Graham Holdings Company Reports 2023 and Fourth Quarter Earnings

ARLINGTON, Va.--(BUSINESS WIRE)--Graham Holdings Company (NYSE: GHC) today reported its financial results for the fourth quarter and full year of 2023. The Company also filed its Form 10-K today for the year ended December 31, 2023 with the Securities and Exchange Commission.

Division Operating Results

Revenue for 2023 was $4,414.9 million, up 12% from $3,924.5 million in 2022. Revenues increased at education, healthcare and automotive, partially offset by declines at television broadcasting, manufacturing and other businesses. The Company reported operating income for 2023 of $69.4 million, compared to $83.9 million in 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 and manufacturing, partially offset by increases at education, healthcare and automotive, and reduced losses at other businesses due to goodwill and other long-lived asset impairment charges in 2022 at Society6 and Saatchi Art (both formerly included in Leaf Marketplace). The Company reported adjusted operating cash flow (non-GAAP) for 2023 of $338.3 million, compared to $377.6 million in 2022. Adjusted operating cash flow declined at television broadcasting, manufacturing and other businesses, partially offset by increases at education, healthcare and automotive.

For the fourth quarter of 2023, revenue was $1,166.8 million, up 10% from $1,064.0 million in 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 $40.8 million in the fourth quarter of 2023, compared to an operating loss of $54.9 million in 2022. The increase in operating results is due to goodwill and other long-lived asset impairment charges at Society6 and Saatchi Art in 2022 and increases at healthcare and automotive, partially offset by declines at education, television broadcasting and manufacturing. The Company reported adjusted operating cash flow (non-GAAP) for the fourth quarter of 2023 of $83.0 million, compared to $119.2 million in 2022. Adjusted operating cash flow declined at education, television broadcasting and manufacturing, partially offset by increases at healthcare and automotive.

Acquisitions and Dispositions of Businesses

There were no significant business acquisitions or dispositions during the fourth quarter of 2023.

Debt, Cash and Marketable Equity Securities

At December 31, 2023, the Company had $811.8 million in borrowings outstanding at an average interest rate of 6.4%, including $97.9 million outstanding on its $300 million revolving credit facility. Cash, marketable equity securities and other investments totaled $898.9 million at December 31, 2023.

At December 31, 2022, the Company had $726.4 million in borrowings outstanding at an average interest rate of 5.7%, including $200.2 million outstanding on its $300 million revolving credit facility. Cash, marketable equity securities and other investments totaled $812.8 million at December 31, 2022.

The Company recognized $24.6 million and $33.3 million in net gains on marketable equity securities in the fourth quarter of 2023 and 2022, respectively.

Common Stock Repurchases

During the fourth quarter of 2023, the Company purchased a total of 100,263 shares of its Class B common stock at a cost of $62.1 million. At December 31, 2023, there were 4,478,810 shares outstanding. On May 4, 2023, the Board of Directors authorized the Company to acquire up to 500,000 shares of Class B common stock; the Company has remaining authorization for 236,403 shares as of December 31, 2023.

Pension Plan

At December 31, 2023, the Company had a pension surplus of $2,113.6 million, reported in the Company's Consolidated Balance Sheet as Prepaid Pension Cost, an increase from $1,658.0 million at December 31, 2022.

Overall Company Results

The Company reported net income attributable to common shares of $205.3 million ($43.82 per share) for the year ended December 31, 2023, compared to $67.1 million ($13.79 per share) for the year ended December 31, 2022. For the fourth quarter of 2023, the Company reported net income attributable to common shares of $53.3 million ($11.72 per share), compared to $6.2 million ($1.28 per share) for the same period of 2022.

The results for 2023 and 2022 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 $200.5 million ($42.78 per share) for 2023, compared to $287.2 million ($59.03 per share) for 2022. Excluding these items, net income attributable to common shares was $49.7 million ($10.94 per share) for the fourth quarter of 2023, compared to $90.5 million ($18.80 per share) for the fourth quarter of 2022.

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

Additional Commentary on Fourth Quarter 2023 Results

Division Results

Education

For the fourth quarter of 2023, education division revenue totaled $395.5 million, up 9% from $361.8 million for the same period of 2022. Kaplan reported operating income for the fourth quarter of 2023 of $21.5 million, compared to $25.2 million in the fourth quarter of 2022.

Kaplan International revenue increased 16% in the fourth quarter of 2023 (11% on a constant currency basis). The increase is due largely to growth at Pathways and Australia. Kaplan International reported operating income of $23.3 million for the fourth quarter of 2023, a small decline from $23.9 million in 2022. The decrease is due to lower earnings at UK Professional and increased incentive compensation costs, partially offset by improved results at Australia and Singapore.

Higher Education revenue in the fourth quarter of 2023 was flat compared to the same period of 2022. Kaplan recorded $11.3 million in fees from Purdue Global in its Higher Education operating results for each of the fourth quarters of 2023 and 2022. Higher education results declined in the fourth quarter of 2023 due to increased other higher education development costs.

Supplemental Education revenue declined 3% in the fourth quarter of 2023, 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. Operating results improved in the fourth quarter of 2023 due to savings from reduced headcount, partially offset by lower revenues.

In the fourth quarter of 2022, Kaplan implemented a Separation Incentive Program (SIP) to reduce the number of employees at Supplemental Education and Higher Education, which was funded by the assets of the Company's pension plan. In connection with the SIP, the Company recorded $3.6 million in non-operating pension expense in the fourth quarter of 2022.

Kaplan corporate and other expenses increased in the fourth quarter of 2023 due to higher incentive compensation costs compared to the fourth quarter of 2022.

Television Broadcasting

For the fourth quarter of 2023, revenue decreased 19% to $124.6 million, from $154.7 million in 2022, due primarily to a $34.0 million decline in political advertising revenue as well as a small decline in retransmission revenues, partially offset by increased digital advertising revenues. Operating income for the fourth quarter of 2023 declined 43% to $40.2 million, from $70.0 million in the same period of 2022, due to reduced revenues and higher network fees.

Manufacturing

Manufacturing revenues decreased 14% in the fourth quarter of 2023 due to lower revenues at Hoover, Dekko and Joyce, partially offset by increased revenues at Forney. The revenue decline at Hoover is due to lower wood prices and a decrease in overall product demand, partially offset by increased rates. Revenues declined at Dekko due largely to lower product demand, particularly in the commercial office electrical products sector. In the fourth quarter of 2023, Hoover results included wood gains on inventory sales, compared to modest losses in the fourth quarter of 2022. Operating results were down in the fourth quarter of 2023 due to a decline in results at Hoover, Dekko and Joyce, partially offset by improved results at Forney.

Healthcare

Healthcare revenues increased 34% in the fourth quarter of 2023, largely due to significant growth at CSI and from businesses acquired in 2022, along with growth in home health and hospice services.

Graham Healthcare Group (GHG) recorded pension expense of $3.4 million related to the pension credit retention program in the fourth quarter of 2023. In the fourth quarter of 2022, GHG recorded pension expense of $10.5 million related to this program. Of this amount, $7.8 million related to the first three quarters of 2022; the Company concluded that this adjustment was not material to the Company's operating results for the relevant interim periods. The improvement in GHG operating results in the fourth quarter of 2023 is due to higher pension expense in the fourth quarter of 2022 related to the GHG pension credit retention program and improved results at CSI, partially offset by increased net losses from newly acquired businesses and a decline in home health and hospice results. Adjusted operating cash flow (non-GAAP) at GHG increased to $12.7 million in the fourth quarter of 2023, from $10.5 million in the fourth quarter of 2022.

GHG recorded equity in earnings of $3.1 million and $2.9 million for the fourth quarter of 2023 and 2022, respectively, related to its interests in home health and hospice joint ventures.

Automotive

Revenues for the fourth quarter of 2023 increased due to the acquisition of the Toyota of Richmond dealership and sales growth at the other dealerships, except for the Jeep dealership, which had lower revenues due a decline in new vehicle sales, and a small revenue decline at CDJR. Operating results for the fourth quarter of 2023 improved due largely to the Toyota of Richmond acquisition, partially offset by declines at the Jeep and CDJR dealerships.

Other Businesses

A summary of revenue by category for other businesses:

		Three Months Ended
		December 31						%
(in thousands)			2023			2022		Change
Operating Revenues
Retail (1)		$	34,108		$	41,335		(17	)
Media (2)			28,131			30,449		(8	)
Specialty (3)			38,304			36,150		6
		$	100,543		$	107,934		(7	)

____________
(1)		Includes Society6 and Saatchi Art (formerly Leaf Marketplace) and Framebridge
(2)		Includes WGB (formerly Leaf Media), Code3, Slate, Foreign Policy, Pinna and City Cast
(3)		Includes Clyde's Restaurant Group, Decile and CyberVista

Overall, revenue from other businesses declined 7% in the fourth quarter of 2023. Retail revenue declined largely due to significantly lower revenue at Society6, partially offset by revenue growth at Framebridge and Saatchi Art. Media revenue declined due to lower revenue at WGB and Code3, partially offset by revenue growth at Slate, Foreign Policy and City Cast. Specialty revenue increased due to revenue growth at Clyde's Restaurant Group (CRG). Excluding the former Leaf businesses, revenues from other businesses increased in the fourth quarter of 2023.

Operating results improved in the fourth quarter of 2023 due to the $129.0 million in impairment charges at the former Leaf businesses recorded in the fourth quarter of 2022. Excluding the impairment charges, operating results declined in the fourth quarter of 2023, due to increased losses at the former Leaf businesses and Framebridge, partially offset by improved results at Code3, Slate, Foreign Policy and CRG and a reduction in losses due to the sales of Pinna and CyberVista. In the fourth quarter of 2023, the former Leaf businesses continued to incur transition-related costs in connection with the overall restructuring of Leaf into three stand-alone businesses. Adjusted operating cash flow losses (non-GAAP) at other businesses declined slightly to $20.0 million in the fourth quarter of 2023, from $20.3 million in the fourth quarter of 2022.

In the fourth quarter of 2022, the former Leaf businesses recorded a net depreciation expense credit of $5.9 million that related to the period from June 2021 through September 30, 2022; the Company concluded that this adjustment was not material to the Company's operating results for the relevant periods.

Equity in Losses of Affiliates

Overall, the Company recorded equity in losses of affiliates of $2.9 million for the fourth quarter of 2023, compared to $5.8 million for 2022. These amounts include $6.4 million and $9.0 million in net losses for 2023 and 2022, respectively, from affiliates whose operations are not managed by the Company.

Net Interest Expense

The Company incurred net interest expense of $23.0 million and $14.4 million for the fourth quarter of 2023 and 2022, respectively. The Company recorded interest expense of $8.7 million and $3.7 million in the fourth quarter of 2023 and 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.

Non-Operating Pension and Postretirement Benefit Income, Net

The Company recorded net non-operating pension and postretirement benefit income of $36.5 million for the fourth quarter of 2023, compared to $45.9 million for the fourth quarter of 2022.

In the fourth quarter of 2023, the Company recorded $0.2 million in expenses related to a non-operating SIP at the television broadcasting division. In the fourth quarter of 2022, the Company recorded $3.6 million in expenses related to a non-operating SIP at the education division.

Other Non-Operating (Expense) Income

For the fourth quarter of 2023, the Company recorded other non-operating expense, net, of $3.4 million, compared to non-operating income, net, of $27.1 million for the fourth quarter of 2022. The 2023 amounts included $3.0 million in foreign currency losses; a $0.5 million impairment on a cost method investment, and other items; partially offset by $1.3 million in gains related to sales of businesses and contingent consideration. The 2022 amounts included a non-cash gain of $18.4 million on the sale of CyberVista; a $6.3 million increase in the fair value of cost method investments; a $2.3 million gain on sale of a cost method investment; $1.3 million in gains related to sales of businesses and contingent consideration and other items; partially offset by a $1.3 million impairment on a cost method investment and other items.

Earnings Per Share

The calculation of diluted earnings per share for the fourth quarter of 2023 was based on 4,515,022 weighted average shares outstanding compared to 4,785,904 for the fourth quarter of 2022.

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
	December 31							%
(in thousands, except per share amounts)		2023				2022		Change
Operating revenues	$	1,166,813			$	1,064,032		10
Operating expenses		1,092,258				960,808		14
Depreciation of property, plant and equipment		22,729				14,752		54
Amortization of intangible assets		11,032				14,415		(23	)
Impairment of goodwill and other long-lived assets		-				128,990		-
Operating income (loss)		40,794				(54,933	)	-
Equity in losses of affiliates, net		(2,938	)			(5,757	)	(49	)
Interest income		2,384				1,012		-
Interest expense		(25,423	)			(15,434	)	65
Non-operating pension and postretirement benefit income, net		36,499				45,876		(20	)
Gain on marketable equity securities, net		24,638				33,289		(26	)
Other (expense) income, net		(3,364	)			27,090		-
Income before income taxes		72,590				31,143		-
Provision for income taxes		16,900				24,500		(31	)
Net income		55,690				6,643		-
Net income attributable to noncontrolling interests		(2,431	)			(483	)	-
Net Income Attributable to Graham Holdings Company Common Stockholders	$	53,259			$	6,160		-
Per Share Information Attributable to Graham Holdings Company Common Stockholders
Basic net income per common share	$	11.76			$	1.28		-
Basic average number of common shares outstanding		4,498				4,771
Diluted net income per common share	$	11.72			$	1.28		-
Diluted average number of common shares outstanding		4,515				4,786

GRAHAM HOLDINGS COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Twelve Months Ended
	December 31							%
(in thousands, except per share amounts)		2023				2022		Change
Operating revenues	$	4,414,877			$	3,924,493		12
Operating expenses		4,110,315				3,579,457		15
Depreciation of property, plant and equipment		86,064				73,297		17
Amortization of intangible assets		50,039				58,851		(15	)
Impairment of goodwill and other long-lived assets		99,066				128,990		(23	)
Operating income		69,393				83,898		(17	)
Equity in losses of affiliates, net		(5,183	)			(2,837	)	83
Interest income		7,122				3,226		-
Interest expense		(63,301	)			(54,403	)	16
Non-operating pension and postretirement benefit income, net		133,812				197,939		(32	)
Gain (loss) on marketable equity securities, net		138,067				(139,589	)	-
Other income, net		19,094				33,500		(43	)
Income before income taxes		299,004				121,734		-
Provision for income taxes		87,300				51,300		70
Net income		211,704				70,434		-
Net income attributable to noncontrolling interests		(6,416	)			(3,355	)	91
Net Income Attributable to Graham Holdings Company Common Stockholders	$	205,288			$	67,079		-
Per Share Information Attributable to Graham Holdings Company Common Stockholders
Basic net income per common share	$	43.96			$	13.83		-
Basic average number of common shares outstanding		4,639				4,823
Diluted net income per common share	$	43.82			$	13.79		-
Diluted average number of common shares outstanding		4,654				4,836

GRAHAM HOLDINGS COMPANY
BUSINESS DIVISION INFORMATION
(Unaudited)
		Three Months Ended											Twelve Months Ended
		December 31								%			December 31								%
(in thousands)			2023				2022			Change				2023				2022			Change
Operating Revenues
Education		$	395,476			$	361,826			9			$	1,587,581			$	1,427,915			11
Television broadcasting			124,618				154,681			(19	)			472,436				535,651			(12	)
Manufacturing			104,028				120,677			(14	)			447,910				486,643			(8	)
Healthcare			127,976				95,184			34				459,481				326,000			41
Automotive			314,642				224,220			40				1,079,893				734,185			47
Other businesses			100,543				107,934			(7	)			369,653				416,084			(11	)
Corporate office			365				-			-				1,580				-			-
Intersegment elimination			(835	)			(490	)		-				(3,657	)			(1,985	)		-
		$	1,166,813			$	1,064,032			10			$	4,414,877			$	3,924,493			12
Operating Expenses
Education		$	374,020			$	336,655			11			$	1,483,110			$	1,344,982			10
Television broadcasting			84,400				84,713			0				338,498				333,772			1
Manufacturing			99,157				111,094			(11	)			464,703				452,936			3
Healthcare			121,415				98,588			23				435,636				310,735			40
Automotive			303,924				215,080			41				1,040,635				699,552			49
Other businesses			127,854				258,045			(50	)			529,379				644,437			(18	)
Corporate office			16,084				15,280			5				57,180				56,166			2
Intersegment elimination			(835	)			(490	)		-				(3,657	)			(1,985	)		-
		$	1,126,019			$	1,118,965			1			$	4,345,484			$	3,840,595			13
Operating Income (Loss)
Education		$	21,456			$	25,171			(15	)		$	104,471			$	82,933			26
Television broadcasting			40,218				69,968			(43	)			133,938				201,879			(34	)
Manufacturing			4,871				9,583			(49	)			(16,793	)			33,707			-
Healthcare			6,561				(3,404	)		-				23,845				15,265			56
Automotive			10,718				9,140			17				39,258				34,633			13
Other businesses			(27,311	)			(150,111	)		82				(159,726	)			(228,353	)		30
Corporate office			(15,719	)			(15,280	)		(3	)			(55,600	)			(56,166	)		1
		$	40,794			$	(54,933	)		-			$	69,393			$	83,898			(17	)
Amortization of Intangible Assets and Impairment of Goodwill and Other Long-Lived Assets
Education		$	2,943			$	3,980			(26	)		$	14,553			$	16,170			(10	)
Television broadcasting			1,362				1,360			0				5,450				5,440			0
Manufacturing			3,120				4,969			(37	)			63,803				20,372			-
Healthcare			973				954			2				3,675				3,776			(3	)
Automotive			10				-			-				13				-			-
Other businesses			2,624				132,142			(98	)			61,611				142,083			(57	)
Corporate office			-				-			-				-				-			-
		$	11,032			$	143,405			(92	)		$	149,105			$	187,841			(21	)
Operating Income (Loss) before Amortization of Intangible Assets and Impairment of Goodwill and Other Long-Lived Assets
Education		$	24,399			$	29,151			(16	)		$	119,024			$	99,103			20
Television broadcasting			41,580				71,328			(42	)			139,388				207,319			(33	)
Manufacturing			7,991				14,552			(45	)			47,010				54,079			(13	)
Healthcare			7,534				(2,450	)		-				27,520				19,041			45
Automotive			10,728				9,140			17				39,271				34,633			13
Other businesses			(24,687	)			(17,969	)		(37	)			(98,115	)			(86,270	)		(14	)
Corporate office			(15,719	)			(15,280	)		(3	)			(55,600	)			(56,166	)		1
		$	51,826			$	88,472			(41	)		$	218,498			$	271,739			(20	)
		Three Months Ended											Twelve Months Ended
		December 31								%			December 31								%
(in thousands)			2023				2022			Change				2023				2022			Change
Depreciation
Education		$	9,759			$	8,718			12			$	38,187			$	34,114			12
Television broadcasting			2,981				2,959			1				12,224				12,294			(1	)
Manufacturing			2,496				2,290			9				9,453				9,399			1
Healthcare			1,673				2,326			(28	)			5,475				3,781			45
Automotive			1,612				1,113			45				5,177				3,709			40
Other businesses			4,059				(2,806	)		-				14,941				9,392			59
Corporate office			149				152			(2	)			607				608			0
		$	22,729			$	14,752			54			$	86,064			$	73,297			17
Pension Expense
Education		$	2,227			$	2,234			0			$	8,907			$	8,934			0
Television broadcasting			833				888			(6	)			3,331				3,554			(6	)
Manufacturing			279				276			1				1,115				1,104			1
Healthcare			3,520				10,591			(67	)			14,083				11,008			28
Automotive			9				5			80				35				22			59
Other businesses			661				524			26				2,508				2,073			21
Corporate office			952				1,468			(35	)			3,808				5,872			(35	)
		$	8,481			$	15,986			(47	)		$	33,787			$	32,567			4
Adjusted Operating Cash Flow (non-GAAP)(1)
Education		$	36,385			$	40,103			(9	)		$	166,118			$	142,151			17
Television broadcasting			45,394				75,175			(40	)			154,943				223,167			(31	)
Manufacturing			10,766				17,118			(37	)			57,578				64,582			(11	)
Healthcare			12,727				10,467			22				47,078				33,830			39
Automotive			12,349				10,258			20				44,483				38,364			16
Other businesses			(19,967	)			(20,251	)		1				(80,666	)			(74,805	)		(8	)
Corporate office			(14,618	)			(13,660	)		(7	)			(51,185	)			(49,686	)		(3	)
		$	83,036			$	119,210			(30	)		$	338,349			$	377,603			(10	)

____________
(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											Twelve Months Ended
		December 31								%			December 31								%
(in thousands)			2023				2022			Change				2023				2022			Change
Operating Revenues
Kaplan international		$	252,164			$	217,770			16			$	966,879			$	816,239			18
Higher education			76,404				76,417			0				326,961				310,407			5
Supplemental education			66,241				68,209			(3	)			292,776				301,625			(3	)
Kaplan corporate and other			2,652				2,439			9				11,012				9,853			12
Intersegment elimination			(1,985	)			(3,009	)		-				(10,047	)			(10,209	)		-
		$	395,476			$	361,826			9			$	1,587,581			$	1,427,915			11
Operating Expenses
Kaplan international		$	228,906			$	193,834			18			$	879,349			$	744,173			18
Higher education			70,805				69,021			3				288,019				285,588			1
Supplemental education			60,761				64,811			(6	)			270,304				280,556			(4	)
Kaplan corporate and other			12,469				7,807			60				40,903				28,659			43
Amortization of intangible assets			2,943				3,980			(26	)			14,076				16,170			(13	)
Impairment of long-lived assets			-				-			-				477				-			-
Intersegment elimination			(1,864	)			(2,798	)		-				(10,018	)			(10,164	)		-
		$	374,020			$	336,655			11			$	1,483,110			$	1,344,982			10
Operating Income (Loss)
Kaplan international		$	23,258			$	23,936			(3	)		$	87,530			$	72,066			21
Higher education			5,599				7,396			(24	)			38,942				24,819			57
Supplemental education			5,480				3,398			61				22,472				21,069			7
Kaplan corporate and other			(9,817	)			(5,368	)		(83	)			(29,891	)			(18,806	)		(59	)
Amortization of intangible assets			(2,943	)			(3,980	)		26				(14,076	)			(16,170	)		13
Impairment of long-lived assets			-				-			-				(477	)			-			-
Intersegment elimination			(121	)			(211	)		-				(29	)			(45	)		-
		$	21,456			$	25,171			(15	)		$	104,471			$	82,933			26
Operating Income (Loss) before Amortization of Intangible Assets and Impairment of Long-Lived Assets
Kaplan international		$	23,258			$	23,936			(3	)		$	87,530			$	72,066			21
Higher education			5,599				7,396			(24	)			38,942				24,819			57
Supplemental education			5,480				3,398			61				22,472				21,069			7
Kaplan corporate and other			(9,817	)			(5,368	)		(83	)			(29,891	)			(18,806	)		(59	)
Intersegment elimination			(121	)			(211	)		-				(29	)			(45	)		-
		$	24,399			$	29,151			(16	)		$	119,024			$	99,103			20
Depreciation
Kaplan international		$	7,669			$	6,012			28			$	28,501			$	23,270			22
Higher education			985				1,117			(12	)			4,416				4,373			1
Supplemental education			1,078				1,557			(31	)			5,165				6,344			(19	)
Kaplan corporate and other			27				32			(16	)			105				127			(17	)
		$	9,759			$	8,718			12			$	38,187			$	34,114			12
Pension Expense
Kaplan international		$	81			$	68			19			$	325			$	270			20
Higher education			934				980			(5	)			3,737				3,842			(3	)
Supplemental education			1,037				1,008			3				4,147				4,114			1
Kaplan corporate and other			175				178			(2	)			698				708			(1	)
		$	2,227			$	2,234			0			$	8,907			$	8,934			0
Adjusted Operating Cash Flow (non-GAAP)(1)
Kaplan international		$	31,008			$	30,016			3			$	116,356			$	95,606			22
Higher education			7,518				9,493			(21	)			47,095				33,034			43
Supplemental education			7,595				5,963			27				31,784				31,527			1
Kaplan corporate and other			(9,615	)			(5,158	)		(86	)			(29,088	)			(17,971	)		(62	)
Intersegment elimination			(121	)			(211	)		-				(29	)			(45	)		-
		$	36,385			$	40,103			(9	)		$	166,118			$	142,151			17

____________
(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 Statement 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 December 31
	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	$	72,590			$	16,900			$	55,690			$	31,143			$	24,500			$	6,643
Attributable to noncontrolling interests										(2,431	)											(483	)
Attributable to Graham Holdings Company Stockholders										53,259												6,160
Adjustments:
Net credit related to fair value changes in contingent consideration from prior acquisitions		(2,267	)			(330	)			(1,937	)			(1,317	)			(10	)			(1,307	)
Goodwill and other long-lived asset impairment charges		-				(3,874	)			3,874				128,990				11,953				117,037
Charges related to non-operating Separation Incentive Programs		240				61				179				3,624				915				2,709
Net gains on marketable equity securities		(24,639	)			(5,491	)			(19,148	)			(33,289	)			(8,266	)			(25,023	)
Net losses of affiliates whose operations are not managed by the Company		6,391				1,637				4,754				9,026				2,386				6,640
Gain on sale of CyberVista		-				-				-				(18,355	)			(4,832	)			(13,523	)
Non-operating loss (gain), net, from write-ups, sales and impairments of cost and equity method investments		500				111				389				(7,268	)			(1,889	)			(5,379	)
Interest expense related to the fair value adjustment of the mandatorily redeemable noncontrolling interest		8,701				377				8,324				3,690				537				3,153
Net Income, adjusted (non-GAAP)									$	49,694											$	90,467
Per share information attributable to Graham Holdings Company Common Stockholders
Diluted income per common share, as reported									$	11.72											$	1.28
Adjustments:
Net credit related to fair value changes in contingent consideration from prior acquisitions										(0.43	)											(0.27	)
Goodwill and other long-lived asset impairment charges										0.85												24.32
Charges related to non-operating Separation Incentive Programs										0.04												0.56
Net gains on marketable equity securities										(4.21	)											(5.20	)
Net losses of affiliates whose operations are not managed by the Company										1.05												1.38
Gain on sale of CyberVista										-												(2.81	)
Non-operating loss (gain), net, from write-ups, sales and impairments of cost and equity method investments										0.09												(1.12	)
Interest expense related to the fair value adjustment of the mandatorily redeemable noncontrolling interest										1.83												0.66
Diluted income per common share, adjusted (non-GAAP)									$	10.94											$	18.80
The adjusted diluted per share amounts may not compute due to rounding.

	Twelve Months Ended December 31
	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	$	299,004			$	87,300			$	211,704			$	121,734			$	51,300			$	70,434
Attributable to noncontrolling interests										(6,416	)											(3,355	)
Attributable to Graham Holdings Company Stockholders									$	205,288											$	67,079
Adjustments:
Net credit related to fair value changes in contingent consideration from prior acquisitions		(6,955	)			(473	)			(6,482	)			(6,113	)			(34	)			(6,079	)
Goodwill and other long-lived asset impairment charges		99,066				10,204				88,862				128,990				11,953				117,037
Charges related to non-operating Separation Incentive Programs		9,886				2,542				7,344				3,624				915				2,709
Net (gains) losses on marketable equity securities		(138,067	)			(35,351	)			(102,716	)			139,589				36,747				102,842
Net losses of affiliates whose operations are not managed by the Company		16,047				4,178				11,869				11,832				3,115				8,717
Gain on sale of Pinna and CyberVista		(10,033	)			(2,641	)			(7,392	)			(18,355	)			(4,832	)			(13,523	)
Non-operating gain, net, from write-ups, sales and impairments of cost and equity method investments		(3,435	)			(896	)			(2,539	)			(9,507	)			(2,456	)			(7,051	)
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		10,122				529				9,593				16,489				1,068				15,421
Net Income, adjusted (non-GAAP)									$	200,498											$	287,152
Per share information attributable to Graham Holdings Company Common Stockholders
Diluted income per common share, as reported									$	43.82											$	13.79
Adjustments:
Net credit related to fair value changes in contingent consideration from prior acquisitions										(1.38	)											(1.25	)
Goodwill and other long-lived asset impairment charges										18.97												24.06
Charges related to non-operating Separation Incentive Programs										1.57												0.56
Net (gains) losses on marketable equity securities										(21.93	)											21.14
Net losses of affiliates whose operations are not managed by the Company										2.53												1.79
Gain on sale of Pinna and CyberVista										(1.59	)											(2.78	)
Non-operating gain, net, from write-ups, sales and impairments of cost and equity method investments										(0.54	)											(1.45	)
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										2.05												3.17
Diluted income per common share, adjusted (non-GAAP)									$	42.78											$	59.03
The adjusted diluted per share amounts may not compute due to rounding.

Contacts

Wallace R. Cooney
[phone]