assets

 

 

 

 

745

 

 

Operating income

 

35,442

 

 

 

27,656

 

28

 

Equity in earnings of affiliates, net

 

2,331

 

 

 

4,661

 

(50

)

Interest income

 

2,178

 

 

 

1,204

 

81

 

Interest expense

 

(19,328

)

 

 

(14,294

)

35

 

Non-operating pension and postretirement benefit income, net

 

42,417

 

 

 

31,845

 

33

 

Gain on marketable equity securities, net

 

104,152

 

 

 

18,022

 

 

Other income, net

 

1,647

 

 

 

3,083

 

(47

)

Income before income taxes

 

168,839

 

 

 

72,177

 

 

Provision for income taxes

 

43,500

 

 

 

19,200

 

 

Net income

 

125,339

 

 

 

52,977

 

 

Net income attributable to noncontrolling interests

 

(959

)

 

 

(705

)

36

 

Net Income Attributable to Graham Holdings Company Common Stockholders

$

124,380

 

 

$

52,272

 

 

Per Share Information Attributable to Graham Holdings Company Common Stockholders

 

 

 

 

Basic net income per common share

$

27.87

 

 

$

10.91

 

 

Basic average number of common shares outstanding

 

4,432

 

 

 

4,759

 

 

Diluted net income per common share

$

27.72

 

 

$

10.88

 

 

Diluted average number of common shares outstanding

 

4,457

 

 

 

4,776

 

 

GRAHAM HOLDINGS COMPANY

BUSINESS DIVISION INFORMATION

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31

 

%

(in thousands)

2024

 

2023

 

Change

Operating Revenues

 

 

 

 

 

Education

 

$

422,598

 

 

$

378,041

 

 

12

 

Television broadcasting

 

 

113,058

 

 

 

112,877

 

 

0

 

Manufacturing

 

 

101,903

 

 

 

114,584

 

 

(11

)

Healthcare

 

 

128,201

 

 

 

102,059

 

 

26

 

Automotive

 

 

303,840

 

 

 

232,561

 

 

31

 

Other businesses

 

 

83,298

 

 

 

92,008

 

 

(9

)

Corporate office

 

 

576

 

 

 

 

 

 

Intersegment elimination

 

 

(812

)

 

 

(584

)

 

 

 

 

$

1,152,662

 

 

$

1,031,546

 

 

12

 

Operating Expenses

 

 

 

 

 

Education

 

$

392,011

 

 

$

355,001

 

 

10

 

Television broadcasting

 

 

83,425

 

 

 

84,294

 

 

(1

)

Manufacturing

 

 

98,834

 

 

 

107,256

 

 

(8

)

Healthcare

 

 

122,110

 

 

 

99,123

 

 

23

 

Automotive

 

 

294,188

 

 

 

221,718

 

 

33

 

Other businesses

 

 

112,252

 

 

 

123,009

 

 

(9

)

Corporate office

 

 

15,212

 

 

 

14,073

 

 

8

 

Intersegment elimination

 

 

(812

)

 

 

(584

)

 

 

 

 

$

1,117,220

 

 

$

1,003,890

 

 

11

 

Operating Income (Loss)

 

 

 

 

 

Education

 

$

30,587

 

 

$

23,040

 

 

33

 

Television broadcasting

 

 

29,633

 

 

 

28,583

 

 

4

 

Manufacturing

 

 

3,069

 

 

 

7,328

 

 

(58

)

Healthcare

 

 

6,091

 

 

 

2,936

 

 

 

Automotive

 

 

9,652

 

 

 

10,843

 

 

(11

)

Other businesses

 

 

(28,954

)

 

 

(31,001

)

 

7

 

Corporate office

 

 

(14,636

)

 

 

(14,073

)

 

(4

)

 

 

$

35,442

 

 

$

27,656

 

 

28

 

Amortization of Intangible Assets and Impairment of Long-Lived Assets

 

 

 

 

 

 

Education

 

$

2,974

 

 

$

4,416

 

 

(33

)

Television broadcasting

 

 

1,350

 

 

 

1,362

 

 

(1

)

Manufacturing

 

 

3,120

 

 

 

4,862

 

 

(36

)

Healthcare

 

 

636

 

 

 

954

 

 

(33

)

Automotive

 

 

 

 

 

 

 

 

Other businesses

 

 

2,671

 

 

 

3,095

 

 

(14

)

Corporate office

 

 

 

 

 

 

 

 

 

 

$

10,751

 

 

$

14,689

 

 

(27

)

Operating Income (Loss) before Amortization of Intangible Assets and Impairment of Long-Lived Assets

 

 

 

 

 

Education

 

$

33,561

 

 

$

27,456

 

 

22

 

Television broadcasting

 

 

30,983

 

 

 

29,945

 

 

3

 

Manufacturing

 

 

6,189

 

 

 

12,190

 

 

(49

)

Healthcare

 

 

6,727

 

 

 

3,890

 

 

73

 

Automotive

 

 

9,652

 

 

 

10,843

 

 

(11

)

Other businesses

 

 

(26,283

)

 

 

(27,906

)

 

6

 

Corporate office

 

 

(14,636

)

 

 

(14,073

)

 

(4

)

 

 

$

46,193

 

 

$

42,345

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31

 

%

(in thousands)

2024

 

2023

 

Change

Depreciation

 

 

 

 

 

Education

 

$

9,305

 

 

$

8,968

 

 

4

 

Television broadcasting

 

 

2,868

 

 

 

3,036

 

 

(6

)

Manufacturing

 

 

2,715

 

 

 

2,282

 

 

19

 

Healthcare

 

 

1,594

 

 

 

1,104

 

 

44

 

Automotive

 

 

1,713

 

 

 

1,113

 

 

54

 

Other businesses

 

 

4,183

 

 

 

3,369

 

 

24

 

Corporate office

 

 

149

 

 

 

153

 

 

(3

)

 

 

$

22,527

 

 

$

20,025

 

 

12

 

Pension Expense

 

 

 

 

 

Education

 

$

4,110

 

 

$

2,198

 

 

87

 

Television broadcasting

 

 

1,639

 

 

 

860

 

 

91

 

Manufacturing

 

 

627

 

 

 

275

 

 

 

Healthcare

 

 

4,758

 

 

 

4,357

 

 

9

 

Automotive

 

 

15

 

 

 

5

 

 

 

Other businesses

 

 

1,940

 

 

 

572

 

 

 

Corporate office

 

 

945

 

 

 

976

 

 

(3

)

 

 

$

14,034

 

 

$

9,243

 

 

52

 

Adjusted Operating Cash Flow (non-GAAP)(1)

 

 

 

 

 

Education

 

$

46,976

 

 

$

38,622

 

 

22

 

Television broadcasting

 

 

35,490

 

 

 

33,841

 

 

5

 

Manufacturing

 

 

9,531

 

 

 

14,747

 

 

(35

)

Healthcare

 

 

13,079

 

 

 

9,351

 

 

40

 

Automotive

 

 

11,380

 

 

 

11,961

 

 

(5

)

Other businesses

 

 

(20,160

)

 

 

(23,965

)

 

16

 

Corporate office

 

 

(13,542

)

 

 

(12,944

)

 

(5

)

 

 

$

82,754

 

 

$

71,613

 

 

16

 

____________

(1)

Adjusted Operating Cash Flow (non-GAAP) is calculated as Operating Income (Loss) before Amortization of Intangible Assets and Impairment of Long-Lived Assets plus Depreciation Expense and Pension Expense.

GRAHAM HOLDINGS COMPANY

EDUCATION DIVISION INFORMATION

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

March 31

 

%

(in thousands)

 

2024

 

2023

 

Change

Operating Revenues

 

 

 

 

 

 

Kaplan international

 

$

269,798

 

 

$

227,076

 

 

19

 

Higher education

 

 

80,122

 

 

 

78,341

 

 

2

 

Supplemental education

 

 

72,122

 

 

 

73,587

 

 

(2

)

Kaplan corporate and other

 

 

2,588

 

 

 

2,372

 

 

9

 

Intersegment elimination

 

 

(2,032

)

 

 

(3,335

)

 

 

 

 

$

422,598

 

 

$

378,041

 

 

12

 

Operating Expenses

 

 

 

 

 

 

Kaplan international

 

$

238,486

 

 

$

205,775

 

 

16

 

Higher education

 

 

74,603

 

 

 

71,258

 

 

5

 

Supplemental education

 

 

67,542

 

 

 

69,836

 

 

(3

)

Kaplan corporate and other

 

 

10,173

 

 

 

7,210

 

 

41

 

Amortization of intangible assets

 

 

2,974

 

 

 

3,939

 

 

(24

)

Impairment of long-lived assets

 

 

 

 

 

477

 

 

 

Intersegment elimination

 

 

(1,767

)

 

 

(3,494

)

 

 

 

 

$

392,011

 

 

$

355,001

 

 

10

 

Operating Income (Loss)

 

 

 

 

 

 

Kaplan international

 

$

31,312

 

 

$

21,301

 

 

47

 

Higher education

 

 

5,519

 

 

 

7,083

 

 

(22

)

Supplemental education

 

 

4,580

 

 

 

3,751

 

 

22

 

Kaplan corporate and other

 

 

(7,585

)

 

 

(4,838

)

 

(57

)

Amortization of intangible assets

 

 

(2,974

)

 

 

(3,939

)

 

24

 

Impairment of long-lived assets

 

 

 

 

 

(477

)

 

 

Intersegment elimination

 

 

(265

)

 

 

159

 

 

 

 

 

$

30,587

 

 

$

23,040

 

 

33

 

Operating Income (Loss) before Amortization of Intangible Assets and Impairment of Long-Lived Assets

 

 

 

 

 

Kaplan international

 

$

31,312

 

 

$

21,301

 

 

47

 

Higher education

 

 

5,519

 

 

 

7,083

 

 

(22

)

Supplemental education

 

 

4,580

 

 

 

3,751

 

 

22

 

Kaplan corporate and other

 

 

(7,585

)

 

 

(4,838

)

 

(57

)

Intersegment elimination

 

 

(265

)

 

 

159

 

 

 

 

 

$

33,561

 

 

$

27,456

 

 

22

 

Depreciation

 

 

 

 

 

 

Kaplan international

 

$

7,356

 

 

$

6,330

 

 

16

 

Higher education

 

 

903

 

 

 

1,102

 

 

(18

)

Supplemental education

 

 

1,019

 

 

 

1,509

 

 

(32

)

Kaplan corporate and other

 

 

27

 

 

 

27

 

 

0

 

 

 

$

9,305

 

 

$

8,968

 

 

4

 

Pension Expense

 

 

 

 

 

 

Kaplan international

 

$

163

 

 

$

80

 

 

 

Higher education

 

 

1,781

 

 

 

922

 

 

93

 

Supplemental education

 

 

1,818

 

 

 

1,024

 

 

78

 

Kaplan corporate and other

 

 

348

 

 

 

172

 

 

 

 

 

$

4,110

 

 

$

2,198

 

 

87

 

Adjusted Operating Cash Flow (non-GAAP)(1)

 

 

 

 

 

Kaplan international

 

$

38,831

 

 

$

27,711

 

 

40

 

Higher education

 

 

8,203

 

 

 

9,107

 

 

(10

)

Supplemental education

 

 

7,417

 

 

 

6,284

 

 

18

 

Kaplan corporate and other

 

 

(7,210

)

 

 

(4,639

)

 

(55

)

Intersegment elimination

 

 

(265

)

 

 

159

 

 

 

 

 

$

46,976

 

 

$

38,622

 

 

22

 

____________

(1)

Adjusted Operating Cash Flow (non-GAAP) is calculated as Operating Income (Loss) before Amortization of Intangible Assets and Impairment of Long-Lived Assets plus Depreciation Expense and Pension Expense.

NON-GAAP FINANCIAL INFORMATION

GRAHAM HOLDINGS COMPANY

(Unaudited)

In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP) included in this press release, the Company has provided information regarding Adjusted Operating Cash Flow and Net income excluding certain items described below, reconciled to the most directly comparable GAAP measures. Management believes that these non-GAAP measures, when read in conjunction with the Company’s GAAP financials, provide useful information to investors by offering:

  • the ability to make meaningful period-to-period comparisons of the Company’s ongoing results;
  • the ability to identify trends in the Company’s underlying business; and
  • a better understanding of how management plans and measures the Company’s underlying business.

Adjusted Operating Cash Flow and Net income, excluding certain items, should not be considered substitutes or alternatives to computations calculated in accordance with and required by GAAP. These non-GAAP financial measures should be read only in conjunction with financial information presented on a GAAP basis.

The gains and losses on marketable equity securities relate to the change in the fair value (quoted prices) of its portfolio of equity securities. The mandatorily redeemable noncontrolling interest represents the ownership portion of a group of minority shareholders at a subsidiary of the Company's Healthcare business. The Company measures the redemption value of this minority ownership on a quarterly basis with changes in the fair value recorded as interest expense or income, which is included in net income for the period. The effect of gains and losses on marketable equity securities and net interest expense related to fair value adjustments of the mandatorily redeemable noncontrolling interest are not directly related to the core performance of the Company’s business operations since these items do not directly relate to the sale of the Company’s services or products. The accounting principles generally accepted in the United States (“GAAP”) require that the Company include the gains and losses on marketable equity securities and net interest expense related to fair value adjustments of the mandatorily redeemable noncontrolling interest in net income on the Condensed Consolidated Statements of Operations. The Company excludes the gains and losses on marketable equity securities and net interest expense related to fair value adjustments of the mandatorily redeemable noncontrolling interest from the non-GAAP adjusted net income because these items are independent of the Company’s core operations and not indicative of the performance of the Company’s business operations.

The following tables reconcile the non-GAAP financial measures for Net income, excluding certain items, to the most directly comparable GAAP measures:

 

Three Months Ended March 31

 

2024

 

2023

Income

 

 

 

 

 

Income

 

 

 

 

before

 

Income

 

Net

 

before

 

Income

 

Net

income

 

Taxes

 

Income

 

income

 

Taxes

 

Income

(in thousands, except per share amounts)

taxes

 

 

 

 

 

taxes

 

 

 

 

Amounts attributable to Graham Holdings Company Common Stockholders

 

 

 

 

 

 

 

 

 

 

 

As reported

$

168,839

 

 

$

43,500

 

 

$

125,339

 

 

$

72,177

 

 

$

19,200

 

 

$

52,977

 

Attributable to noncontrolling interests

 

 

 

 

 

(959

)

 

 

 

 

 

 

(705

)

Attributable to Graham Holdings Company Stockholders

 

 

 

 

 

124,380

 

 

 

 

 

 

 

52,272

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Charges related to non-operating Separation Incentive Programs

 

418

 

 

 

107

 

 

 

311

 

 

 

4,129

 

 

 

1,062

 

 

 

3,067

 

Net gains on marketable equity securities

 

(104,152

)

 

 

(26,668

)

 

 

(77,484

)

 

 

(18,022

)

 

 

(4,744

)

 

 

(13,278

)

Net losses (earnings) of affiliates whose operations are not managed by the Company

 

1,486

 

 

 

380

 

 

 

1,106

 

 

 

(1,812

)

 

 

(477

)

 

 

(1,335

)

Non-operating loss (gain) from write-up, sale and impairment of cost method investments

 

406

 

 

 

104

 

 

 

302

 

 

 

(2,615

)

 

 

(660

)

 

 

(1,955

)

Interest expense related to the fair value adjustment of the mandatorily redeemable noncontrolling interest

 

1,876

 

 

 

95

 

 

 

1,781

 

 

 

1,468

 

 

 

75

 

 

 

1,393

 

Net Income, adjusted (non-GAAP)

 

 

 

 

$

50,396

 

 

 

 

 

 

$

40,164

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share information attributable to Graham Holdings Company Common Stockholders

 

 

 

 

 

 

 

 

 

 

 

Diluted income per common share, as reported

 

 

 

 

$

27.72

 

 

 

 

 

 

$

10.88

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Charges related to non-operating Separation Incentive Programs

 

 

 

 

 

0.07

 

 

 

 

 

 

 

0.64

 

Net gains on marketable equity securities

 

 

 

 

 

(17.27

)

 

 

 

 

 

 

(2.76

)

Net losses (earnings) of affiliates whose operations are not managed by the Company

 

 

 

 

 

0.25

 

 

 

 

 

 

 

(0.28

)

Non-operating loss (gain) from write-up, sale and impairment of cost method investments

 

 

 

 

 

0.07

 

 

 

 

 

 

 

(0.41

)

Interest expense related to the fair value adjustment of the mandatorily redeemable noncontrolling interest

 

 

 

 

 

0.40

 

 

 

 

 

 

 

0.29

 

Diluted income per common share, adjusted (non-GAAP)

 

 

 

 

$

11.24

 

 

 

 

 

 

$

8.36

 

 

 

 

 

 

 

 

 

 

 

 

 

The adjusted diluted per share amounts may not compute due to rounding.

 

Contacts

Wallace R. Cooney

(703) 345-6470

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