Graham Holdings(US:GHC)2025-10-29 12:18Financial Performance - The Company reported net income of $122.9 million ($27.91 per share) for Q3 2025, up from $72.5 million ($16.42 per share) in Q3 2024, representing a 69.5% increase in net income [152]. - Revenue for Q3 2025 was $1,278.9 million, a 6% increase from $1,207.2 million in Q3 2024, driven by growth in education, manufacturing, and healthcare [152]. - For the first nine months of 2025, net income was $183.6 million ($41.75 per share), compared to $175.8 million ($39.49 per share) for the same period in 2024, reflecting a 4.1% increase [153]. - The Company reported operating income of $67.1 million for Q3 2025, down from $81.6 million in Q3 2024, attributed to declines in television broadcasting and automotive sectors [152]. - For the first nine months of 2025, revenue was $3,660.5 million, a 3% increase from $3,545.1 million in the same period of 2024, with growth in education, manufacturing, and healthcare [155]. Segment Performance - Education division revenue for Q3 2025 was $472.7 million, up 8% from $438.1 million in Q3 2024, with operating income increasing to $49.1 million from $34.9 million [156]. - Kaplan International revenue increased by 6% in Q3 2025, with operating income rising to $28.9 million from $25.5 million in Q3 2024 [159]. - Higher Education revenue increased by 8% for both Q3 and the first nine months of 2025, primarily due to a rise in fees from Purdue Global [160]. - Manufacturing revenue increased by 30% in Q3 2025 and 6% for the first nine months, driven by Hoover, Dekko, and Joyce, despite lower revenues at Forney [168]. - Healthcare revenue rose by 34% in Q3 2025 and 36% for the first nine months, largely due to growth at CSI and home health services [170]. - Automotive revenue decreased by 1% in Q3 2025 and 6% for the first nine months, primarily due to declines in new and used vehicle sales [175]. Non-Operating Income and Expenses - The Company experienced a net non-operating gain of $17.1 million from earnings and impairment of equity and cost method investments in Q3 2025 [154]. - The Company recorded equity in earnings of $2.9 million from home health and hospice joint ventures in Q3 2025 [172]. - The Company recorded equity in earnings of affiliates of $15.8 million for Q3 2025, compared to losses of $13.4 million in Q3 2024, including a gain of $18.6 million from Intersection [188]. - Net interest expense decreased to $15.7 million in Q3 2025 from $23.6 million in Q3 2024, reflecting lower interest rates on variable debt [190]. - Non-operating pension and postretirement benefit income was $31.0 million for Q3 2025, down from $38.3 million in Q3 2024 [194]. Cash Flow and Capital Expenditures - Cash and cash equivalents decreased by $70.0 million during the first nine months of 2025, primarily due to capital expenditures and business acquisitions [207]. - Net cash provided by operating activities for the first nine months of 2025 was $318.9 million, an increase from $290.7 million in 2024, primarily driven by higher net income [217][218]. - The Company used $98.4 million in investing activities during the first nine months of 2025, compared to $35.7 million in 2024, with capital expenditures estimated to be between $80 million and $90 million in 2025 [218]. Debt and Financial Obligations - As of September 30, 2025, the Company had $731.9 million in borrowings outstanding at an average interest rate of 5.9% [193]. - The Company had working capital of $549.3 million as of September 30, 2025, down from $898.8 million at December 31, 2024 [211]. - The Company incurred net interest expense of $111.3 million for the first nine months of 2025, down from $130.0 million for the same period in 2024 [213]. - The Company settled a significant portion of the mandatorily redeemable noncontrolling interest for a total of $205 million, consisting of approximately $186.25 million in cash and $18.75 million in Class B common stock [214]. - The Company recorded a $66.2 million increase to the mandatorily redeemable noncontrolling interest obligation as interest expense in Q1 2025, with a remaining obligation of $22.2 million as of September 30, 2025 [215]. - The Company had $67.2 million outstanding under its $300 million revolving credit facility as of September 30, 2025, and expects to meet its financial requirements for the next 12 months [216]. Acquisitions and Investments - The Company acquired Arconic Architectural Products, LLC for a significant portion funded by $107.4 million in net pension obligations [167]. - In August 2025, CSI purchased Pine Drug Holdings, LLC, with operations expected to commence in Q4 2025 [171]. - The Company invested an additional $29.3 million in its equity affiliate Intersection in September 2025 [223]. Dividends and Stock Repurchase - The Company paid dividends of $23.5 million in the first nine months of 2025, with a quarterly dividend rate of $1.80 per share, up from $1.72 in 2024 [227]. - The Company repurchased 3,978 shares of Class B common stock at a cost of approximately $3.5 million during the first nine months of 2025 [228]. Market Risks - The Company is exposed to market risks including equity price risk, interest rate risk, and foreign exchange rate risk [231].