Graham Holdings Company (NYSE: GHC) today reported a net loss
attributable to common shares of $23.0 million ($5.02 per share)
for the third quarter of 2023, compared to net income attributable
to common shares of $32.8 million ($6.76 per share) for the third
quarter of 2022.
The results for the third quarter of 2023 and 2022 were affected
by a number of items as described in the following paragraphs.
Excluding these items, net income attributable to common shares was
$48.9 million ($10.45 per share) for the third quarter of 2023,
compared to $74.2 million ($15.30 per share) for the third quarter
of 2022. (Refer to the Non-GAAP Financial Information schedule at
the end of this release for additional details.)
Items included in the Company’s net loss for the third quarter
of 2023:
- $98.3 million in goodwill and other long-lived asset impairment
charges (after-tax impact of $84.4 million, or $18.18 per
share);
- $16.8 million in net gains on marketable equity securities
(after-tax impact of $12.3 million, or $2.66 per share);
- $2.8 million in net losses of affiliates whose operations are
not managed by the Company (after-tax impact of $2.1 million, or
$0.45 per share);
- a $4.6 million credit to interest expense resulting from gains
realized related to the termination of interest rate swaps
(after-tax impact of $3.3 million, or $0.72 per share); and
- $1.1 million in interest expense to adjust the fair value of
the mandatorily redeemable noncontrolling interest (after-tax
impact of $1.0 million, or $0.22 per share).
Items included in the Company’s net income for the third quarter
of 2022:
- a $1.7 million net credit related to a fair value change in
contingent consideration from a prior acquisition at the education
division ($0.35 per share);
- $54.2 million in net losses on marketable equity securities
(after-tax impact of $40.2 million, or $8.28 per share);
- $2.7 million in net losses of affiliates whose operations are
not managed by the Company (after-tax impact of $2.0 million, or
$0.42 per share);
- a net non-operating gain of $0.6 million from the write-up of a
cost method investment (after-tax impact of $0.4 million, or $0.09
per share); and
- $1.4 million in interest expense to adjust the fair value of
the mandatorily redeemable noncontrolling interest (after-tax
impact of $1.3 million, or $0.28 per share).
Revenue for the third quarter of 2023 was $1,111.5 million, up
10% from $1,012.4 million in the third quarter of 2022. Revenues
increased at education, healthcare and automotive, partially offset
by declines at television broadcasting, manufacturing and other
businesses. The Company reported an operating loss of $57.1 million
for the third quarter of 2023, compared to operating income of
$59.5 million for the third quarter of 2022. The decrease in
operating results is due to goodwill impairment charges at World of
Good Brands (WGB, formerly Leaf Media) and Dekko and declines at
television broadcasting, manufacturing, automotive and other
businesses, partially offset by an increase at education. The
Company reported adjusted operating cash flow (non-GAAP) of $83.7
million for the third quarter of 2023, compared to $99.4 million
for the third quarter of 2022. Adjusted operating cash flow
declined at television broadcasting, manufacturing, automotive and
other businesses, partially offset by increases at education and
healthcare.
For the first nine months of 2023, the Company recorded net
income attributable to common shares of $152.0 million ($32.14 per
share), compared to $60.9 million ($12.48 per share) for the first
nine months of 2022. The results for the first nine months of 2023
and 2022 were affected by a number of items as described in the
following paragraphs. Excluding these items, net income
attributable to common shares was $151.2 million ($31.96 per share)
for the first nine months of 2023, compared to $196.6 million
($40.27 per share) for the first nine months of 2022. (Refer to the
Non-GAAP Financial Information schedule at the end of this release
for additional details.)
Items included in the Company’s net income for the first nine
months of 2023:
- a $4.2 million net credit related to a fair value change in
contingent consideration from a prior acquisition at Corporate
(after-tax impact of $4.1 million, or $0.89 per share);
- $99.1 million in goodwill and other-long lived asset impairment
charges (after-tax impact of $85.0 million, or $18.30 per
share);
- $9.6 million in expenses related to non-operating Separation
Incentive Programs (SIPs) at other businesses and the education and
television broadcasting divisions (after-tax impact of $7.2
million, or $1.54 per share);
- $113.4 million in net gains on marketable equity securities
(after-tax impact of $83.6 million, or $17.99 per share);
- $9.7 million in net losses of affiliates whose operations are
not managed by the Company (after-tax impact of $7.1 million, or
$1.53 per share);
- a non-operating gain of $10.0 million on the sale of Pinna
(after-tax-impact of $7.4 million, or $1.59 per share);
- non-operating gain of $3.9 million from the write-up and sales
of cost method investments (after-tax impact of $2.9 million, or
$0.63 per share);
- a $4.6 million credit to interest expense resulting from gains
realized related to the termination of interest rate swaps
(after-tax impact of $3.3 million, or $0.72 per share); and
- $1.4 million in net interest expense to adjust the fair value
of the mandatorily redeemable noncontrolling interest (after-tax
impact of $1.3 million, or $0.27 per share).
Items included in the Company’s net income for the first nine
months of 2022:
- a $4.9 million net credit related to fair value changes in
contingent consideration from prior acquisitions (after-tax impact
of $4.9 million, or $1.00 per share);
- $172.9 million in net losses on marketable equity securities
(after-tax impact of $127.9 million, or $26.19 per share);
- $2.8 million in net losses of affiliates whose operations are
not managed by the Company (after-tax impact of $2.1 million, or
$0.43 per share);
- Non-operating gain of $2.2 million from sales and write-up of
cost and equity method investments (after-tax impact of $1.7
million, or $0.34 per share); and
- $12.8 million in interest expense to adjust the fair value of
the mandatorily redeemable noncontrolling interest (after-tax
impact of $12.3 million, or $2.51 per share).
Revenue for the first nine months of 2023 was $3,248.1 million,
up 14% from $2,860.5 million in the first nine months of 2022.
Revenues increased at education, healthcare and automotive,
partially offset by declines at television broadcasting,
manufacturing and other businesses. The Company reported operating
income of $28.6 million for the first nine months of 2023, compared
to $138.8 million for the first nine months of 2022. The decrease
in operating results is due to goodwill impairment charges at WGB
and Dekko and declines at television broadcasting, healthcare, and
other businesses, partially offset by increases at education and
automotive. The Company reported adjusted operating cash flow
(non-GAAP) of $255.3 million for the first nine months of 2023,
compared to $258.4 million for the first nine months of 2022.
Adjusted operating cash flow declined at television broadcasting
and other businesses, partially offset by increases at education,
healthcare and automotive.
Division Results
Education
Education division revenue totaled $411.8 million for the third
quarter of 2023, up 16% from $355.1 million for the same period of
2022. Kaplan reported operating income of $29.9 million for the
third quarter of 2023, compared to $18.6 million for the third
quarter of 2022.
For the first nine months of 2023, education division revenue
totaled $1,192.1 million, up 12% from $1,066.1 million for the same
period of 2022. Kaplan reported operating income of $83.0 million
for the first nine months of 2023, compared to $57.8 million for
the first nine months of 2022.
In the second quarter of 2023, Kaplan modified its segment
reporting for Kaplan India, a shared services center that supports
Higher Education (previously included in Kaplan corporate and
other); prior periods have been reclassified to conform with the
current presentation.
A summary of Kaplan’s operating results is as follows:
Three Months Ended
Nine Months Ended
September 30
September 30
(in thousands)
2023
2022
% Change
2023
2022
% Change
Revenue
Kaplan international
$
249,976
$
193,085
29
$
714,715
$
598,469
19
Higher education
81,925
82,314
0
250,557
233,990
7
Supplemental education
78,332
79,566
(2
)
226,535
233,416
(3
)
Kaplan corporate and other
3,101
2,616
19
8,360
7,414
13
Intersegment elimination
(1,497
)
(2,517
)
—
(8,062
)
(7,200
)
—
$
411,837
$
355,064
16
$
1,192,105
$
1,066,089
12
Operating Income (Loss)
Kaplan international
$
22,220
$
8,503
—
$
64,272
$
48,130
34
Higher education
8,465
9,064
(7
)
33,343
17,423
91
Supplemental education
9,729
9,471
3
16,992
17,671
(4
)
Kaplan corporate and other
(7,412
)
(4,616
)
(61
)
(20,074
)
(13,438
)
(49
)
Amortization of intangible assets
(3,210
)
(3,980
)
19
(11,133
)
(12,190
)
9
Impairment of long-lived assets
—
—
—
(477
)
—
—
Intersegment elimination
67
203
—
92
166
—
$
29,859
$
18,645
60
$
83,015
$
57,762
44
Kaplan International includes postsecondary education,
professional training and language training businesses largely
outside the United States. Kaplan International revenue increased
29% and 19% for the third quarter and first nine months of 2023,
respectively (25% and 21%, respectively, on a constant currency
basis). The increases are due largely to growth at Pathways,
Australia, Languages and UK Professional, partially offset by a
decline at Singapore. Kaplan International reported operating
income of $22.2 million in the third quarter of 2023, compared to
$8.5 million in the third quarter of 2022. The improved results are
due largely to improved results at Australia, Pathways, UK
Professional and Languages. Operating income increased to $64.3
million in the first nine months of 2023, compared to $48.1 million
in the first nine months of 2022. The improved results are due
largely to improved results at Australia, Pathways and Languages,
partially offset by declines at UK Professional and Singapore.
Higher Education includes the results of Kaplan as a service
provider to higher education institutions. Higher Education revenue
was flat compared to the third quarter of 2022 and increased 7% for
the first nine months of 2023. For the third quarter and first nine
months of 2023 and 2022, Kaplan recorded a portion of the fee with
Purdue Global based on an assessment of its collectability under
the TOSA. Enrollments at Purdue Global for the first nine months of
2023 increased 5% compared to the first nine months of 2022. The
Company will continue to assess the collectability of the fee with
Purdue Global on a quarterly basis to make a determination as to
whether to record all or part of the fee in the future and whether
to make adjustments to fee amounts recognized in earlier periods.
Higher Education results declined in the third quarter of 2023 due
to a lower Purdue Global fee recorded compared to the third quarter
of 2022, partially offset by a decline in other higher education
development costs. Higher Education results improved in the first
nine months of 2023 due to an increase in the Purdue Global fee
recorded, and a decline in other higher education development
costs.
Supplemental Education includes Kaplan’s standardized test
preparation programs and domestic professional and other continuing
education businesses. Supplemental Education revenue declined 2%
and 3% for the third quarter and first nine months of 2023,
respectively, driven mostly by softness in Real Estate, Securities
and Medical Licensure test preparation, offset in part by growth in
CFP, CFA, Architecture and Engineering and MCAT test preparation
and publishing activities. Overall, demand for graduate and
pre-college test preparation programs has declined due to the
strength of U.S. employment markets and the decline in test-takers,
while demand for professional programs remained stable. Operating
results improved in the third quarter of 2023 due to savings from
reduced headcount, partially offset by lower revenues. Operating
results declined in the first nine months of 2023 due to lower
revenues, partially offset by savings from reduced headcount.
Kaplan corporate and other represents unallocated expenses of
Kaplan, Inc.’s corporate office, other minor businesses and certain
shared activities. Kaplan corporate and other expenses increased in
the third quarter and first nine months of 2023, largely due to
increased incentive compensation costs.
Television Broadcasting
Graham Media Group, Inc. owns seven television stations located
in Houston, TX; Detroit, MI; Orlando, FL; San Antonio, TX;
Jacksonville, FL; and Roanoke, VA, as well as SocialNewsDesk, a
provider of social media management tools designed to connect
newsrooms with their users. Revenue at the television broadcasting
division decreased 14% to $116.1 million in the third quarter of
2023, from $135.2 million in the same period of 2022. The revenue
decline is due primarily to a $20.3 million decline in political
advertising revenue, partially offset by a modest increase in
retransmission revenues. Operating income for the third quarter of
2023 declined 39% to $31.9 million, from $52.3 million in the same
period of 2022, due to reduced revenues and higher network
fees.
Revenue at the television broadcasting division decreased 9% to
$347.8 million in the first nine months of 2023, from $381.0
million in the same period of 2022. The revenue decline is due
primarily to a $23.8 million decline in political advertising
revenue, winter Olympics and Super Bowl advertising at the
Company’s NBC affiliates in the first quarter of 2022, as well as
modest declines in digital advertising and retransmission revenues.
Operating income for the first nine months of 2023 declined 29% to
$93.7 million, from $131.9 million in the same period of 2022, due
to reduced revenues and higher network fees. While per subscriber
rates from cable, satellite and OTT providers have grown, overall
cable and satellite subscribers are down due to cord cutting,
resulting in retransmission revenue net of network fees in 2023
expected to be down modestly compared with 2022, and this trend is
expected to continue in the future.
Manufacturing
Manufacturing includes four businesses: Hoover, a supplier of
pressure impregnated kiln-dried lumber and plywood products for
fire retardant and preservative applications; Dekko, a manufacturer
of electrical workspace solutions, architectural lighting and
electrical components and assemblies; Joyce/Dayton, a manufacturer
of screw jacks and other linear motion systems; and Forney, a
global supplier of products and systems that control and monitor
combustion processes in electric utility and industrial
applications.
Manufacturing revenues decreased 11% and 6% in the third quarter
and first nine months of 2023, respectively. The revenue declines
are due primarily to lower revenues at Hoover and Dekko, partially
offset by increased revenues at Joyce and Forney. Revenues declined
in the third quarter of 2023 at Hoover due largely to lower wood
prices and a decrease in product demand. Revenues declined in the
first nine months of 2023 at Hoover due largely to lower wood
prices, partially offset by overall increased rates and higher
product demand. Revenues declined at Dekko due largely to lower
product demand, particularly in the commercial office electrical
products sector. Overall, Hoover results included wood gains on
inventory sales in the first nine months of 2023 and 2022, with
gains in the first nine months of 2023 modestly higher than the
prior year. For the third quarter of 2023, Hoover results included
wood gains on inventory sales, compared with modest wood losses on
inventory sales in the third quarter of 2022. Manufacturing
operating results declined in the third quarter and first nine
months of 2023 due primarily to a $47.8 million goodwill impairment
charge at Dekko, resulting from continued sustained weakness in
demand for certain Dekko power and data products, primarily in the
commercial office sector. Excluding the impairment charge at Dekko,
manufacturing operating results were down in the third quarter of
2023, due to declines at Dekko and Hoover, partially offset by
improved results at Joyce and Forney. Excluding the impairment
charge at Dekko, manufacturing operating results were down slightly
in the first nine months of 2023, due to declines at Dekko,
partially offset by improvements at Hoover and Joyce.
Healthcare
Graham Healthcare Group (GHG) provides home health and hospice
services in seven states. GHG also provides other healthcare
services, including nursing care and prescription services for
patients receiving in-home infusion treatments through its 76.5%
interest in CSI Pharmacy Holdings Company, LLC (CSI). In May 2022,
GHG acquired two small businesses, one of which expanded GHG’s home
health operations into Kansas and Missouri. In July 2022, GHG
acquired a 100% interest in a multi-state provider of Applied
Behavior Analysis clinics and in August 2022, GHG acquired two
small businesses, which expanded GHG’s hospice services into
Missouri and Ohio. Healthcare revenues increased 33% and 44% for
the third quarter and first nine months of 2023, respectively,
largely due to significant growth at CSI and from businesses
acquired in 2022, along with growth in home health and hospice
services.
In 2022, GHG implemented a new pension credit retention program
in order to improve employee retention and utilize the Company’s
surplus pension assets. The GHG pilot program offers a pension
credit up to $50,000 per employee, cliff vested after three years
of continuous employment for certain existing employees and new
employees hired from January 1, 2022 through December 31, 2024. GHG
recorded pension expense of $3.4 million and $10.1 million related
to this program in the third quarter and first nine months of 2023,
respectively.
The decline in GHG operating results in the third quarter and
first nine months of 2023 is due largely to an increase in pension
expense related to the new GHG pension credit retention program,
partially offset by improved results at CSI and in home health and
hospice. Excluding pension expense, GHG operating results increased
in the third quarter and first nine months of 2023. Adjusted
operating cash flow (non-GAAP) at GHG increased to $11.8 million in
the third quarter of 2023, from $7.7 million in the third quarter
of 2022. Adjusted operating cash flow (non-GAAP) at GHG increased
to $34.4 million in the first nine months of 2023, from $23.4
million in the first nine months of 2022.
The Company also holds interests in four home health and hospice
joint ventures managed by GHG, whose results are included in equity
in earnings of affiliates in the Company’s Condensed Consolidated
Statements of Operations. The Company recorded equity in earnings
of $1.9 million and $1.5 million for the third quarter of 2023 and
2022, respectively, from these joint ventures. The Company recorded
equity in earnings of $6.9 million and $5.1 million for the first
nine months of 2023 and 2022, respectively. During the first
quarter of 2022, GHG, through its Residential Home Health Illinois
and Residential Hospice Illinois affiliates, acquired an interest
in the home health and hospice assets of NorthShore University
HealthSystem, an integrated healthcare delivery system serving
patients throughout the Chicago, IL area. The transaction resulted
in a decrease to GHG’s interest in Residential Hospice Illinois and
a $0.6 million non-operating gain was recorded in the first quarter
of 2022 related to the change in interest.
Automotive
Automotive includes seven automotive dealerships in the
Washington, D.C. metropolitan area and Richmond, VA: Ourisman Lexus
of Rockville, Ourisman Honda of Tysons Corner, Ourisman Jeep
Bethesda, Ourisman Ford of Manassas, and Toyota of Woodbridge and
Ourisman Chrysler-Dodge-Jeep-Ram (CDJR) of Woodbridge, which were
acquired on July 5, 2022 from the Lustine Automotive Group. In
addition, on September 27, 2023, the Company acquired a Toyota
dealership in Henrico, VA from McGeorge Toyota. Christopher J.
Ourisman, a member of the Ourisman Automotive Group family of
dealerships, and his team of industry professionals operate and
manage the dealerships; the Company holds a 90% stake. The
automotive group has also been awarded a KIA Open Point dealership
in Bethesda, MD with plans to commence operations by the end of the
year.
Revenues for the third quarter of 2023 increased 29% due to
sales growth at all dealerships, except for the Jeep dealership,
which had lower revenues due to a decline in new vehicle sales.
Revenues for the first nine months of 2023 increased 50% due to the
acquisitions of the Toyota of Woodbridge and CDJR dealerships and
sales growth at the other dealerships, except for the Jeep
dealership, which had lower revenues due to a decline in new
vehicle sales. Additionally, all of the dealerships reported sales
growth for services and parts for the first nine month of 2023.
Operating results for the third quarter of 2023 decreased due to
declines at the Jeep, CDJR, Ford, and Lexus dealerships and
transaction costs related to the McGeorge Toyota acquisition,
partially offset by improved results at the Toyota of Woodbridge
and Honda dealerships. Operating results for the first nine months
of 2023 improved due largely to the Toyota of Woodbridge and CDJR
acquisitions, and improved results at the Honda and Lexus
dealerships, partially offset by declines at the Jeep dealership
due primarily to declines in new vehicle sales and related margins,
and declines at the Ford dealership in margins on new vehicle
sales.
Other Businesses
A summary of revenue by category for other businesses:
Three Months Ended
Nine Months Ended
September 30
%
September 30
%
(in thousands)
2023
2022
Change
2023
2022
Change
Operating Revenues
Retail (1)
$
28,446
$
38,990
(27
)
$
90,215
$
122,236
(26
)
Media (2)
27,418
31,604
(13
)
78,105
95,646
(18
)
Specialty (3)
30,789
30,613
1
100,790
90,268
12
$
86,653
$
101,207
(14
)
$
269,110
$
308,150
(13
)
____________
(1)
Includes Society6 and Saatchi Art
(formerly Leaf Marketplace) and Framebridge
(2)
Includes WGB, Code3, Slate, Foreign
Policy, Pinna and City Cast
(3)
Includes Clyde’s Restaurant Group, Decile
and CyberVista
Overall, revenue from other businesses declined 14% and 13% in
the third quarter and first nine months of 2023, respectively.
Retail revenue declined in the first nine months of 2023 largely
due to significantly lower revenue at Society6, partially offset by
revenue growth at Framebridge. Media revenue declined in the first
nine months of 2023 due to lower revenue at WGB and Code3,
partially offset by revenue growth at Slate and Foreign Policy.
Specialty revenue increased in the first nine months of 2023 due to
revenue growth at Clyde’s Restaurant Group (CRG). Excluding the
former Leaf businesses, revenue from other businesses grew in the
third quarter and first nine months of 2023.
Overall, operating results at other businesses declined in the
first nine months of 2023 due to a $50.2 million goodwill
impairment charge recorded at WGB, increased losses at the former
Leaf businesses, Code3, Decile and City Cast; partially offset by
improved results at CRG, Slate and Foreign Policy, reduced losses
at Framebridge, and a reduction in losses due to the sales of
CyberVista and Pinna.
Leaf Group
On June 14, 2021, the Company acquired Leaf Group Ltd. (Leaf), a
consumer internet company headquartered in Santa Monica, CA, that
builds enduring, creator-driven brands that reach passionate
audiences in large and growing lifestyle categories, including
fitness and wellness (Well+Good and Livestrong.com), and home, art
and design (Saatchi Art, Society6 and Hunker).
In the second quarter of 2023, the Company restructured Leaf
into three stand-alone businesses: Society6 (formerly included in
Leaf Marketplace), Saatchi Art (formerly included in Leaf
Marketplace) and World of Good Brands (WGB, formerly Leaf Media).
The transition process for this restructuring involves various cost
reduction initiatives, including elimination of shared services
costs and functions; transitioning financial and human resources
systems; and rationalizing physical facilities and data centers. In
the first and second quarters of 2023, Leaf implemented a SIP to
reduce the number of employees, which is being funded by the assets
of the Company’s pension plan; $2.9 million and $3.9 million in
related non-operating pension expense was recorded in the first and
second quarters of 2023, respectively. Each of Society6, Saatchi
Art and World of Good Brands is continuing with the transition and
cost reduction process, which is expected to be completed by the
end of the second quarter of 2024.
Revenue at each of the three Leaf businesses declined in the
third quarter and first nine months of 2023, with substantial
declines at Society6 and WGB. Revenue decreases at Society6 are due
to declines in traffic, conversion rates and related sales for both
direct to consumer and business to business categories; revenue
declines at WGB are due to reduced traffic and the soft digital
advertising market for both direct and programmatic categories.
Overall, the Leaf businesses reported significant operating losses
in each of the third quarters and first nine months of 2023 and
2022, with an increase in operating losses in the third quarter and
first nine months of 2023.
As a result of the substantial digital advertising revenue
declines and continued significant operating losses at WGB, the
Company recorded a $50.2 million goodwill impairment charge in the
third quarter of 2023.
Clyde’s Restaurant Group
CRG owns and operates 12 restaurants and entertainment venues in
the Washington, D.C. metropolitan area, including Old Ebbitt Grill
and The Hamilton. CRG reported an operating loss in the third
quarter of 2023 and 2022 and an operating profit for the first nine
months of 2023 and 2022. Both revenues and operating results
improved in the first nine months of 2023, due to strong guest
traffic, modest price increases, and the absence of any significant
adverse impact from the COVID-19 pandemic. Operating results in the
first nine months of 2022 benefited from a favorable rent
concession.
CRG recently announced plans to open new restaurants in
Baltimore, MD; Washington, D.C.; and Reston, VA in early 2024, mid
2024 and early 2025, respectively.
Framebridge
Framebridge is a custom framing service company, headquartered
in Washington, D.C., with 20 retail locations in the Washington,
D.C., New York City, Atlanta, GA, Philadelphia, PA, Boston, MA and
Chicago, IL areas and two manufacturing facilities in Kentucky and
New Jersey. Framebridge continues to actively explore opportunities
for further store expansion. Revenues increased in the third
quarter and first nine months of 2023 due to an increase in retail
revenue from same-store sales growth and operating additional
retail stores compared to the same periods in 2022. Framebridge is
an investment stage business and reported significant operating
losses in the first nine months of 2023 and 2022.
Other
Other businesses also include Code3, a performance marketing
agency focused on driving performance for brands though three core
elements of digital success: media, creative and commerce; Slate
and Foreign Policy, which publish online and print magazines and
websites; and two investment stage businesses, Decile and City
Cast. Slate, Foreign Policy and City Cast reported revenue
increases in the first nine months of 2023, while Code3 reported a
revenue decline. Losses from City Cast, Code3 and Decile in the
first nine months of 2023 adversely affected operating results,
while Slate and Foreign Policy each reported an operating profit
during this period.
Other businesses also included Pinna, which was sold in June
2023 when the Company entered into a merger agreement with Realm of
Possibility, Inc. (Realm), a provider of audio entertainment
services, to merge Pinna with Realm in return for a noncontrolling
financial interest in the merged entity. In connection with the
merger, the Company recorded a $10.0 million non-cash,
non-operating gain related to the transaction. The Company held a
noncontrolling interest in Realm prior to the transaction and
continues to hold a noncontrolling interest in Realm following the
transaction. The Company’s investment in Realm is reported as an
equity method investment.
Other businesses also included CyberVista, which was sold in
October 2022 when the Company announced a strategic merger of
CyberVista and CyberWire, a B2B cybersecurity audio network to form
a new parent company, N2K Networks. The Company’s investment in N2K
Networks is reported as an equity method investment.
In the first and second quarters of 2023, Code3 implemented a
SIP to reduce the number of employees, which is being funded by the
assets of the Company’s pension plan; $1.2 million and $0.6 million
in related non-operating pension expense was recorded in the first
and second quarters of 2023, respectively.
Corporate Office
Corporate office includes the expenses of the Company’s
corporate office and certain continuing obligations related to
prior business dispositions.
Equity in (Losses) Earnings of
Affiliates
At September 30, 2023, the Company held an approximate 18%
interest in Intersection Holdings, LLC (Intersection), a company
that provides digital marketing and advertising services and
products for cities, transit systems, airports, and other public
and private spaces; a 49.9% interest in N2K Networks on a fully
diluted basis; and a 42.3% interest in Realm on a fully diluted
basis. The Company also holds interests in several other
affiliates, including a number of home health and hospice joint
ventures managed by GHG and two joint ventures managed by Kaplan.
Overall, the Company recorded equity in losses of affiliates of
$0.8 million for the third quarter of 2023, compared to $1.1
million for the third quarter of 2022. These amounts include $2.8
million and $2.7 million in net losses for the third quarter of
2023 and 2022, respectively, from affiliates whose operations are
not managed by the Company.
The Company recorded equity in losses of affiliates of $2.2
million for the first nine months of 2023, compared to earnings of
$2.9 million for the first nine months of 2022. These amounts
include $9.7 million and $2.8 million in net losses for the first
nine months of 2023 and 2022, respectively, from affiliates whose
operations are not managed by the Company.
Net Interest Expense and Related
Balances
In connection with the acquisition of the Toyota of Richmond
dealership, in September 2023, the automotive subsidiary of the
Company entered into a credit agreement with Truist Bank, which
includes (i) a $75.2 million real estate term loan, (ii) a $65.0
million capital term loan, (iii) an undrawn $50.0 million delayed
draw term loan available upon request and (iv) establishment of a
revolving floor plan credit facility. Additionally, the automotive
subsidiary entered into interest rate swaps to fix the interest
rate that the Company will pay on the $75.2 million real estate
term loan at 6.42% per annum. The proceeds from this borrowing were
used to finance the acquisition of the Toyota of Richmond
dealership and to repay the outstanding balance of the automotive
subsidiary commercial notes that were maturing in 2031 and 2032.
The related interest rate swaps were also terminated, resulting in
a realized gain of $4.6 million recorded as a credit to interest
expense during the third quarter of 2023.
The Company incurred net interest expense of $9.8 million and
$33.1 million for the third quarter and first nine months of 2023,
respectively, compared to $10.8 million and $36.8 million for the
third quarter and first nine months of 2022, respectively. The
Company recorded interest expense of $1.1 million and $1.4 million
in the third quarter and first nine months of 2023, respectively,
to adjust the fair value of the mandatorily redeemable
noncontrolling interest at GHG. The Company recorded interest
expense of $1.4 million and $12.8 million in the third quarter and
first nine months of 2022, respectively, to adjust the fair value
of the mandatorily redeemable noncontrolling interest at GHG.
Excluding these adjustments, the increase in net interest expense
relates primarily to increased debt at the automotive dealerships
and higher interest rates on the Company’s variable debt.
At September 30, 2023, the Company had $761.7 million in
borrowings outstanding at an average interest rate of 6.3%, and
cash, marketable equity securities and other investments of $873.0
million. At September 30, 2023, the Company had $60.9 million
outstanding on its $300 million revolving credit facility.
Non-operating Pension and
Postretirement Benefit Income, net
The Company recorded net non-operating pension and
postretirement benefit income of $35.7 million and $97.3 million
for the third quarter and first nine months of 2023, respectively,
compared to $50.7 million and $152.1 million for the third quarter
and first nine months of 2022, respectively.
In the second quarter of 2023, the Company recorded $5.5 million
in expenses related to non-operating SIPs at other businesses and
the education and television broadcasting divisions. In the first
quarter of 2023, the Company recorded $4.1 million in expenses
related to non-operating SIPs at other businesses.
Gain (Loss) on Marketable Equity Securities,
net
Overall, the Company recognized $16.8 million and $113.4 million
in net gains on marketable equity securities in the third quarter
and first nine months of 2023, respectively, compared to $54.3
million and $172.9 million in net losses on marketable equity
securities in the third quarter and first nine months of 2022,
respectively.
Other Non-Operating
Income
The Company recorded total other non-operating income, net, of
$3.6 million for the third quarter of 2023, compared to $2.4
million for the third quarter of 2022. The 2023 amounts included
$1.7 million in foreign currency gains; $1.1 million in gains
related to the sale of businesses and contingent consideration; a
$0.1 million gain on sale of a cost method investment, and other
items. The 2022 amounts included $1.4 million in gains related to
the sale of businesses and contingent consideration; a $0.6 million
fair value increase on a cost method investment, and other items;
partially offset by $0.4 million in foreign currency losses.
The Company recorded total non-operating income, net, of $22.5
million for the first nine months of 2023, compared to $6.4 million
for the first nine months of 2022. The 2023 amounts included a
non-cash gain of $10.0 million on the sale of Pinna; $4.3 million
in gains related to the sale of businesses and contingent
consideration; a $3.1 million fair value increase on cost method
investments; $1.8 million in foreign currency gains; a $1.0 million
gain on sales of cost method investments, and other items. The 2022
amounts included $3.1 million in gains related to the sale of
businesses and contingent consideration; $1.0 million in gains on
sales of cost method investments; a $0.6 million gain on sale of an
equity affiliate; a $0.6 million fair value increase on a cost
method investment, and other items; partially offset by $2.0
million in foreign currency losses.
Provision for Income Taxes
The Company’s effective tax rate for the first nine months of
2023 and 2022 was 31.1% and 29.6%, respectively.
Earnings Per Share
The calculation of diluted earnings per share for the third
quarter and first nine months of 2023 was based on 4,601,521 and
4,700,304 weighted average shares outstanding, respectively,
compared to 4,819,661 and 4,853,267, respectively, for the third
quarter and first nine months of 2022. At September 30, 2023, there
were 4,578,889 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 336,666 shares as of September 30, 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 2022
Annual Report to Stockholders, are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. Actual results may differ materially from those projected
as a result of certain risks and uncertainties. Other
forward-looking statements include comments about expectations
related to acquisitions or dispositions or related business
activities, including the TOSA, the Company’s business strategies
and objectives, the prospects for growth in the Company’s various
business operations and the Company’s future financial performance.
As with any projection or forecast, forward-looking statements are
subject to various risks and uncertainties, including the risks and
uncertainties described in Item 1A of the Company’s Annual Report
on Form 10-K, that could cause actual results or events to differ
materially from those anticipated in such statements. 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
September 30
%
(in thousands, except per share
amounts)
2023
2022
Change
Operating revenues
$
1,111,519
$
1,012,438
10
Operating expenses
1,036,344
918,614
13
Depreciation of property, plant and
equipment
22,207
19,657
13
Amortization of intangible assets
11,759
14,635
(20
)
Impairment of goodwill and other
long-lived assets
98,321
—
—
Operating (loss) income
(57,112
)
59,532
—
Equity in losses of affiliates, net
(791
)
(1,111
)
(29
)
Interest income
1,986
803
—
Interest expense
(11,810
)
(11,579
)
2
Non-operating pension and postretirement
benefit income, net
35,653
50,687
(30
)
Gain (loss) on marketable equity
securities, net
16,759
(54,250
)
—
Other income, net
3,581
2,358
52
(Loss) income before income
taxes
(11,734
)
46,440
—
Provision for income taxes
9,400
12,600
(25
)
Net (loss) income
(21,134
)
33,840
—
Net income attributable to
noncontrolling interests
(1,897
)
(1,060
)
79
Net (Loss) Income Attributable to
Graham Holdings Company Common Stockholders
$
(23,031
)
$
32,780
—
Per Share Information Attributable to
Graham Holdings Company Common Stockholders
Basic net (loss) income per common
share
$
(5.02
)
$
6.78
—
Basic average number of common shares
outstanding
4,602
4,808
Diluted net (loss) income per common
share
$
(5.02
)
$
6.76
—
Diluted average number of common shares
outstanding
4,602
4,820
GRAHAM HOLDINGS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine Months Ended
September 30
%
(in thousands, except per share
amounts)
2023
2022
Change
Operating revenues
$
3,248,064
$
2,860,461
14
Operating expenses
3,018,057
2,618,649
15
Depreciation of property, plant and
equipment
63,335
58,545
8
Amortization of intangible assets
39,007
44,436
(12
)
Impairment of goodwill and other
long-lived assets
99,066
—
—
Operating income
28,599
138,831
(79
)
Equity in (losses) earnings of affiliates,
net
(2,245
)
2,920
—
Interest income
4,738
2,214
—
Interest expense
(37,878
)
(38,969
)
(3
)
Non-operating pension and postretirement
benefit income, net
97,313
152,063
(36
)
Gain (loss) on marketable equity
securities, net
113,429
(172,878
)
—
Other income, net
22,458
6,410
—
Income before income taxes
226,414
90,591
—
Provision for income taxes
70,400
26,800
—
Net income
156,014
63,791
—
Net income attributable to
noncontrolling interests
(3,985
)
(2,872
)
39
Net Income Attributable to Graham
Holdings Company Common Stockholders
$
152,029
$
60,919
—
Per Share Information Attributable to
Graham Holdings Company Common Stockholders
Basic net income per common share
$
32.23
$
12.51
—
Basic average number of common shares
outstanding
4,686
4,841
Diluted net income per common share
$
32.14
$
12.48
—
Diluted average number of common shares
outstanding
4,700
4,853
GRAHAM HOLDINGS COMPANY
BUSINESS
DIVISION INFORMATION
(Unaudited)
Three Months Ended
Nine Months Ended
September 30
%
September 30
%
(in thousands)
2023
2022
Change
2023
2022
Change
Operating Revenues
Education
$
411,837
$
355,064
16
$
1,192,105
$
1,066,089
12
Television broadcasting
116,112
135,165
(14
)
347,818
380,970
(9
)
Manufacturing
109,216
122,964
(11
)
343,882
365,966
(6
)
Healthcare
116,164
87,176
33
331,505
230,816
44
Automotive
272,018
211,396
29
765,251
509,965
50
Other businesses
86,653
101,207
(14
)
269,110
308,150
(13
)
Corporate office
365
—
—
1,215
—
—
Intersegment elimination
(846
)
(534
)
—
(2,822
)
(1,495
)
—
$
1,111,519
$
1,012,438
10
$
3,248,064
$
2,860,461
14
Operating Expenses
Education
$
381,978
$
336,419
14
$
1,109,090
$
1,008,327
10
Television broadcasting
84,165
82,834
2
254,098
249,059
2
Manufacturing
150,190
113,317
33
365,546
341,842
7
Healthcare
110,193
81,128
36
314,221
212,147
48
Automotive
263,781
200,346
32
736,711
484,472
52
Other businesses
164,206
122,361
34
401,525
386,392
4
Corporate office
14,964
17,035
(12
)
41,096
40,886
1
Intersegment elimination
(846
)
(534
)
—
(2,822
)
(1,495
)
—
$
1,168,631
$
952,906
23
$
3,219,465
$
2,721,630
18
Operating Income (Loss)
Education
$
29,859
$
18,645
60
$
83,015
$
57,762
44
Television broadcasting
31,947
52,331
(39
)
93,720
131,911
(29
)
Manufacturing
(40,974
)
9,647
—
(21,664
)
24,124
—
Healthcare
5,971
6,048
(1
)
17,284
18,669
(7
)
Automotive
8,237
11,050
(25
)
28,540
25,493
12
Other businesses
(77,553
)
(21,154
)
—
(132,415
)
(78,242
)
(69
)
Corporate office
(14,599
)
(17,035
)
14
(39,881
)
(40,886
)
2
$
(57,112
)
$
59,532
—
$
28,599
$
138,831
(79
)
Amortization of Intangible Assets and
Impairment of Goodwill and Other Long-Lived Assets
Education
$
3,210
$
3,980
(19
)
$
11,610
$
12,190
(5
)
Television broadcasting
1,363
1,360
0
4,088
4,080
0
Manufacturing
51,489
5,076
—
60,683
15,403
—
Healthcare
866
905
(4
)
2,702
2,822
(4
)
Automotive
3
—
—
3
—
—
Other businesses
53,149
3,314
—
58,987
9,941
—
Corporate office
—
—
—
—
—
—
$
110,080
$
14,635
—
$
138,073
$
44,436
—
Operating Income (Loss) before
Amortization of Intangible Assets and Impairment of Goodwill and
Other Long-Lived Assets
Education
$
33,069
$
22,625
46
$
94,625
$
69,952
35
Television broadcasting
33,310
53,691
(38
)
97,808
135,991
(28
)
Manufacturing
10,515
14,723
(29
)
39,019
39,527
(1
)
Healthcare
6,837
6,953
(2
)
19,986
21,491
(7
)
Automotive
8,240
11,050
(25
)
28,543
25,493
12
Other businesses
(24,404
)
(17,840
)
(37
)
(73,428
)
(68,301
)
(8
)
Corporate office
(14,599
)
(17,035
)
14
(39,881
)
(40,886
)
2
$
52,968
$
74,167
(29
)
$
166,672
$
183,267
(9
)
Three Months Ended
Nine Months Ended
September 30
%
September 30
%
(in thousands)
2023
2022
Change
2023
2022
Change
Depreciation
Education
$
10,000
$
8,360
20
$
28,428
$
25,396
12
Television broadcasting
3,120
2,961
5
9,243
9,335
(1
)
Manufacturing
2,388
2,358
1
6,957
7,109
(2
)
Healthcare
1,411
590
—
3,802
1,455
—
Automotive
1,304
1,067
22
3,565
2,596
37
Other businesses
3,832
4,169
(8
)
10,882
12,198
(11
)
Corporate office
152
152
—
458
456
0
$
22,207
$
19,657
13
$
63,335
$
58,545
8
Pension Expense
Education
$
2,226
$
2,233
0
$
6,680
$
6,700
0
Television broadcasting
833
884
(6
)
2,498
2,666
(6
)
Manufacturing
280
276
1
836
828
1
Healthcare
3,521
138
—
10,563
417
—
Automotive
16
6
—
26
17
53
Other businesses
662
552
20
1,847
1,549
19
Corporate office
952
1,468
(35
)
2,856
4,404
(35
)
$
8,490
$
5,557
53
$
25,306
$
16,581
53
Adjusted Operating Cash Flow
(non-GAAP)(1)
Education
$
45,295
$
33,218
36
$
129,733
$
102,048
27
Television broadcasting
37,263
57,536
(35
)
109,549
147,992
(26
)
Manufacturing
13,183
17,357
(24
)
46,812
47,464
(1
)
Healthcare
11,769
7,681
53
34,351
23,363
47
Automotive
9,560
12,123
(21
)
32,134
28,106
14
Other businesses
(19,910
)
(13,119
)
(52
)
(60,699
)
(54,554
)
(11
)
Corporate office
(13,495
)
(15,415
)
12
(36,567
)
(36,026
)
(2
)
$
83,665
$
99,381
(16
)
$
255,313
$
258,393
(1
)
____________
(1)
Adjusted Operating Cash Flow (non-GAAP) is
calculated as Operating Income (Loss) before Amortization of
Intangible Assets and Impairment of Goodwill and Other Long-Lived
Assets plus Depreciation Expense and Pension Expense.
GRAHAM HOLDINGS COMPANY
EDUCATION
DIVISION INFORMATION
(Unaudited)
Three Months Ended
Nine Months Ended
September 30
%
September 30
%
(in thousands)
2023
2022
Change
2023
2022
Change
Operating Revenues
Kaplan international
$
249,976
$
193,085
29
$
714,715
$
598,469
19
Higher education
81,925
82,314
0
250,557
233,990
7
Supplemental education
78,332
79,566
(2
)
226,535
233,416
(3
)
Kaplan corporate and other
3,101
2,616
19
8,360
7,414
13
Intersegment elimination
(1,497
)
(2,517
)
—
(8,062
)
(7,200
)
—
$
411,837
$
355,064
16
$
1,192,105
$
1,066,089
12
Operating Expenses
Kaplan international
$
227,756
$
184,582
23
$
650,443
$
550,339
18
Higher education
73,460
73,250
0
217,214
216,567
0
Supplemental education
68,603
70,095
(2
)
209,543
215,745
(3
)
Kaplan corporate and other
10,513
7,232
45
28,434
20,852
36
Amortization of intangible assets
3,210
3,980
(19
)
11,133
12,190
(9
)
Impairment of long-lived assets
—
—
—
477
—
—
Intersegment elimination
(1,564
)
(2,720
)
—
(8,154
)
(7,366
)
—
$
381,978
$
336,419
14
$
1,109,090
$
1,008,327
10
Operating Income (Loss)
Kaplan international
$
22,220
$
8,503
—
$
64,272
$
48,130
34
Higher education
8,465
9,064
(7
)
33,343
17,423
91
Supplemental education
9,729
9,471
3
16,992
17,671
(4
)
Kaplan corporate and other
(7,412
)
(4,616
)
(61
)
(20,074
)
(13,438
)
(49
)
Amortization of intangible assets
(3,210
)
(3,980
)
19
(11,133
)
(12,190
)
9
Impairment of long-lived assets
—
—
—
(477
)
—
—
Intersegment elimination
67
203
—
92
166
—
$
29,859
$
18,645
60
$
83,015
$
57,762
44
Operating Income (Loss) before
Amortization of Intangible Assets and Impairment of Long-Lived
Assets
Kaplan international
$
22,220
$
8,503
—
$
64,272
$
48,130
34
Higher education
8,465
9,064
(7
)
33,343
17,423
91
Supplemental education
9,729
9,471
3
16,992
17,671
(4
)
Kaplan corporate and other
(7,412
)
(4,616
)
(61
)
(20,074
)
(13,438
)
(49
)
Intersegment elimination
67
203
—
92
166
—
$
33,069
$
22,625
46
$
94,625
$
69,952
35
Depreciation
Kaplan international
$
7,599
$
5,709
33
$
20,832
$
17,258
21
Higher education
1,258
1,050
20
3,431
3,256
5
Supplemental education
1,117
1,570
(29
)
4,087
4,787
(15
)
Kaplan corporate and other
26
31
(16
)
78
95
(18
)
$
10,000
$
8,360
20
$
28,428
$
25,396
12
Pension Expense
Kaplan international
$
83
$
67
24
$
244
$
202
21
Higher education
958
961
0
2,803
2,862
(2
)
Supplemental education
1,063
1,029
3
3,110
3,106
0
Kaplan corporate and other
122
176
(31
)
523
530
(1
)
$
2,226
$
2,233
0
$
6,680
$
6,700
0
Adjusted Operating Cash Flow
(non-GAAP)(1)
Kaplan international
$
29,902
$
14,279
—
$
85,348
$
65,590
30
Higher education
10,681
11,075
(4
)
39,577
23,541
68
Supplemental education
11,909
12,070
(1
)
24,189
25,564
(5
)
Kaplan corporate and other
(7,264
)
(4,409
)
(65
)
(19,473
)
(12,813
)
(52
)
Intersegment elimination
67
203
—
92
166
—
$
45,295
$
33,218
36
$
129,733
$
102,048
27
_________
(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 September
30
2023
2022
(in thousands, except per share
amounts)
(Loss) Income before income
taxes
Income Taxes
Net (Loss) Income
Income before income taxes
Income Taxes
Net Income
Amounts attributable to Graham Holdings
Company Common Stockholders
As reported
$
(11,734
)
$
9,400
$
(21,134
)
$
46,440
$
12,600
$
33,840
Attributable to noncontrolling
interests
(1,897
)
(1,060
)
Attributable to Graham Holdings Company
Stockholders
(23,031
)
32,780
Adjustments:
Net credit related to a fair value change
in contingent consideration from prior acquisitions
—
—
—
(1,720
)
—
(1,720
)
Goodwill and other long-lived asset
impairment charges
98,321
13,876
84,445
—
—
—
Net (gains) losses on marketable equity
securities
(16,758
)
(4,411
)
(12,347
)
54,250
14,094
40,156
Net losses of affiliates whose operations
are not managed by the Company
2,836
746
2,090
2,732
709
2,023
Non-operating gain from the write-up of a
cost method investment
—
—
—
(560
)
(146
)
(414
)
Credit to interest expense resulting from
gains realized related to the termination of interest rate
swaps
(4,581
)
(1,252
)
(3,329
)
—
—
—
Interest expense related to the fair value
adjustment of the mandatorily redeemable noncontrolling
interest
1,132
105
1,027
1,369
21
1,348
Net income, adjusted (non-GAAP)
$
48,855
$
74,173
Per share information attributable to
Graham Holdings Company Common Stockholders
Diluted income (loss) per common share, as
reported
$
(5.02
)
$
6.76
Adjustments:
Net credit related to a fair value change
in contingent consideration from prior acquisitions
—
(0.35
)
Goodwill and other long-lived asset
impairment charges
18.18
—
Net (gains) losses on marketable equity
securities
(2.66
)
8.28
Net losses of affiliates whose operations
are not managed by the Company
0.45
0.42
Non-operating gain from the write-up of a
cost method investment
—
(0.09
)
Credit to interest expense resulting from
gains realized related to the termination of interest rate
swaps
(0.72
)
—
Interest expense related to the fair value
adjustment of the mandatorily redeemable noncontrolling
interest
0.22
0.28
Diluted income per common share, adjusted
(non-GAAP)
$
10.45
$
15.30
The adjusted diluted per share amounts may
not compute due to rounding.
Nine Months Ended September
30
2023
2022
(in thousands, except per share
amounts)
Income before income
taxes
Income Taxes
Net Income
Income before income taxes
Income Taxes
Net Income
Amounts attributable to Graham Holdings
Company Common Stockholders
As reported
$
226,414
$
70,400
$
156,014
$
90,591
$
26,800
$
63,791
Attributable to noncontrolling
interests
(3,985
)
(2,872
)
Attributable to Graham Holdings Company
Stockholders
152,029
60,919
Adjustments:
Net credit related to a fair value change
in contingent consideration from prior acquisitions
(4,150
)
(26
)
(4,124
)
(4,883
)
(24
)
(4,859
)
Goodwill and other long-lived asset
impairment charges
99,066
14,078
84,988
—
—
—
Charges related to non-operating
Separation Incentive Programs
9,646
2,481
7,165
—
—
—
Net (gains) losses on marketable equity
securities
(113,429
)
(29,861
)
(83,568
)
172,878
45,013
127,865
Net losses of affiliates whose operations
are not managed by the Company
9,657
2,542
7,115
2,806
729
2,077
Gain on sale of Pinna
(10,033
)
(2,641
)
(7,392
)
—
—
—
Non-operating gain from write-up and sales
of equity and cost method investments
(3,935
)
(1,008
)
(2,927
)
(2,239
)
(567
)
(1,672
)
Credit to interest expense resulting from
gains realized related to the termination of interest rate
swaps
(4,581
)
(1,252
)
(3,329
)
—
—
—
Net interest expense related to the fair
value adjustment of the mandatorily redeemable noncontrolling
interest
1,421
152
1,269
12,799
531
12,268
Net income, adjusted (non-GAAP)
$
151,226
$
196,598
Per share information attributable to
Graham Holdings Company Common Stockholders
Diluted income per common share, as
reported
$
32.14
$
12.48
Adjustments:
Net credit related to a fair value change
in contingent consideration from prior acquisitions
(0.89
)
(1.00
)
Goodwill and other long-lived asset
impairment charges
18.30
—
Charges related to non-operating
Separation Incentive Programs
1.54
—
Net (gains) losses on marketable equity
securities
(17.99
)
26.19
Net losses of affiliates whose operations
are not managed by the Company
1.53
0.43
Gain on sale of Pinna
(1.59
)
—
Non-operating gain from write-up and sales
of equity and cost method investments
(0.63
)
(0.34
)
Credit to interest expense resulting from
gains realized related to the termination of interest rate
swaps
(0.72
)
—
Net interest expense related to the fair
value adjustment of the mandatorily redeemable noncontrolling
interest
0.27
2.51
Diluted income per common share, adjusted
(non-GAAP)
$
31.96
$
40.27
The adjusted diluted per share amounts may
not compute due to rounding.
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version on businesswire.com: https://www.businesswire.com/news/home/20231031399360/en/
Wallace R. Cooney (703) 345-6470
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