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.

 

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The Graham Holdings Stock at the time of publication of the news with a fall of -1,49 % to 660EUR on Tradegate stock exchange (30. April 2024, 22:26 Uhr).