Graham Holdings Co: Form 10-Q for the period ended Jun 30, 2025

This analysis should be read in conjunction with the condensed consolidated financial statements and the notes thereto.

Results of Operations

The Company reported net income attributable to common shares of $36.7 million ($8.35 per share) for the second quarter of 2025, compared to a net loss of $21.0 million ($4.79 per share) for the second quarter of 2024.

Items included in the Company’s net income for the second quarter of 2025:

• $6.0 million in non-operating expenses related to Separation Incentive Programs (SIPs) at other businesses and the education and television broadcasting divisions (after tax-impact of $4.5 million, or $1.02 per share);
• $1.2 million in interest expense to adjust the fair value of the mandatorily redeemable noncontrolling interest (after-tax impact of $3.5 million, or $0.79 per share);
• $11.5 million in net losses on marketable equity securities (after-tax impact of $8.6 million, or $1.95 per share);
• $0.4 million in net losses of affiliates whose operations are not managed by the Company (after-tax impact of $0.3 million, or $0.07 per share); and
• a non-operating loss of $12.7 million from the impairment of a cost method investment (after-tax impact of $9.5 million, or $2.15 per share).

Items included in the Company’s net loss for the second quarter of 2024:

• $26.3 million in goodwill and intangible asset impairment charges at World of Good Brands (WGB) (after tax impact of $20.6 million, or $4.62 per share);
• $16.4 million in non-operating expenses related to a Voluntary Retirement Incentive Program (VRIP) at the television broadcasting division and the corporate office, and SIPs at other businesses (after tax-impact of $12.2 million, or $2.74 per share);
• $73.5 million in interest expense to adjust the fair value of the mandatorily redeemable noncontrolling interest (after-tax impact of $61.4 million, or $13.77 per share);
• $19.6 million in net gains on marketable equity securities (after-tax impact of $14.6 million, or $3.28 per share);
• $1.1 million in net losses of affiliates whose operations are not managed by the Company (after-tax impact of $0.8 million, or $0.19 per share);
• a non-operating gain of $3.5 million from the sale of certain WGB websites (after-tax impact of $2.7 million, or $0.61 per share); and
• a non-operating loss of $0.3 million from the impairment of a cost method investment (after-tax impact of $0.3 million, or $0.06 per share).

Revenue for the second quarter of 2025 was $1,215.8 million, up 3% from $1,185.3 million in the second quarter of 2024. Revenues increased at education, healthcare and other businesses, partially offset by declines at television broadcasting, manufacturing and automotive. The Company reported operating income of $72.8 million for the second quarter of 2025, compared to $25.9 million for the second quarter of 2024. Excluding goodwill and other long-lived asset impairment charges at WGB in the second quarter of 2024, the improvement in operating results is due to increases at education, manufacturing, and healthcare, partially offset by declines at television broadcasting, automotive and other businesses.

For the first six months of 2025, the Company reported net income attributable to common shares of $60.6 million ($13.81 per share), compared to $103.3 million ($23.11 per share) for the first six months of 2024.

Items included in the Company’s net income for the first six months of 2025:

• $6.6 million in non-operating expenses related to SIPs at other businesses and the education and television broadcasting divisions (after tax-impact of $4.9 million, or $1.12 per share);
• $67.6 million in interest expense to adjust the fair value of the mandatorily redeemable noncontrolling interest (after-tax impact of $53.9 million, or $12.26 per share);
• $32.3 million in net gains on marketable equity securities (after-tax impact of $24.0 million, or $5.46 per share);
• $12.3 million in net losses of affiliates whose operations are not managed by the Company (after-tax impact of $9.2 million, or $2.09 per share); and
• a non-operating loss of $12.7 million from the impairment of a cost method investment (after-tax impact of $9.5 million, or $2.16 per share).

Items included in the Company’s net income for the first six months of 2024:

• $26.3 million in goodwill and intangible asset impairment charges at WGB (after tax impact of $20.6 million, or $4.60 per share);
• $16.8 million in non-operating expenses related to a VRIP at the television broadcasting division and the corporate office, and SIPs at other businesses (after tax-impact of $12.5 million, or $2.80 per share);
• $75.4 million in interest expense to adjust the fair value of the mandatorily redeemable noncontrolling interest (after-tax impact of $63.2 million, or $14.13 per share);
• $123.8 million in net gains on marketable equity securities (after-tax impact of $92.1 million, or $20.59 per share);
• $2.6 million in net losses of affiliates whose operations are not managed by the Company (after-tax impact of $1.9 million, or $0.43 per share);
• a non-operating gain of $3.5 million from the sale of certain WGB websites (after-tax impact of $2.7 million, or $0.61 per share); and
• a non-operating loss of $0.7 million from the impairment of cost method investments (after-tax impact of $0.6 million, or $0.12 per share).

Revenue for the first six months of 2025 was $2,381.7 million, up 2% from $2,337.9 million in the first six months of 2024. Revenues increased at education, healthcare and other businesses, partially offset by declines at television broadcasting, manufacturing and automotive. The Company reported operating income of $120.2 million for the first six months of 2025, compared to $61.4 million for the first six months of 2024. Excluding goodwill and other long-lived asset impairment charges at WGB in the second quarter of 2024, the improvement in operating results is due to increases at education, manufacturing and healthcare, partially offset by declines at television broadcasting, automotive and other businesses.

Division Results

Education

Education division revenue totaled $436.8 million for the second quarter of 2025, up 3% from $422.9 million for the same period of 2024. Kaplan reported operating income of $46.2 million for the second quarter of 2025, compared to $35.3 million for the second quarter of 2024.

For the first six months of 2025, education division revenue totaled $861.5 million, up 2% from $845.5 million for the same period of 2024. Kaplan reported operating income of $86.2 million for the first six months of 2025, compared to $65.9 million for the first six months of 2024.

A summary of Kaplan’s operating results is as follows:

(in thousands)

Kaplan International includes postsecondary education, professional training and language training businesses largely outside the United States (U.S.). Kaplan International revenue increased 2% for the second quarter (2% decrease on a constant currency basis) due largely to growth at UK Professional and Singapore, partially offset by lower student enrollments at Languages and Australia. Kaplan International revenue decreased 1% for the first six months (2% on a constant currency basis) due largely to lower student enrollments at UK Pathways, Languages and Australia, partially offset by growth at UK Professional and Singapore. Kaplan International reported operating income of $29.9 million in the second quarter of 2025, compared to $25.8 million in the second quarter of 2024. The increase is due largely to improved results at Pathways and Singapore, partially offset by a decline in results at Languages, UK Professional and MPW. Operating income increased to $60.0 million in the first six months of 2025, compared to $57.1 million in the first six months of 2024. The increase is due largely to improved results at Australia and Singapore, partially offset by a decline at MPW, Pathways and Languages.

Higher Education includes the results of Kaplan as a service provider to higher education institutions. Higher Education revenue increased 5% and 7% for the second quarter and first six months of 2025, respectively, due primarily to an increase in the Purdue Global fee recorded. Enrollments at Purdue Global, the largest institutional client, increased 4% for the first six months of 2025 compared to the first six months of 2024. For the second quarter and first six months of 2025, Kaplan recorded the full fee from Purdue Global. For the second quarter and first six months of 2024, Kaplan recorded a portion of the fee from Purdue Global. The Company will continue to assess the fee it records from 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 adjust fee amounts recognized in earlier periods. Higher Education operating results improved in the second quarter and first six months of 2025 due to an increase in the Purdue Global fee recorded, and a decline in higher education development costs.

Supplemental Education includes Kaplan’s standardized test preparation programs and domestic professional and other continuing education businesses. Most of the program offerings in Supplemental Education experienced growth in the first half leading to a 7% revenue increase. Operating results improved in the second quarter and first six months of 2025 due largely to revenue growth.

Kaplan corporate and other represents unallocated expenses of Kaplan’s corporate office, other minor businesses and certain shared activities.

In the second quarter of 2025, the Company offered a SIP to certain employees at Higher Education and Supplemental Education, which was funded from the assets of the Company’s pension plan; $0.7 million in related non-operating pension expense was recorded in the second quarter of 2025.

Television Broadcasting

A summary of television broadcasting’s operating results is as follows:

(in thousands)

32

Graham Media Group (GMG) 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 8% to $106.0 million in the second quarter of 2025, from $115.5 million in the same period of 2024. The revenue decrease is due to a $4.5 million decrease in political advertising revenue, a $2.6 million decrease in retransmission revenue and declines in local and digital advertising revenue. Operating income for the second quarter of 2025 was down 10% to $27.9 million, from $31.1 million in the same period of 2024, due to lower revenues, partially offset by overall costs.

Revenue at the television broadcasting division was down 8% to $209.5 million in the first six months of 2025, from $228.5 million in the same period of 2024. The revenue decline is due to a $6.1 million decrease in political advertising revenue, a $4.1 million decrease in retransmission revenue and declines in local and digital advertising revenue. Operating income for the first six months of 2025 was down 14% to $52.3 million, from $60.8 million in the same period of 2024, due to lower revenues, partially offset by lower overall costs. 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 2025 expected to decline compared with 2024, and this trend is expected to continue.

In the second quarter of 2025, GMG offered a SIP; $0.1 million in related non-operating pension expense was recorded. In the second quarter of 2024, the Company offered a VRIP to certain employees at the television broadcasting division; $14.3 million in related non-operating pension expense was recorded in the second quarter of 2024. These programs were funded from the assets of the Company’s pension plan.

Manufacturing

A summary of manufacturing’s operating results is as follows:

(in thousands)

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 7% and 6% in the second quarter and first six months of 2025, respectively. The revenue decline in the second quarter of 2025 is due to lower revenues at Hoover and Forney, partially offset by increased revenues at Dekko and Joyce. The revenue decline in the first six months of 2025 is due to lower revenues at Hoover, partially offset by increased revenues at Dekko, Joyce and Forney. The revenue decline at Hoover is due largely to a decrease in overall product demand, particularly for multi-family housing. Hoover results included wood gains on inventory sales in the first half of 2025 and 2024, with gains in the first half of 2025 higher than the prior year. Manufacturing operating results improved in the second quarter of 2025 due largely to increases at Dekko and Joyce, partially offset by a decline at Hoover. Manufacturing operating results improved in the first six months of 2025 due largely to increases at Dekko and Forney, partially offset by declines at Hoover and Joyce.

On July 15, 2025, Hoover acquired Arconic Architectural Products, LLC, a wholly-owned subsidiary of Arconic Corporation, which manufactures aluminum cladding products and operates within the broader non-residential materials space from its facility in Eastman, GA. A significant portion of the purchase price was funded by the Company’s assumption of approximately $105 million in net pension obligations.

Healthcare

A summary of healthcare’s operating results is as follows:

(in thousands)

Graham Healthcare Group (GHG) provides home health and hospice services in seven states. GHG also provides nursing care and prescription services for patients receiving in-home infusion treatments through its 87.5% interest in CSI Pharmacy Holding Company, LLC (CSI), and other healthcare services through Clarus (provides call management SaaS-based solution for physician groups and hospitals), Impact Medical (an Allergy, Asthma and Immunology physician practice), Skin Clique (a concierge provider of aesthetics products and services) and Surpass Behavioral Health (provides therapy for autism patients). Healthcare revenues increased 37% and 36% and operating results were up substantially in the second quarter and first six months of 2025, largely due to significant growth at CSI from an expansion of infusion treatment offerings and patient service areas, and growth in home health and hospice services and at the other healthcare businesses; operating results also benefited from a reduction in pension expense. In January 2022, GHG implemented a pension credit retention program offering a pension credit up to $50,000 per employee, cliff vested after three years of continuous employment for certain existing employees and new employees. Effective April 1, 2024, this program is no longer being offered to new employees.

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 $3.4 million for each of the second quarters of 2025 and 2024 from these joint ventures. The Company recorded equity in earnings of $6.6 million and $6.8 million for the first six months of 2025 and 2024, respectively.

Automotive

A summary of automotive’s operating results is as follows:

(in thousands)

Automotive includes eight automotive dealerships in the Washington, DC metropolitan area and Richmond, VA: Ourisman Lexus of Rockville, Ourisman Honda of Tysons Corner, Ourisman Jeep of Bethesda, Ourisman Ford of Manassas, Toyota of Woodbridge, Ourisman Chrysler-Dodge-Jeep-Ram of Woodbridge, Ourisman Toyota of Richmond and Ourisman Kia of Bethesda. 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.

Revenues for each of the second quarter and first six months of 2025 decreased 8%, due largely to declines in new and used vehicle sales and a decline in sales of finance and insurance product offerings, partially offset by sales growth for services and parts. Operating results decreased for the second quarter of 2025 due largely to lower overall sales and gross margins on new vehicles and a decline in finance and insurance product sales; partially offset by higher overall gross profits on services and parts and used vehicles. Operating results declined for the first six months of 2025 due largely to lower overall sales and gross margins on new vehicles, a decline in finance and insurance product sales, and lower overall gross profit on used vehicles; partially offset by higher overall gross profit on services and parts.

Other Businesses

A summary of revenue by category for other businesses:

(in thousands)

(1) Includes Clyde’s Restaurant Group, Decile and Supporting Cast

(2) Includes Framebridge, Saatchi Art and Society6

(3) Includes Slate, Foreign Policy, Code3, World of Good Brands and City Cast

Overall, revenue from other businesses increased 2% in the second quarter and first six months of 2025. For the first six months of 2025, specialty revenue increased due to revenue growth at Clyde’s Restaurant Group (CRG), Supporting Cast and Decile. Retail revenue increased due to revenue growth at Framebridge, offset by lower revenue at Society6 and Saatchi Art. Media revenue declined due to lower revenue at WGB, Slate and Code3, partially offset by revenue growth at Foreign Policy and City Cast.

Overall, operating results at other businesses were down in the second quarter and first six months of 2025, excluding goodwill and intangible asset impairment charges at WGB in the second quarter of 2024. The declines were due to declines at WGB, Society6, Framebridge, Slate and City Cast, partially offset by improved results at Foreign Policy, CRG, Decile, Supporting Cast and Code3.

Clyde’s Restaurant Group

CRG owns and operates 14 restaurants and entertainment venues in the Washington, DC metropolitan area, including Old Ebbitt Grill and The Hamilton. In July 2024, CRG opened Rye Street Tavern, a new restaurant in Baltimore, MD. In November 2024, CRG opened Cordelia Fishbar, a new restaurant in Washington, D.C. Revenue increased in the second quarter and first six months of 2025 due to the new restaurant openings and modest price increases. CRG reported an operating profit in each of the second quarters and first six months of 2025 and 2024, with improved results in the second quarter and first six months of 2025.

CRG plans to open a new restaurant in Reston, VA in the second quarter of 2026.

Framebridge

Framebridge is a custom framing service company, headquartered in Washington, DC, with 36 retail locations, and two manufacturing facilities in Kentucky and Virginia. In addition, Framebridge is in the process of opening an additional manufacturing facility in Nevada in the third quarter of 2025. In the first half of 2025, Framebridge opened five new retail stores. Framebridge plans to open additional stores in 2025, including an expansion into California, and continues to actively explore other opportunities for further store expansion.

Revenues increased in the second quarter and first six months of 2025 due to an increase in retail revenue from same-store sales growth and operating additional retail stores compared to the same periods in 2024, as well as higher online revenues. Framebridge is an investment stage business and reported significant operating losses in the first six months of 2025 and 2024.

In the first and second quarters of 2024, Framebridge implemented a SIP, which was funded by the assets of the Company’s pension plan; $0.4 million and $1.0 million in related non-operating pension expense was recorded in the first and second quarters of 2024, respectively.

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; Saatchi Art and Society6, which offer art and design; WGB, an owner and operator of websites; and three investment stage businesses, Decile, City Cast and Supporting Cast. Foreign Policy, City Cast, Supporting Cast and Decile reported revenue growth in the first six months of 2025, while WGB, Society6, Slate, Saatchi Art and Code3 reported revenue declines. Losses from WGB, Society6, City Cast, Saatchi Art, Decile, Slate, Code3 and Supporting Cast in the first six months of 2025 adversely affected operating results, while Foreign Policy reported an operating profit during this period.

In the first half of 2025, the Company completed the sale of various websites and related businesses that made WGB. All remaining WGB operations are expected to be substantially shut down by the end of the third quarter of 2025. WGB recorded various asset write-offs and incurred other costs in the second quarter of 2025 related to these actions.

In the second quarter of 2025, the Company offered SIPs to certain employees at Code3, Saatchi Art, Society6, WGB and Decile; $5.2 million in related non-operating pension expense was recorded. In the first quarter of 2025, WGB offered a SIP; $0.6 million in related non-operating pension expense was recorded. In the second quarter of 2024, Code3 implemented a SIP to reduce the number of employees; $0.6 million in related non-operating pension expense was recorded. These SIPs were funded by the assets of the Company’s pension plan.

Corporate Office

Corporate office includes the expenses of the Company’s corporate office and certain continuing obligations related to prior business dispositions.

Equity in Earnings (Losses) of Affiliates

At June 30, 2025, the Company held an approximate 18% interest in Intersection Holdings, LLC, a company that provides digital marketing and advertising services and products for cities, transit systems, airports, and other public and private spaces; and a 41.4% interest on a fully diluted basis in Realm. 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 earnings of affiliates of $3.1 million for the second quarter of 2025, compared to $2.6 million for the second quarter of 2024. These amounts include $0.4 million and $1.1 million in net losses for the second quarter of 2025 and 2024, respectively, from affiliates whose operations are not managed by the Company.

The Company recorded equity in losses of affiliates of $5.3 million for the first six months of 2025, compared to earnings of $4.9 million for the first six months of 2024. These amounts include $12.3 million and $2.6 million in net losses for the first six months of 2025 and 2024, respectively, from affiliates whose operations are not managed by the Company.

Net Interest Expense and Related Balances

The Company incurred net interest expense of $15.8 million and $95.6 million for the second quarter and first six months of 2025, respectively, compared to $89.3 million and $106.4 million for the second quarter and first six months of 2024.

The Company recorded interest expense of $1.2 million and $67.6 million in the second quarter and first six months of 2025, respectively; compared to $73.5 million and $75.4 million in the second quarter and first six months of 2024, respectively, to adjust the fair value of the mandatorily redeemable noncontrolling interest at GHG. The significant adjustments recorded in the first quarter of 2025 and second quarter of 2024 are largely related to a substantial increase in the estimated fair value of CSI. On February 25, 2025, the Company and a group of minority shareholders entered into an agreement to settle a significant portion of the mandatorily redeemable noncontrolling interest for a total of $205 million, which consisted of approximately $186.25 million in cash and $18.75 million in Graham Holdings Company Class B common stock.

Excluding these adjustments, the decrease in net interest expense relates primarily to lower interest rates on the Company’s variable debt.

At June 30, 2025, the Company had $816.4 million in borrowings outstanding at an average interest rate of 6.0%, and cash, marketable equity securities and other investments of $1,127.5 million. At June 30, 2025, the Company had $143.6 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 $28.6 million and $63.2 million for the second quarter and first six months of 2025, respectively, compared to $24.7 million and $67.1 million for the second quarter and first six months of 2024, respectively.

In the second quarter of 2025, the Company recorded $6.0 million in expenses related to non-operating SIPs at the education and television broadcasting divisions and other businesses. In the first quarter of 2025, the Company recorded $0.6 million in expenses related to non-operating SIPs at other businesses.

In the second quarter of 2024, the Company recorded $14.8 million in expenses related to a VRIP at the television broadcasting division and the corporate office and $1.6 million in expenses related to non-operating SIPs at other businesses. In the first quarter of 2024, the Company recorded $0.4 million in expenses related to a non-operating SIP at other businesses.

(Loss) Gain on Marketable Equity Securities, net

Overall, the Company recognized $11.5 million in net losses and $32.3 million in net gains on marketable equity securities in the second quarter and first six months of 2025, respectively, compared to $19.6 million and $123.8 million in net gains on marketable equity securities in the second quarter and first six months of 2024, respectively.

Other Non-Operating Income (Expenses)

The Company recorded total other non-operating expenses, net, of $16.5 million for the second quarter of 2025, compared to income of $1.8 million for the second quarter of 2024. The 2025 amounts included a $12.7 million impairment on a cost method investment and $4.5 million in foreign currency losses; partially offset by $0.4 million gain on sale of businesses and other items. The 2024 amounts included a gain of $3.5 million on the sale of certain WGB websites, and other items; partially offset by $1.7 million in foreign currency losses and a $0.3 million impairment on a cost method investment.

The Company recorded total other non-operating expense, net, of $20.5 million for the first six months of 2025, compared to income of $3.4 million for the first six months of 2024. The 2025 amounts included a $12.7 million impairment on a cost method investment and $8.9 million in foreign currency losses; partially offset by $0.4 million gain on sale of businesses and other items. The 2024 amounts included a gain of $3.5 million on the sale of certain WGB websites; $0.9 million in gains related to the sale of businesses and contingent consideration, and other items; partially offset by $1.1 million in foreign currency losses and a $0.7 million impairment on cost method investments.

Provision for Income Taxes

The Company’s effective tax rate for the first six months of 2025 and 2024 was 29.8% and 30.9%, respectively. The Company’s effective tax rate for the first six months of 2025 is based on the estimated full year 2025 effective tax rate, which includes the adverse impact of the permanent difference related to the interest expense recorded to adjust the fair value of the mandatorily redeemable noncontrolling interest at GHG. For the first six months of 2024, the Company’s effective tax rate was based on the estimated full year 2024 effective tax rate, which includes the adverse impact of the permanent differences related to the interest expense recorded to adjust the fair value of the mandatorily redeemable noncontrolling interest at GHG and goodwill and intangible asset impairment charges.

On July 4, 2025, legislation known as "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14" (the Act) was enacted in the U.S., which includes, among other things, many corporate income tax provisions that will impact the Company. The Company is in the process of analyzing the various provisions of the Act. At this stage, the Company expects the Act will result in a significant decline in federal taxable income for 2025 and a related reduction in federal income tax payments for the second half of 2025 as a result of changes to the income tax treatment of certain research and development costs and accelerated income tax deductions for certain capital expenditures.

Earnings Per Share

The calculation of diluted earnings per share for the second quarter and first six months of 2025 was based on 4,372,639 and 4,365,534 weighted average shares outstanding, respectively, compared to 4,400,745 and 4,442,214 for the second quarter and first six months of 2024. At June 30, 2025, there were 4,359,759 shares outstanding. On September 12, 2024, 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 462,482 shares as of June 30, 2025.

Other

Graham Healthcare Group Leadership Changes

David Curtis and Justin DeWitte, co-CEOs of GHG, recently made the decision to step down from their respective leadership roles at GHG. Both will remain with GHG for a transition period and to support the search and onboarding of a new leader for the home health and hospice businesses. The other healthcare businesses will transition to reporting into Graham Holdings leadership directly.

Tariffs

Historically, tariffs have had a limited impact on the Company’s financial operations and business strategy. The Company’s holding company structure, with a diverse portfolio of U.S. businesses and international operations, serves to limit its overall risk. While the Company believes it is reasonably well insulated from tariffs currently, there is significant uncertainty as to future policies regarding U.S. and worldwide tariffs. Therefore, it is possible that the Company could be significantly impacted. At this time, however, we believe that macroeconomic risks related to tariff policies and a potential economic slowdown pose the most meaningful risk to the Company’s financial results. In considering our approach and strategy related to tariff policies and changing conditions, the Company will continue to track developments and develop plans as needed.

Financial Condition: Liquidity and Capital Resources

The Company considers the following when assessing its liquidity and capital resources:

(In thousands)

Cash generated by operations is the Company’s primary source of liquidity. The Company maintains investments in a portfolio of marketable equity securities, which is considered when assessing the Company’s sources of liquidity. An additional source of liquidity includes the undrawn portion of the Company’s $300 million revolving credit facility, amounting to $156.4 million at June 30, 2025 and the undrawn $50.0 million delayed draw term loan at the automotive subsidiary.

During the first six months of 2025, the Company’s cash and cash equivalents decreased by $84.6 million, due to the settlement of a significant portion of the mandatorily redeemable noncontrolling interest, capital expenditures, purchase of marketable equity securities, share repurchases, dividend payments, and net repayments of the vehicle floor plan payable, which was offset by cash generated from operations and additional borrowings. In the first six months of 2025, the Company’s borrowings increased by $68.2 million, primarily due to net borrowings under the revolving credit facility, partially offset by repayments under the term loan and commercial notes at the automotive subsidiary.

As of June 30, 2025 and December 31, 2024, the Company had money market investments of $6.0 million and $3.9 million, that are included in cash and cash equivalents. At June 30, 2025, the Company held approximately $104 million in cash and cash equivalents in businesses domiciled outside the U.S., of which approximately $6 million is not available for immediate use in operations or for distribution. Additionally, Kaplan’s business operations outside the U.S. retain cash balances to support ongoing working capital requirements, capital expenditures, and regulatory requirements. As a result, the Company considers a significant portion of the cash and cash equivalents balance held outside the U.S. as not readily available for use in U.S. operations.

At June 30, 2025, the fair value of the Company’s investments in marketable equity securities was $889.5 million, which includes investments in the common stock of four publicly traded companies. During the first six months of 2025, the Company purchased $4.8 million of marketable equity securities. There were no sales of marketable equity securities during the first six months of 2025. At June 30, 2025, the net unrealized gain related to the Company’s investments totaled $657.5 million.

The Company had working capital of $430.2 million and $898.8 million at June 30, 2025 and December 31, 2024, respectively. The working capital at June 30, 2025 includes the Company’s $400 million senior unsecured fixed rate notes that are due on June 1, 2026. The Company maintains working capital levels consistent with its underlying business requirements and consistently generates cash from operations in excess of required interest or principal payments.

At June 30, 2025 and December 31, 2024, the Company had borrowings outstanding of $816.4 million and $748.2 million, respectively. The Company’s borrowings at June 30, 2025 were mostly from $400.0 million of 5.75% unsecured notes due June 1, 2026, $143.6 million in outstanding borrowings under the Company’s revolving credit facility, a term loan of $136.5 million, and real estate and capital term loans of $122.5 million at the automotive subsidiary. The Company’s borrowings at December 31, 2024 were mostly from $400.0 million of 5.75% unsecured notes due June 1, 2026, $62.8 million in outstanding borrowings under the Company’s revolving credit facility, a term loan of $140.1 million, and real estate and capital term loans of $127.6 million at the automotive subsidiary. The interest on the $400.0 million of 5.75% unsecured notes is payable semiannually on June 1 and December 1.

During the six months ended June 30, 2025 and 2024, the Company had average borrowings outstanding of approximately $828.7 million and $826.9 million, respectively, at average annual interest rates of approximately 6.0% and 6.4%, respectively. During the six months ended June 30, 2025 and 2024, the Company incurred net interest expense of $95.6 million and $106.4 million, respectively. Included in the interest expense for the six months ended June 30, 2025 and 2024 is $67.6 million and $75.4 million, respectively, to adjust the fair value of the mandatorily redeemable noncontrolling interest (see Notes 7 and 8).

On February 25, 2025, the Company and a group of minority shareholders entered into an agreement to settle a significant portion of the mandatorily redeemable noncontrolling interest related to GHC One, including CSI, for a total of $205 million, which consisted of approximately $186.25 million in cash and $18.75 million in Graham Holdings Company Class B common stock.

The settlement agreement resulted in a $66.2 million increase to the mandatorily redeemable noncontrolling interest obligation, which the Company recorded as interest expense in the first quarter of 2025. The remaining mandatorily redeemable noncontrolling interest obligation related to GHC One and GHC Two was $21.5 million at June 30, 2025.

On June 12, 2025, Standard & Poor’s affirmed the Company’s credit rating and maintained the outlook as Stable. On December 20, 2024, Moody’s affirmed the Company’s credit rating and maintained the outlook as Stable.

The Company’s current credit ratings are as follows:

The Company expects to fund its estimated capital needs primarily through existing cash balances and internally generated funds, and, as needed, from borrowings under its revolving credit facility. As of June 30, 2025, the Company had $143.6 million outstanding under the $300 million revolving credit facility. In management’s opinion, the Company will have sufficient financial resources to meet its business requirements in the next 12 months, including working capital requirements, capital expenditures, interest payments, potential acquisitions and strategic investments, dividends and stock repurchases.

In summary, the Company’s cash flows for each period were as follows:

(In thousands)

Operating Activities. Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities. The Company’s net cash flow provided by operating activities were as follows:

(In thousands)

Net cash provided by operating activities consists primarily of cash receipts from customers, less disbursements for costs, benefits, income taxes, interest and other expenses.

For the first six months of 2025 compared to the first six months of 2024, the increase in net cash provided by operating activities is primarily driven by the changes in operating assets and liabilities and higher net income, net of non-cash adjustments. Changes in operating assets and liabilities were driven by lower purchases of inventory, partially offset by increases in vendor payments.

Investing Activities. The Company’s net cash flow used in investing activities were as follows:

(In thousands)

Capital Expenditures. The amounts reflected in the Company’s Condensed Consolidated Statements of Cash Flows are based on cash payments made during the relevant periods, whereas the Company’s capital expenditures for the first six months of 2025 and 2024 disclosed in Note 15 to the Condensed Consolidated Financial Statements include assets acquired during the period. The Company estimates that its capital expenditures will be in the range of $85 million to $95 million in 2025.

Disposition of Businesses. In April 2025, Kaplan completed the sale of a small business, BridgeU Limited, which was included in Kaplan International. In the first half of 2025, WGB completed the sale of various websites and related businesses that made up the WGB operations. All remaining WGB operations are expected to be substantially shut down by the end of the third quarter of 2025.

Purchases of marketable equity securities. The Company purchased $4.8 million of marketable equity securities during the first six months of 2025. There were no sales of marketable equity securities during the first six months of 2025. There were no purchases or sales of marketable equity securities during the first six months of 2024.

Acquisitions. In June 2025, Kaplan acquired one small business which is included in its supplemental education division. During 2024, the Company acquired two small businesses. In January 2024, the Company acquired one small business which is included in other businesses. In May 2024, Kaplan acquired one small business which is included in its international division.

On July 15, 2025, Hoover acquired Arconic Architectural Products, LLC, a wholly-owned subsidiary of Arconic Corporation, which manufactures aluminum cladding products and operates within the broader non-residential materials space from its facility in Eastman, GA. A significant portion of the purchase price was funded by the Company’s assumption of approximately $105 million in net pension obligations.

Loan to related party. In May 2024, the Company entered into a convertible promissory note agreement to loan N2K Networks $2.0 million. The convertible promissory note bears interest at a rate of 12% per annum and, subject to conversion provisions, all unpaid interest and principal are due by May 2027.

Financing Activities. The Company’s net cash flow used in financing activities were as follows:

(In thousands)

Distributions paid to noncontrolling interests. On February 25, 2025, the Company and a group of minority shareholders entered into an agreement to settle a significant portion of the mandatorily redeemable noncontrolling interest related to GHC One, including CSI, for a total of $205 million, which consisted of approximately $186.25 million in cash and $18.75 million in Graham Holdings Company Class B common stock.

Borrowings and Vehicle Floor Plan Payable. In the first six months of 2025 and 2024, the Company made additional borrowings on the $300 million revolving credit facility and repaid amounts borrowed under the term loan and commercial notes at the automotive subsidiary. In the first six months of 2025 and 2024, the Company used vehicle floor plan financing to fund the purchase of new, used and service loaner vehicles at its automotive subsidiary. The (repayments of) proceeds from the vehicle floor plan payable fluctuates with changes in the amount of vehicle inventory held by the automotive dealerships.

Dividends. The quarterly dividend rate per share was $1.80 and $1.72 for the first six months of 2025 and 2024, respectively. The Company expects to pay a dividend of $7.20 per share in 2025.

Common Stock Repurchases. During the first six months of 2025, the Company purchased a total of 3,978 shares of its Class B common stock at a cost of approximately $3.5 million resulting from the net settlement of stock awards upon vesting. On September 12, 2024, the Board of Directors authorized the Company to acquire up to 500,000 shares of its Class B common stock. The Company did not announce a ceiling price or time limit for the purchases. At June 30, 2025, the Company had remaining authorization from the Board of Directors to purchase up to 462,482 shares of Class B common stock.

There were no other significant changes to the Company’s contractual obligations or other commercial commitments from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

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 report, in the Company’s Annual Report on Form 10-K and in the Company’s 2024 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.

The Company is exposed to market risk in the normal course of its business due primarily to its ownership of marketable equity securities, which are subject to equity price risk; to its borrowing and cash-management activities, which are subject to interest rate risk; and to its foreign business operations, which are subject to foreign exchange rate risk. The Company’s market risk disclosures set forth in its 2024 Annual Report filed on Form 10-K have not otherwise changed significantly.

(a) Evaluation of Disclosure Controls and Procedures

An evaluation was performed by the Company’s management, with the participation of the Company’s Chief Executive Officer (principal executive officer) and the Company’s Chief Financial Officer (principal financial officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), as of June 30, 2025. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures, as designed and implemented, are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the quarter ended June 30, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.