Releases
Graham Holdings Company Reports Second Quarter Earnings
The COVID-19 pandemic and measures taken to prevent its spread, such as travel restrictions, shelter in place orders and mandatory closures, significantly impacted the Company’s results for 2020 and the first six months of 2021, largely from reduced demand for the Company’s products and services. This significant adverse impact is expected to continue for several of the Company’s businesses for the remainder of 2021. The Company’s management has taken a variety of measures to reduce costs and implement changes to business operations. The Company cannot predict the severity or duration of the pandemic, the extent to which demand for the Company’s products and services will be adversely affected or the degree to which financial and operating results will be negatively impacted.
On
The results for the second quarter of 2021 and 2020 were also affected by a number of items as described in the following paragraphs. Including these items, income before income taxes was
Items included in the Company’s income before income taxes for the second quarter of 2021:
- a
$2.6 million net credit related to a fair value change in contingent consideration from a prior acquisition at Corporate; - a
$0.2 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of theFCC ; $3.4 million in long-lived asset impairment charges;$1.1 million in expenses related to a non-operating Separation Incentive Program at manufacturing;$83.7 million in net gains on marketable equity securities;$1.4 million in net losses of affiliates whose operations are not managed by the Company;- a net non-operating gain of
$14.5 million from the sale and write-up of cost method investments; $1.0 million in interest income to adjust the fair value of the mandatorily redeemable noncontrolling interest; and$0.7 million in non-operating foreign currency gains.
Items included in the Company’s income before income taxes for the second quarter of 2020:
$9.3 million in long-lived asset impairment charges;$10.2 million in restructuring charges at the education division;$2.8 million in accelerated depreciation at other businesses;- a
$1.1 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of theFCC ; $4.6 million in expenses related to non-operating Separation Incentive Programs at the education division and other businesses;$39.9 million in net gains on marketable equity securities;$3.1 million in net losses of affiliates whose operations are not managed by the Company;- non-operating gains of
$7.8 million from write-ups and sales of cost and equity method investments; and $1.1 million in non-operating foreign currency losses.
Revenue for the second quarter of 2021 was
For the first six months of 2021, the Company reported net income attributable to common shares of
Items included in the Company’s income before income taxes for the six months of 2021:
- a
$2.2 million net credit related to a fair value change in contingent consideration from a prior acquisition at Corporate; - a
$0.8 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of theFCC ; $3.4 million in long-lived asset impairment charges;$1.1 million in expenses related to a non-operating Separation Incentive Program at manufacturing;$162.9 million in net gains on marketable equity securities;$8.9 million in net earnings of affiliates whose operations are not managed by the Company;- a net non-operating gain of
$17.2 million from the sale and write-up of cost method investments; $0.1 million in net interest expense to adjust the fair value of the mandatorily redeemable noncontrolling interest; and$0.7 million in non-operating foreign currency gains.
Items included in the Company’s loss before income taxes for the six months of 2020:
$25.7 million in goodwill and other long-lived asset impairment charges;$10.2 million in restructuring charges at the education division;$2.8 million in accelerated depreciation at other businesses;$1.4 million reduction to operating expenses from property, plant and equipment gains in connection with the spectrum repacking mandate of theFCC ;$4.6 million in expenses related to non-operating Separation Incentive Programs at the education division and other businesses;$60.5 million in net losses on marketable equity securities;$3.7 million in net losses of affiliates whose operations are not managed by the Company;- non-operating gain, net, of
$1.6 million from write-ups, sales and impairments of cost and equity method investments; and $3.2 million in non-operating foreign currency gains.
Revenue for the first six months of 2021 was
Division Results
Education
Education division revenue totaled
For the first six months of 2021, education division revenue totaled
The COVID-19 pandemic adversely impacted Kaplan’s operating results beginning in
Kaplan serves a significant number of students who travel to other countries to study a second language, prepare for licensure, or pursue a higher education degree. Government-imposed travel restrictions and school closures arising from COVID-19 had a negative impact on the ability of international students to travel and attend Kaplan’s programs, particularly Kaplan International’s Language programs. In addition, most licensing bodies and administrators of standardized exams postponed or canceled scheduled examinations due to COVID-19, resulting in a significant number of students deciding to defer their studies, negatively impacting Kaplan’s exam preparation education businesses. Overall, this is expected to continue to adversely impact Kaplan's revenues and operating results for the remainder of 2021, particularly at Kaplan International Languages.
To help mitigate the adverse impact of COVID-19, Kaplan implemented a number of significant cost reduction and restructuring activities across its businesses. Related to these restructuring activities, Kaplan recorded
In 2020, Kaplan also accelerated the development and promotion of various online programs and solutions, rapidly transitioned most of its classroom-based programs online and addressed the individual needs of its students and partners, substantially reducing the disruption from COVID-19 while simultaneously adding important new product offerings and operating capabilities. Further, in the fourth quarter of 2020, Kaplan combined its three primary divisions based in
A summary of Kaplan’s operating results is as follows:
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
(in thousands) |
|
2021 |
|
2020 |
|
% Change |
|
2021 |
|
2020 |
|
% Change |
||||||||||||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Kaplan international |
|
$ |
181,276 |
|
|
|
$ |
164,713 |
|
|
|
10 |
|
|
|
$ |
353,171 |
|
|
|
$ |
364,328 |
|
|
|
(3 |
) |
|
Higher education |
|
78,740 |
|
|
|
86,453 |
|
|
|
(9 |
) |
|
|
154,426 |
|
|
|
159,990 |
|
|
|
(3 |
) |
|
||||
Supplemental education |
|
77,911 |
|
|
|
79,785 |
|
|
|
(2 |
) |
|
|
157,566 |
|
|
|
161,073 |
|
|
|
(2 |
) |
|
||||
Kaplan corporate and other |
|
3,615 |
|
|
|
3,039 |
|
|
|
19 |
|
|
|
6,978 |
|
|
|
6,244 |
|
|
|
12 |
|
|
||||
Intersegment elimination |
|
(1,558 |
) |
|
|
(815 |
) |
|
|
— |
|
|
|
(2,840 |
) |
|
|
(2,082 |
) |
|
|
— |
|
|
||||
|
|
$ |
339,984 |
|
|
|
$ |
333,175 |
|
|
|
2 |
|
|
|
$ |
669,301 |
|
|
|
$ |
689,553 |
|
|
|
(3 |
) |
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Kaplan international |
|
$ |
14,077 |
|
|
|
$ |
16,035 |
|
|
|
(12 |
) |
|
|
$ |
24,284 |
|
|
|
$ |
35,015 |
|
|
|
(31 |
) |
|
Higher education |
|
2,374 |
|
|
|
17,050 |
|
|
|
(86 |
) |
|
|
8,627 |
|
|
|
15,030 |
|
|
|
(43 |
) |
|
||||
Supplemental education |
|
8,813 |
|
|
|
330 |
|
|
|
— |
|
|
|
21,310 |
|
|
|
(6,220 |
) |
|
|
— |
|
|
||||
Kaplan corporate and other |
|
(6,042 |
) |
|
|
(6,870 |
) |
|
|
12 |
|
|
|
(10,949 |
) |
|
|
(8,392 |
) |
|
|
(30 |
) |
|
||||
Amortization of intangible assets |
|
(3,914 |
) |
|
|
(4,271 |
) |
|
|
8 |
|
|
|
(8,079 |
) |
|
|
(8,472 |
) |
|
|
5 |
|
|
||||
Impairment of long-lived assets |
|
(2,159 |
) |
|
|
(10,020 |
) |
|
|
78 |
|
|
|
(3,206 |
) |
|
|
(10,020 |
) |
|
|
68 |
|
|
||||
Intersegment elimination |
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
97 |
|
|
|
5 |
|
|
|
— |
|
|
||||
|
|
$ |
13,148 |
|
|
|
$ |
12,254 |
|
|
|
7 |
|
|
|
$ |
32,084 |
|
|
|
$ |
16,946 |
|
|
|
89 |
|
|
Higher Education includes the results of Kaplan as a service provider to higher education institutions. In the second quarter and first six months of 2021, Higher Education revenue declined 9% and 3%, respectively, due to a reduction in the Purdue Global fee recorded. For the second quarter and first half of 2021, Kaplan recorded a portion of the fee with Purdue Global based on an assessment of its collectability under the TOSA. Higher Education operating income was down substantially from the prior year, as the Purdue Global fee recognized in the first six months of 2021 was lower than the amount recognized in the prior year, due to less cash available for distribution at
Supplemental Education includes Kaplan’s standardized test preparation programs and domestic professional and other continuing education businesses. Supplemental Education revenue declined 2% for the second quarter and first six months of 2021, due to a decline in retail comprehensive test preparation demand, offset in part by product-life extensions in 2020 related to the postponement of various standardized test and certification exam dates due to COVID-19, as well as growth in real estate and insurance programs. Operating results improved in 2021 due to savings from restructuring activities implemented in 2020,
Kaplan corporate and other represents unallocated expenses of Kaplan, Inc.’s corporate office, other minor businesses and certain shared activities. Overall, Kaplan corporate and other expenses increased in the first six months of 2021 due to higher compensation costs.
Revenue at the television broadcasting division increased 19% to
Revenue at the television broadcasting division increased 8% to
Manufacturing
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;
Manufacturing revenues increased 70% and 31% in the second quarter and first six months of 2021, respectively. The revenue growth for the second quarter of 2021 is due primarily to significantly increased revenues at Hoover from substantially higher wood prices and improved product demand, as well as increased revenue at Dekko. The revenue growth for the first half of 2021 is due primarily to significantly increased revenues at Hoover from substantially higher wood prices and improved product demand, partially offset by lower revenues at Dekko from lower product demand. Manufacturing operating results improved in the second quarter of 2021 due to significantly higher results at Hoover from substantial gains on inventory sales and improved results at Dekko. Manufacturing operating results improved in the first six months of 2021 due to significantly higher results at Hoover from substantial gains on inventory sales, partially offset by a decline in Dekko results from lower revenues and higher prices for certain commodities. Wood prices began to decline in
In the second quarter of 2021, Dekko announced a plan to relocate its manufacturing operations in
Healthcare
The
In the second quarter of 2020, GHG received
Other Businesses
Automotive
Automotive includes three automotive dealerships in the
Clyde’s Restaurant Group
Clyde’s Restaurant Group (CRG) owns and operates eleven restaurants and entertainment venues in the
Overall, CRG incurred operating losses in each of the second quarters and first six months of 2021 and 2020 due to limited revenues and costs incurred to maintain its facilities and support its employees, however, those losses were significantly lower in 2021. While CRG revenues have been adversely impacted as a result of the pandemic, such revenues improved steadily in each of the first six months of 2021. CRG continues to develop and implement initiatives to increase sales and reduce costs to mitigate the impact of COVID-19.
On
Code3
Code3 is a performance marketing agency focused on driving performance for brands through three core elements of digital success: media, creative and commerce. Code3 revenue declined in the second quarter and first six months of 2021, due to continued sluggish marketing spending by some advertising clients, offset by increased commerce and creative revenues. Code3 reported operating losses in the second quarter and first six months of 2021 and 2020. In the second quarter of 2021, Code 3 recorded a
Leaf Group
On
Megaphone
Megaphone was sold by the Company to Spotify in
Other
Other businesses also include Slate and
Overall, for the second quarter of 2021, operating revenues for other businesses increased due largely to increases at the automotive dealerships and CRG and from the
Corporate Office
Corporate office includes the expenses of the Company’s corporate office and certain continuing obligations related to prior business dispositions. Corporate office expenses increased in the first six months of 2021 due primarily to higher compensation costs, offset by a credit related to the fair value change in contingent consideration related to the
Equity in Earnings of Affiliates
At
The Company recorded equity in earnings of affiliates of
Net Interest Expense and Related Balances
The Company incurred net interest expense of
At
Non-operating Pension and Postretirement Benefit Income, net
The Company recorded net non-operating pension and postretirement benefit income of
In the second quarter of 2021, the Company recorded
Gain (Loss) on
Overall, the Company recognized
Other Non-Operating Income
The Company recorded total other non-operating income, net, of
The Company recorded total other non-operating income, net of
Provision for (Benefit from) Income Taxes
The Company’s effective tax rate for the first six months of 2021 and 2020 was 27.0% and 18.9%, respectively.
Earnings (Losses) Per Share
The calculation of diluted earnings (losses) per share for the second quarter and first six months of 2021 was based on 4,985,488 and 4,981,000 weighted average shares outstanding, respectively, compared to 5,201,101 and 5,234,809, respectively, for the second quarter and first six months of 2020. At
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 2020 Annual Report to Stockholders, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the duration and severity of the COVID-19 pandemic and its effects on the Company’s operations, financial results, liquidity and cash flows. Other forward-looking statements include comments about expectations related to acquisitions or dispositions or related business activities, including the TOSA, the Company’s business strategies and objectives, anticipated results of license renewal applications, the prospects for growth in the Company’s various business operations and the Company’s future financial performance. As with any projection or forecast, forward-looking statements are subject to various risks and uncertainties, including the risks and uncertainties described in Item 1A of the Company’s Annual Report on Form 10-K, that could cause actual results or events to differ materially from those anticipated in such statements. 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.
|
||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||
(Unaudited) |
||||||||||||
|
|
|
||||||||||
|
Three Months Ended |
|
||||||||||
|
|
% |
||||||||||
(in thousands, except per share amounts) |
2021 |
|
2020 |
Change |
||||||||
Operating revenues |
$ |
801,152 |
|
|
|
$ |
652,871 |
|
|
23 |
|
|
Operating expenses |
729,304 |
|
|
|
598,243 |
|
|
22 |
|
|
||
Depreciation of property, plant and equipment |
16,600 |
|
|
|
22,913 |
|
|
(28 |
) |
|
||
Amortization of intangible assets |
13,889 |
|
|
|
14,327 |
|
|
(3 |
) |
|
||
Impairment of long-lived assets |
3,768 |
|
|
|
11,511 |
|
|
(67 |
) |
|
||
Operating income |
37,591 |
|
|
|
5,877 |
|
|
— |
|
|
||
Equity in earnings of affiliates, net |
1,776 |
|
|
|
1,182 |
|
|
50 |
|
|
||
Interest income |
1,876 |
|
|
|
954 |
|
|
97 |
|
|
||
Interest expense |
(7,353 |
) |
|
|
(7,377 |
) |
|
0 |
|
|
||
Non-operating pension and postretirement benefit income, net |
25,216 |
|
|
|
12,136 |
|
|
— |
|
|
||
Gain on marketable equity securities, net |
83,698 |
|
|
|
39,890 |
|
|
— |
|
|
||
Other income, net |
16,122 |
|
|
|
8,100 |
|
|
99 |
|
|
||
Income before income taxes |
158,926 |
|
|
|
60,762 |
|
|
— |
|
|
||
Provision for income taxes |
43,000 |
|
|
|
41,900 |
|
|
3 |
|
|
||
Net income |
115,926 |
|
|
|
18,862 |
|
|
— |
|
|
||
Net income attributable to noncontrolling interests |
(568 |
) |
|
|
(8 |
) |
|
— |
|
|
||
Net Income Attributable to Graham Holdings Company Common Stockholders |
$ |
115,358 |
|
|
|
$ |
18,854 |
|
|
— |
|
|
Per Share Information Attributable to Graham Holdings Company Common Stockholders |
|
|
|
|
||||||||
Basic net income per common share |
$ |
23.07 |
|
|
|
$ |
3.61 |
|
|
— |
|
|
Basic average number of common shares outstanding |
4,968 |
|
|
|
5,196 |
|
|
|
||||
Diluted net income per common share |
$ |
22.99 |
|
|
|
$ |
3.60 |
|
|
— |
|
|
Diluted average number of common shares outstanding |
4,985 |
|
|
|
5,201 |
|
|
|
||||
|
|
|||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|||||||||||
(Unaudited) |
|
|||||||||||
|
|
|
||||||||||
|
Six Months Ended |
|
||||||||||
|
|
% |
||||||||||
(in thousands, except per share amounts) |
2021 |
|
2020 |
Change |
||||||||
Operating revenues |
$ |
1,513,607 |
|
|
|
$ |
1,385,128 |
|
|
9 |
|
|
Operating expenses |
1,376,386 |
|
|
|
1,275,145 |
|
|
8 |
|
|
||
Depreciation of property, plant and equipment |
33,145 |
|
|
|
39,617 |
|
|
(16 |
) |
|
||
Amortization of intangible assets |
27,826 |
|
|
|
28,492 |
|
|
(2 |
) |
|
||
Impairment of goodwill and other long-lived assets |
4,815 |
|
|
|
27,912 |
|
|
(83 |
) |
|
||
Operating income |
71,435 |
|
|
|
13,962 |
|
|
— |
|
|
||
Equity in earnings (losses) of affiliates, net |
15,204 |
|
|
|
(365 |
) |
|
— |
|
|
||
Interest income |
2,766 |
|
|
|
2,105 |
|
|
31 |
|
|
||
Interest expense |
(15,801 |
) |
|
|
(15,055 |
) |
|
5 |
|
|
||
Non-operating pension and postretirement benefit income, net |
54,003 |
|
|
|
30,539 |
|
|
77 |
|
|
||
Gain (loss) on marketable equity securities, net |
162,912 |
|
|
|
(60,503 |
) |
|
— |
|
|
||
Other income, net |
22,442 |
|
|
|
10,788 |
|
|
— |
|
|
||
Income (loss) before income taxes |
312,961 |
|
|
|
(18,529 |
) |
|
— |
|
|
||
Provision for (benefit from) income taxes |
84,400 |
|
|
|
(3,500 |
) |
|
— |
|
|
||
Net income (loss) |
228,561 |
|
|
|
(15,029 |
) |
|
— |
|
|
||
Net (income) loss attributable to noncontrolling interests |
(753 |
) |
|
|
638 |
|
|
— |
|
|
||
Net Income (Loss) Attributable to Graham Holdings Company Common Stockholders |
$ |
227,808 |
|
|
|
$ |
(14,391 |
) |
|
— |
|
|
Per Share Information Attributable to Graham Holdings Company Common Stockholders |
|
|
|
|
||||||||
Basic net income (loss) per common share |
$ |
45.55 |
|
|
|
$ |
(2.77 |
) |
|
— |
|
|
Basic average number of common shares outstanding |
4,968 |
|
|
|
5,235 |
|
|
|
||||
Diluted net income (loss) per common share |
$ |
45.43 |
|
|
|
$ |
(2.77 |
) |
|
— |
|
|
Diluted average number of common shares outstanding |
4,981 |
|
|
|
5,235 |
|
|
|
||||
|
||||||||||||||||||||||||||||
BUSINESS DIVISION INFORMATION |
||||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||||
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
||||||||||||||||||||
|
|
|
|
% |
|
|
|
% |
||||||||||||||||||||
(in thousands) |
|
2021 |
|
2020 |
|
Change |
|
2021 |
|
2020 |
|
Change |
||||||||||||||||
Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Education |
|
$ |
339,984 |
|
|
|
$ |
333,175 |
|
|
|
2 |
|
|
|
$ |
669,301 |
|
|
|
$ |
689,553 |
|
|
|
(3 |
) |
|
Television broadcasting |
|
119,966 |
|
|
|
100,762 |
|
|
|
19 |
|
|
|
233,591 |
|
|
|
216,210 |
|
|
|
8 |
|
|
||||
Manufacturing |
|
141,123 |
|
|
|
83,239 |
|
|
|
70 |
|
|
|
257,083 |
|
|
|
196,697 |
|
|
|
31 |
|
|
||||
Healthcare |
|
54,696 |
|
|
|
49,181 |
|
|
|
11 |
|
|
|
104,739 |
|
|
|
95,175 |
|
|
|
10 |
|
|
||||
Other businesses |
|
145,899 |
|
|
|
86,863 |
|
|
|
68 |
|
|
|
249,938 |
|
|
|
188,145 |
|
|
|
33 |
|
|
||||
Corporate office |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
||||
Intersegment elimination |
|
(516 |
) |
|
|
(349 |
) |
|
|
— |
|
|
|
(1,045 |
) |
|
|
(652 |
) |
|
|
— |
|
|
||||
|
|
$ |
801,152 |
|
|
|
$ |
652,871 |
|
|
|
23 |
|
|
|
$ |
1,513,607 |
|
|
|
$ |
1,385,128 |
|
|
|
9 |
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Education |
|
$ |
326,836 |
|
|
|
$ |
320,921 |
|
|
|
2 |
|
|
|
$ |
637,217 |
|
|
|
$ |
672,607 |
|
|
|
(5 |
) |
|
Television broadcasting |
|
84,363 |
|
|
|
77,135 |
|
|
|
9 |
|
|
|
165,010 |
|
|
|
156,807 |
|
|
|
5 |
|
|
||||
Manufacturing |
|
128,695 |
|
|
|
84,721 |
|
|
|
52 |
|
|
|
235,748 |
|
|
|
191,678 |
|
|
|
23 |
|
|
||||
Healthcare |
|
46,101 |
|
|
|
40,363 |
|
|
|
14 |
|
|
|
89,004 |
|
|
|
83,188 |
|
|
|
7 |
|
|
||||
Other businesses |
|
163,512 |
|
|
|
111,183 |
|
|
|
47 |
|
|
|
286,888 |
|
|
|
245,946 |
|
|
|
17 |
|
|
||||
Corporate office |
|
14,570 |
|
|
|
13,020 |
|
|
|
12 |
|
|
|
29,350 |
|
|
|
21,592 |
|
|
|
36 |
|
|
||||
Intersegment elimination |
|
(516 |
) |
|
|
(349 |
) |
|
|
— |
|
|
|
(1,045 |
) |
|
|
(652 |
) |
|
|
— |
|
|
||||
|
|
$ |
763,561 |
|
|
|
$ |
646,994 |
|
|
|
18 |
|
|
|
$ |
1,442,172 |
|
|
|
$ |
1,371,166 |
|
|
|
5 |
|
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Education |
|
$ |
13,148 |
|
|
|
$ |
12,254 |
|
|
|
7 |
|
|
|
$ |
32,084 |
|
|
|
$ |
16,946 |
|
|
|
89 |
|
|
Television broadcasting |
|
35,603 |
|
|
|
23,627 |
|
|
|
51 |
|
|
|
68,581 |
|
|
|
59,403 |
|
|
|
15 |
|
|
||||
Manufacturing |
|
12,428 |
|
|
|
(1,482 |
) |
|
|
— |
|
|
|
21,335 |
|
|
|
5,019 |
|
|
|
— |
|
|
||||
Healthcare |
|
8,595 |
|
|
|
8,818 |
|
|
|
(3 |
) |
|
|
15,735 |
|
|
|
11,987 |
|
|
|
31 |
|
|
||||
Other businesses |
|
(17,613 |
) |
|
|
(24,320 |
) |
|
|
28 |
|
|
|
(36,950 |
) |
|
|
(57,801 |
) |
|
|
36 |
|
|
||||
Corporate office |
|
(14,570 |
) |
|
|
(13,020 |
) |
|
|
(12 |
) |
|
|
(29,350 |
) |
|
|
(21,592 |
) |
|
|
(36 |
) |
|
||||
|
|
$ |
37,591 |
|
|
|
$ |
5,877 |
|
|
|
— |
|
|
|
$ |
71,435 |
|
|
|
$ |
13,962 |
|
|
|
— |
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Education |
|
$ |
7,482 |
|
|
|
$ |
10,324 |
|
|
|
(28 |
) |
|
|
$ |
15,262 |
|
|
|
$ |
17,653 |
|
|
|
(14 |
) |
|
Television broadcasting |
|
3,543 |
|
|
|
3,446 |
|
|
|
3 |
|
|
|
7,016 |
|
|
|
6,789 |
|
|
|
3 |
|
|
||||
Manufacturing |
|
2,427 |
|
|
|
2,526 |
|
|
|
(4 |
) |
|
|
4,944 |
|
|
|
5,053 |
|
|
|
(2 |
) |
|
||||
Healthcare |
|
331 |
|
|
|
493 |
|
|
|
(33 |
) |
|
|
648 |
|
|
|
1,033 |
|
|
|
(37 |
) |
|
||||
Other businesses |
|
2,659 |
|
|
|
5,948 |
|
|
|
(55 |
) |
|
|
4,949 |
|
|
|
8,738 |
|
|
|
(43 |
) |
|
||||
Corporate office |
|
158 |
|
|
|
176 |
|
|
|
(10 |
) |
|
|
326 |
|
|
|
351 |
|
|
|
(7 |
) |
|
||||
|
|
$ |
16,600 |
|
|
|
$ |
22,913 |
|
|
|
(28 |
) |
|
|
$ |
33,145 |
|
|
|
$ |
39,617 |
|
|
|
(16 |
) |
|
Amortization of Intangible Assets and Impairment of |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Education |
|
$ |
6,073 |
|
|
|
$ |
14,291 |
|
|
|
(58 |
) |
|
|
$ |
11,285 |
|
|
|
$ |
18,492 |
|
|
|
(39 |
) |
|
Television broadcasting |
|
1,361 |
|
|
|
1,361 |
|
|
|
0 |
|
|
|
2,720 |
|
|
|
2,721 |
|
|
|
0 |
|
|
||||
Manufacturing |
|
6,610 |
|
|
|
6,988 |
|
|
|
(5 |
) |
|
|
13,597 |
|
|
|
14,125 |
|
|
|
(4 |
) |
|
||||
Healthcare |
|
780 |
|
|
|
1,307 |
|
|
|
(40 |
) |
|
|
1,561 |
|
|
|
2,617 |
|
|
|
(40 |
) |
|
||||
Other businesses |
|
2,833 |
|
|
|
1,891 |
|
|
|
50 |
|
|
|
3,478 |
|
|
|
18,449 |
|
|
|
(81 |
) |
|
||||
Corporate office |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
||||
|
|
$ |
17,657 |
|
|
|
$ |
25,838 |
|
|
|
(32 |
) |
|
|
$ |
32,641 |
|
|
|
$ |
56,404 |
|
|
|
(42 |
) |
|
Pension Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Education |
|
$ |
2,398 |
|
|
|
$ |
2,592 |
|
|
|
(7 |
) |
|
|
$ |
4,681 |
|
|
|
$ |
5,177 |
|
|
|
(10 |
) |
|
Television broadcasting |
|
956 |
|
|
|
836 |
|
|
|
14 |
|
|
|
1,791 |
|
|
|
1,632 |
|
|
|
10 |
|
|
||||
Manufacturing |
|
246 |
|
|
|
395 |
|
|
|
(38 |
) |
|
|
641 |
|
|
|
789 |
|
|
|
(19 |
) |
|
||||
Healthcare |
|
108 |
|
|
|
112 |
|
|
|
(4 |
) |
|
|
280 |
|
|
|
271 |
|
|
|
3 |
|
|
||||
Other businesses |
|
487 |
|
|
|
403 |
|
|
|
21 |
|
|
|
856 |
|
|
|
866 |
|
|
|
(1 |
) |
|
||||
Corporate office |
|
1,682 |
|
|
|
1,466 |
|
|
|
15 |
|
|
|
3,230 |
|
|
|
2,852 |
|
|
|
13 |
|
|
||||
|
|
$ |
5,877 |
|
|
|
$ |
5,804 |
|
|
|
1 |
|
|
|
$ |
11,479 |
|
|
|
$ |
11,587 |
|
|
|
(1 |
) |
|
|
||||||||||||||||||||||||||||
EDUCATION DIVISION INFORMATION |
||||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
||||||||||||||||||||
|
|
|
|
% |
|
|
|
% |
||||||||||||||||||||
(in thousands) |
|
2021 |
|
2020 |
|
Change |
|
2021 |
|
2020 |
|
Change |
||||||||||||||||
Operating Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Kaplan international |
|
$ |
181,276 |
|
|
|
$ |
164,713 |
|
|
|
10 |
|
|
|
$ |
353,171 |
|
|
|
$ |
364,328 |
|
|
|
(3 |
) |
|
Higher education |
|
78,740 |
|
|
|
86,453 |
|
|
|
(9 |
) |
|
|
154,426 |
|
|
|
159,990 |
|
|
|
(3 |
) |
|
||||
Supplemental education |
|
77,911 |
|
|
|
79,785 |
|
|
|
(2 |
) |
|
|
157,566 |
|
|
|
161,073 |
|
|
|
(2 |
) |
|
||||
Kaplan corporate and other |
|
3,615 |
|
|
|
3,039 |
|
|
|
19 |
|
|
|
6,978 |
|
|
|
6,244 |
|
|
|
12 |
|
|
||||
Intersegment elimination |
|
(1,558 |
) |
|
|
(815 |
) |
|
|
— |
|
|
|
(2,840 |
) |
|
|
(2,082 |
) |
|
|
— |
|
|
||||
|
|
$ |
339,984 |
|
|
|
$ |
333,175 |
|
|
|
2 |
|
|
|
$ |
669,301 |
|
|
|
$ |
689,553 |
|
|
|
(3 |
) |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Kaplan international |
|
$ |
167,199 |
|
|
|
$ |
148,678 |
|
|
|
12 |
|
|
|
$ |
328,887 |
|
|
|
$ |
329,313 |
|
|
|
0 |
|
|
Higher education |
|
76,366 |
|
|
|
69,403 |
|
|
|
10 |
|
|
|
145,799 |
|
|
|
144,960 |
|
|
|
1 |
|
|
||||
Supplemental education |
|
69,098 |
|
|
|
79,455 |
|
|
|
(13 |
) |
|
|
136,256 |
|
|
|
167,293 |
|
|
|
(19 |
) |
|
||||
Kaplan corporate and other |
|
9,657 |
|
|
|
9,909 |
|
|
|
(3 |
) |
|
|
17,927 |
|
|
|
14,636 |
|
|
|
22 |
|
|
||||
Amortization of intangible assets |
|
3,914 |
|
|
|
4,271 |
|
|
|
(8 |
) |
|
|
8,079 |
|
|
|
8,472 |
|
|
|
(5 |
) |
|
||||
Impairment of long-lived assets |
|
2,159 |
|
|
|
10,020 |
|
|
|
(78 |
) |
|
|
3,206 |
|
|
|
10,020 |
|
|
|
(68 |
) |
|
||||
Intersegment elimination |
|
(1,557 |
) |
|
|
(815 |
) |
|
|
— |
|
|
|
(2,937 |
) |
|
|
(2,087 |
) |
|
|
— |
|
|
||||
|
|
$ |
326,836 |
|
|
|
$ |
320,921 |
|
|
|
2 |
|
|
|
$ |
637,217 |
|
|
|
$ |
672,607 |
|
|
|
(5 |
) |
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Kaplan international |
|
$ |
14,077 |
|
|
|
$ |
16,035 |
|
|
|
(12 |
) |
|
|
$ |
24,284 |
|
|
|
$ |
35,015 |
|
|
|
(31 |
) |
|
Higher education |
|
2,374 |
|
|
|
17,050 |
|
|
|
(86 |
) |
|
|
8,627 |
|
|
|
15,030 |
|
|
|
(43 |
) |
|
||||
Supplemental education |
|
8,813 |
|
|
|
330 |
|
|
|
— |
|
|
|
21,310 |
|
|
|
(6,220 |
) |
|
|
— |
|
|
||||
Kaplan corporate and other |
|
(6,042 |
) |
|
|
(6,870 |
) |
|
|
12 |
|
|
|
(10,949 |
) |
|
|
(8,392 |
) |
|
|
(30 |
) |
|
||||
Amortization of intangible assets |
|
(3,914 |
) |
|
|
(4,271 |
) |
|
|
8 |
|
|
|
(8,079 |
) |
|
|
(8,472 |
) |
|
|
5 |
|
|
||||
Impairment of long-lived assets |
|
(2,159 |
) |
|
|
(10,020 |
) |
|
|
78 |
|
|
|
(3,206 |
) |
|
|
(10,020 |
) |
|
|
68 |
|
|
||||
Intersegment elimination |
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
97 |
|
|
|
5 |
|
|
|
— |
|
|
||||
|
|
$ |
13,148 |
|
|
|
$ |
12,254 |
|
|
|
7 |
|
|
|
$ |
32,084 |
|
|
|
$ |
16,946 |
|
|
|
89 |
|
|
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Kaplan international |
|
$ |
4,835 |
|
|
|
$ |
5,619 |
|
|
|
(14 |
) |
|
|
$ |
10,087 |
|
|
|
$ |
10,197 |
|
|
|
(1 |
) |
|
Higher education |
|
873 |
|
|
|
832 |
|
|
|
5 |
|
|
|
1,725 |
|
|
|
1,555 |
|
|
|
11 |
|
|
||||
Supplemental education |
|
1,670 |
|
|
|
3,772 |
|
|
|
(56 |
) |
|
|
3,246 |
|
|
|
5,711 |
|
|
|
(43 |
) |
|
||||
Kaplan corporate and other |
|
104 |
|
|
|
101 |
|
|
|
3 |
|
|
|
204 |
|
|
|
190 |
|
|
|
7 |
|
|
||||
|
|
$ |
7,482 |
|
|
|
$ |
10,324 |
|
|
|
(28 |
) |
|
|
$ |
15,262 |
|
|
|
$ |
17,653 |
|
|
|
(14 |
) |
|
Pension Expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Kaplan international |
|
$ |
77 |
|
|
|
$ |
120 |
|
|
|
(36 |
) |
|
|
$ |
148 |
|
|
|
$ |
232 |
|
|
|
(36 |
) |
|
Higher education |
|
1,137 |
|
|
|
1,070 |
|
|
|
6 |
|
|
|
2,220 |
|
|
|
2,140 |
|
|
|
4 |
|
|
||||
Supplemental education |
|
976 |
|
|
|
1,084 |
|
|
|
(10 |
) |
|
|
1,907 |
|
|
|
2,169 |
|
|
|
(12 |
) |
|
||||
Kaplan corporate and other |
|
208 |
|
|
|
318 |
|
|
|
(35 |
) |
|
|
406 |
|
|
|
636 |
|
|
|
(36 |
) |
|
||||
|
|
$ |
2,398 |
|
|
|
$ |
2,592 |
|
|
|
(7 |
) |
|
|
$ |
4,681 |
|
|
|
$ |
5,177 |
|
|
|
(10 |
) |
|
NON-GAAP FINANCIAL INFORMATION
(Unaudited)
In addition to the results reported in accordance with accounting principles generally accepted in
- 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.
The Company has provided this non-GAAP information on a pre-income tax basis in order to facilitate a meaningful period-to-period comparison of income in light of the difference in applicable income tax rates for the second quarter and first six months of 2021 and the second quarter and first six months of 2020.
Income before income taxes, 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 following table reconciles the non-GAAP financial measures to the most directly comparable GAAP measures:
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||
(in thousands) |
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||||||
Income (loss) before income taxes, as reported |
$ |
158,926 |
|
|
|
$ |
60,762 |
|
|
|
$ |
312,961 |
|
|
|
$ |
(18,529 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||||||
Net credit related to a fair value change in contingent consideration from a prior acquisition |
(2,599 |
) |
|
|
— |
|
|
|
(2,213 |
) |
|
|
— |
|
|
||||
|
3,439 |
|
|
|
9,274 |
|
|
|
3,439 |
|
|
|
25,676 |
|
|
||||
Restructuring charges at the education division |
— |
|
|
|
10,211 |
|
|
|
— |
|
|
|
10,211 |
|
|
||||
Accelerated depreciation at other businesses |
— |
|
|
|
2,847 |
|
|
|
— |
|
|
|
2,847 |
|
|
||||
Reduction to operating expenses in connection with the broadcast spectrum repacking |
(171 |
) |
|
|
(1,074 |
) |
|
|
(814 |
) |
|
|
(1,365 |
) |
|
||||
Charges related to non-operating Separation Incentive Program |
1,118 |
|
|
|
4,583 |
|
|
|
1,118 |
|
|
|
4,583 |
|
|
||||
Net (gains) losses on marketable equity securities |
(83,698 |
) |
|
|
(39,890 |
) |
|
|
(162,912 |
) |
|
|
60,503 |
|
|
||||
Net losses (earnings) of affiliates whose operations are not managed by the Company |
1,436 |
|
|
|
3,083 |
|
|
|
(8,896 |
) |
|
|
3,667 |
|
|
||||
Non-operating gain, net, from sales, write-ups and impairments of cost and equity method investments |
(14,482 |
) |
|
|
(7,752 |
) |
|
|
(17,205 |
) |
|
|
(1,621 |
) |
|
||||
Net interest (income) expense related to the fair value adjustment of the mandatorily redeemable noncontrolling interest |
(955 |
) |
|
|
— |
|
|
|
96 |
|
|
|
— |
|
|
||||
Foreign currency (gain) loss |
(678 |
) |
|
|
1,070 |
|
|
|
(678 |
) |
|
|
(3,220 |
) |
|
||||
Income before income taxes, adjusted (non-GAAP) |
$ |
62,336 |
|
|
|
$ |
43,114 |
|
|
|
$ |
124,896 |
|
|
|
$ |
82,752 |
|
|
###
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