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revenue: 12% increase from $3.92 billion in 2022 to $4.41 billion in 2023.
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Operating income: Decrease from $83.9 million in 2022 to $69.4 million in 2023.
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Net income: A significant increase from $67.1 million ($13.79 per share) in 2022 to $205.3 million ($43.82 per share) in 2023.
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Adjusted operating cash flow: Decrease from $377.6 million in 2022 to $338.3 million in 2023.
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Debt and cash position: Debt increased from $726.4 million in 2022 to $811.8 million at the end of 2023, bringing total cash and investments to $898.9 million.
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Stock buyback: GHC repurchased 100,263 shares in the fourth quarter of 2023 for $62.1 million.
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pension system: The company reported a pension surplus of $2.11 billion at the end of 2023, up from $1.66 billion in 2022.
Graham Holdings (NYSE:GHC) released its 8-K report on February 23, 2024, detailing its financial results for the fourth quarter and full year of 2023. This diversified education and media company operates in segments such as Kaplan International and Higher Education. Annual sales in the Education, Supplemental Education, Television Broadcasting, Manufacturing, Healthcare and Automotive segment increased 12% due to growth in the Education, Healthcare and Automotive segment. However, operating income for the current fiscal year decreased due to impairment losses and declines in the television broadcasting and manufacturing industries.
Segment performance and financial highlights
The education division, led by Kaplan International, reported a 9% increase in revenue in the fourth quarter of 2023, but operating profit declined slightly. The Healthcare segment posted strong revenue growth of 34% in the fourth quarter due to growth in CSI and acquisitions made in 2022. GHC’s automotive division also saw increased revenue due to dealer acquisitions and increased sales.
Despite these gains, the television broadcast division faced a 19% revenue decline in the fourth quarter, primarily due to a significant decline in political advertising revenue. The manufacturing sector also reported a 14% revenue decline in the fourth quarter, with product demand declining in several sectors.
GHC’s overall net income for 2023 showed a notable increase from $67.1 million in 2022 to $205.3 million. This increase was impacted by several non-operating items, including marketable equity gains and pension-related expense adjustments.
Financial status and shareholder returns
The company’s debt increased year-on-year, with outstanding debt at the end of 2023 of $811.8 million. Despite this, GHC maintained strong liquidity with cash and investments totaling $898.9 million. In the fourth quarter of 2023, GHC will continue its shareholder return policy by repurchasing over 100,000 shares and still has the authority to repurchase additional shares.
The company’s pension plan reserves increased significantly, reflecting its strong balance sheet and potential for future investments in growth initiatives and further shareholder returns.
Outlook and strategic moves
Although GHC did not make any specific forward-looking statements, the mixed performance across its segments highlights the challenges and opportunities facing the company. Growth in education and healthcare suggests the resilience of these sectors, which could be a key driver of future performance. However, volatility in broadcasting and manufacturing highlights the need for strategic adjustments to address market fluctuations.
GHC’s commitment to shareholder returns through share buybacks, combined with its strong financial position, could make it attractive to value investors looking for stable companies with an aggressive approach to capital allocation.
In conclusion, Graham Holdings’ 2023 financial results paint a picture of a company capitalizing on growth opportunities in the education and healthcare sectors while navigating the segment-specific challenges. The company’s strong balance sheet and commitment to shareholder value remain central to its financial strategy.
For more information, see Graham Holdings Co’s full 8-K earnings release here.
This article first appeared on GuruFocus.
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