Summary of Graham Holdings Company 2025 Investor Day Company Overview - **Company**: Graham Holdings Company (NYSE: GHC) - **Event**: 2025 Investor Day held on December 9, 2025 Key Industry and Company Insights Financial Performance - 2025 has been a strong year for Graham Holdings, with major businesses performing at or above expectations [3][4] - Adjusted operating cash flow increased from $307 million to $310 million year-to-date, despite a $45 million reduction at Graham Media Group [9] - Kaplan's revenue increased by 4% year-to-date, with adjusted operating cash flow up 18% [9] - Healthcare segment revenue increased by 36% and adjusted operating cash flow by 46% year-to-date [15] Strategic Focus - The company emphasizes driving cash flow per share through owners' earnings growth, share repurchases, pension management, and acquisitions [4][5] - Acquisitions include the purchase of Hoover Architectural Solutions and a Honda dealership, enhancing existing operations [6][7] - The company maintains a strong balance sheet with $1.236 billion in cash and securities against $732 million in debt, resulting in a net cash position of $504 million [27] Challenges and Risks - Graham Media Group faces challenges due to reduced political spending in non-election years, with revenues down 28% and operating income down 57% [36] - The local broadcast industry is experiencing audience fragmentation and economic challenges, leading to concerns about long-term viability [12][14] - Regulatory changes could impact the local broadcast landscape, with potential for a managed decline if no substantial changes occur [15] Growth Opportunities - The healthcare segment is expected to continue growing, with plans for geographical expansion, including entry into California [16][37] - Kaplan is focusing on enhancing its online offerings and has successfully transitioned from physical test prep centers to online leadership [10][11] - Framebridge is expanding its retail footprint, with a target of 20-25 new store openings in 2026 [23][24] Management and Personnel Updates - New appointments include Spiro Roiniotis as Chief Technology Officer and Dee Grine as CEO of Graham Healthcare Group [8] - The management team is focused on leveraging technology and improving operational efficiencies across segments [8][60] Market Dynamics - The company is navigating challenges in the education sector due to immigration policy changes affecting student enrollment [39][40] - Political advertising is expected to see record spending in the upcoming midterm elections, benefiting Graham Media Group [61][62] Capital Allocation Strategy - Graham Holdings is focused on bolt-on acquisitions and increasing ownership stakes in existing businesses as part of its capital allocation strategy [53][54] - The company is cautious about leveraging its balance sheet, prioritizing operational cash flow and securities for funding [43][44] Conclusion Graham Holdings Company is positioned for growth in several segments, particularly healthcare and education, while facing challenges in the media landscape. The management's strategic focus on cash flow, acquisitions, and operational efficiency aims to navigate these challenges and capitalize on emerging opportunities.

Financial Data and Key Metrics Changes - Corporate adjusted EBITDA for Q3 2025 was $79.1 million, and adjusted FFO per share was $0.29, both exceeding expectations [2] - Free cash flow per share for the trailing 12 months increased approximately 4% to $0.66 per share [3] - Comparable RevPAR declined 0.3%, which was better than the expected low single-digit decline [3] - Total hotel operating expenses increased by 1.6%, resulting in only a 3 basis point EBITDA margin contraction [5] Business Line Data and Key Metrics Changes - Business transient revenue grew almost 2%, while leisure transient revenue declined 1.5% and group room revenue declined 3.5% [3] - Out-of-room revenues increased by 5.1%, leading to total RevPAR growth of 1.5% [4] - Food and beverage revenues increased by 4%, with banquets and catering up almost 8% [4] - EBITDA margins for resorts expanded by over 150 basis points despite a 2.5% decline in RevPAR [7] Market Data and Key Metrics Changes - Urban portfolio achieved RevPAR growth of 0.6%, while total RevPAR growth was 2.1% [5] - Resort RevPAR declined 2.5%, but total RevPAR increased 0.4% due to a 4% growth in out-of-room revenues [6] - Group room revenues across the portfolio declined 3.5%, but the group revenue pace is up in the mid to high single digits for 2026 [8] Company Strategy and Development Direction - The company focuses on driving outsized free cash flow per share, which historically results in outsized total shareholder returns [12][13] - The CapEx strategy has been to spend 7-9% of revenues, compared to peers' 10.5%, resulting in significant capital preservation [15][16] - The company is actively underwriting acquisition opportunities, primarily targeting group-oriented hotels and urban select service hotels [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the lodging industry's trajectory, citing upcoming events like the FIFA World Cup as potential demand drivers [26] - The federal government shutdown has created uncertainty regarding short-term group pickup and transient guest arrivals [24] - The company raised the midpoint of its adjusted EBITDA guidance by $6 million to $287-$295 million for 2025 [11] Other Important Information - The company has successfully refinanced its senior unsecured credit facility, eliminating secured debt and improving financial flexibility [9] - The company repurchased 1.5 million common shares at an implied cap rate of approximately 9.7% during the year [10] - The company expects to end the year with over $150 million in cash on hand [10] Q&A Session Summary Question: How much of the expense control is driven by headcount reduction? - Management clarified that the focus is on productivity improvements rather than headcount reduction, with efforts to increase efficiency across the portfolio [29] Question: What are the options for recent or upcoming franchise expirations? - Management discussed various options, including potential upbranding or remaining with current brands, depending on what drives the best return [30] Question: What projects are on the docket for next year? - Management indicated that there are ongoing projects, but no significant disruptions are expected in 2026 [37] Question: How will the company approach potential asset dispositions? - Management stated that they are considering a mix of opportunistic asset sales and older properties that may not fit future strategies [40] Question: What is the outlook for labor costs in 2026? - Management anticipates that labor costs may not see the same efficiency gains as in 2025, projecting a growth rate of around 2.5-3% [43] Question: How is the company positioning for the FIFA World Cup? - Management is cautiously optimistic and is monitoring team matchups to gauge potential demand [45] Question: What is the expected impact of capital recycling on earnings? - Management aims to ensure that capital recycling is accretive to earnings, focusing on maximizing shareholder value [49]