Graham Holdings Company (GHC) Earnings Call Transcript & Summary

Hello, and welcome to the 2023 Graham Holdings Investor Day. I am Tim O'Shaughnessy, the CEO at Graham Holdings. Before we get going, I'd like to remind you that these presentations at this meeting contain certain forward-looking statements that are based largely on the company's current expectations. All public statements made by the company and its representatives that are not statements of historical fact, including certain statements in this presentation, the company's annual report on Form 10-K, its current reports on Forms 8-K, the company's 2022 annual report to stockholders and the Forms 10-Q for the first, second and third quarter are forward-looking statements, meaning the meaning -- within the meaning of the Private Securities Litigation Reform Act of 1995. In addition to the results reported in accordance with accounting principles generally accepted in the United States included in this presentation, the company is providing certain non-GAAP financial measures. The most directly comparable GAAP financial measure and a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in the appendix of this presentation. The full disclaimer is available on our website. So with that, I'd like to get moving. We have quite a bit to share today, and I appreciate everyone's attendance. The agenda will be as follows: a general update on financial results and operations of the company. Catherine Badalamente, the CEO of Graham Media Group, will provide an update on operations at GMG and how we are navigating the changing media landscape; a financial analysis of the 3 divisions we've built over the last 5 to 10 years, health care, automotive and manufacturing; our thoughts on stock repurchases; and a question-and-answer session for as long as time permits. We've received several questions in advance, and would like to remind you that questions can also be submitted real time through the presentation portal. We have been pleased with the results year-to-date. More has gone right than wrong in 2023. Perhaps a better measure of progress may be to note that through only 3 quarters of this year, we're also -- we're only modestly behind the 2021 full year adjusted operating cash flow number, and we still have 1 quarter to go. The results have been driven by the expected recovery at Kaplan, steady results at manufacturing and automotive and strong growth in the health care business. These largely offset expected declines at Graham Media and a modest increase in losses at other businesses. Revenue continues to grow, with year-to-date totals up 14% from prior year, driven by a mix of organic and acquired growth. Through Q3, our adjusted operating cash flow is modestly down from 2022. This gap will likely expand a bit in Q4 as we lap against the peak of last year's political advertising season. Capital expenditures rose as several expansion projects launched at a few units. These should be substantially completed in 2024. The balance sheet has not changed drastically this year. We continue to have a cash and marketable securities balance that exceeds our debt. We took out a term loan A due in May 2027, largely as a revolver supplement to increase flexibility and modestly change our maturity profile. Our total debt as of 9/30 remains similar to the levels prior to taking out the term loan A. The team at Kaplan is doing amazing work. Improved results have been realized year-to-date at both Kaplan International and Kaplan North America. Revenue is up 12% year-to-date, with adjusted operating cash flow increasing to $130 million, a 27% increase over the prior year. Corporate costs are up due to the achievement of several incentive compensation awards. The improved results are wonderful. Kaplan is increasingly viewed across the global education ecosystem as a highly valued partner and has been able to build upon that reputation to continue to grow its business, both in and outside the U.S. I've never felt better about our ability to continue to provide solutions for both the rising global middle class and higher education institutions. In 2020, it was projected that 1 billion people will enter the global middle class over the following decade, with enrollments into postsecondary education growing by more than 150 million during the same period. I would argue Kaplan is better positioned than any organization in the world to help address this market need. We should continue to capitalize on our ability to deliver results for students and shareholders in the coming years. Andy Rosen and his team have done a remarkable job in changing the nature of Kaplan. At Kaplan North America, our supplemental business has migrated away from a major dependency on the pre-college segment and is more geared to professional certifications with increasing institutional sales via our All Access programs. Also at KNA, the higher education business has transitioned from proprietary degree awarding programs to becoming a key partner with universities. At Kaplan International, we have a diverse set of programs for students in a diverse number of end markets from a diverse number of student source countries. Perhaps nothing exemplifies the change more than the fact that 10 years ago, 1 of Kaplan International's biggest income-producing businesses was languages. Now it's 1 of the smallest, yet KI is much larger than a decade ago. Catherine will follow up with an in-depth presentation on Graham Media Group, so I will only touch on the business briefly. With an off-cycle year of political advertising, year-to-date revenue through Q3 is down 9% and adjusted operating cash flow was down 26%. We expect steady demand from local advertisers and robust demand from political advertisers to drive a very strong 2024. The media bundle and distribution of local news is in the midst of change. Catherine will discuss how Graham Media is approaching that change shortly. The Manufacturing segment has had another solid year, led by Hoover, with a strong contribution from Joyce/Dayton, the segment had flat adjusted operating cash flow with revenue modestly down. We are patiently awaiting the recovery of the commercial real estate market, which would lead to improved results at Dekko. Nearly 4 years after the start of the pandemic, I am hopeful we are closer to a world where supply and demand normalization of commercial office space is on the horizon. Growth continues at Graham Healthcare Group. Consolidated revenue has increased 44% year-to-date, with adjusted operating cash flow up 47% to $34 million. At the joint ventures, GHG's share of earnings increased 34%. As a reminder, the healthcare operations are comprised of 3 areas: wholly owned home health and hospice operations, home health and hospice joint ventures and other healthcare services businesses, where we hold equity stakes between 51% and 100%. Our growth has been driven by a few factors; one, strong purpose-driven management; two, quality outcomes in the care we provide; and three, societal desire and economic motives for care to be delivered outside of a hospital or medical facility setting when appropriate. All 3 parts of the business have grown in 2023, although at different rates. Revenue has grown the fastest within our newer health care services businesses. At CSI Pharmacy, the opening of 2 additional pharmacy locations kicked off additional geographic penetration. We are also beginning to see the benefits of investing in the management infrastructure to grow CSI into a larger company. The investments in 2022 and the beginning of 2023 have paid dividends and should continue to provide operating leverage moving forward. CSI's revenue year-to-date has increased 81%, and we believe the business has more runway ahead. Home Health and Hospice continues to grow their operations, revenue and operating income, even in the face of more challenging reimbursement rates and cost of service delivery. With recent consolidation in the broader industry, our strength as 1 of the larger independent operators should be an advantage moving forward as hospital systems look for home health and hospice partners. We remain excited about the future prospects at Graham Healthcare Group. We should be able to grow organically as well as occasionally expand our operations via acquisition. The sector is enormous, and we expect this formula to work for some time to come. 2023 saw another steady year of performance at the Automotive group. In addition to acquiring Toyota of Richmond at the end of September, we are on track to be open for business at Kia of Bethesda by the end of the year. Year-to-date revenue grew substantially from prior year, partially due to some organic growth, but largely tied to a full year of owning our 2 rooftops in Woodbridge, Virginia. Adjusted operating cash flow is up 11% through Q3 as well. The addition of Toyota of Richmond and Kia continue to leverage our D.C. area team and infrastructure to build 1 of the area's premier operating groups. Overall, business remains solid. Although new and used vehicle front-end gross profits have begun to retreat from the highs of recent years, we believe the overall consumer demand equation for the industry looks favorable for the foreseeable future. Additionally, the continued development of strong hybrid products by our OEM partners seems to be addressing a consumer need. We believe our brands are favorably positioned to meet these consumer preferences. Our Other Businesses group did not take the step forward we had hoped for this year, although there are signs that trends may be improving. Revenue has decreased year-to-date by 13%, and adjusted operating losses have worsened by $6 million. We expect this cash flow trend to reverse in 2024. The primary reason for the lack of expected improvements is the results of the former Leaf businesses, which took a step back in 2023, offsetting improvements in many other units. As discussed in May at the annual meeting, in Q2, we eliminated the holding company structure at Leaf and began to transition the 3 businesses into stand-alone companies. Costs associated with this transition elevated Leaf losses on a short-term basis beyond what they would have otherwise been. While not entirely through the transition phase, we are much closer to the end than the beginning. The businesses now largely operate as distinct units with separate leadership. By the end of 2023, we will have reduced the annual fixed expense base of the former Leaf businesses by over $20 million. Costs tied to these efforts will have largely cycled out after the first half of 2024. Beyond Leaf, we've made good progress. Two of our media businesses crossed the line to profitability in 2023, Slate and Foreign Policy. They are to be commended for building diversified digital media businesses that do important work in the world. 2023 has been a year of real headwinds in the larger digital media landscape. Being able to make the progress they have made with macro headwinds is an impressive accomplishment. Elsewhere, Framebridge continues its market expansion. We expect to roll out dozens of additional retail stores in the coming years, on the back of 6 new retail locations in 2023. At Framebridge, much of the fixed cost base has now been built. While these costs will continue to grow modestly, we should see progress in the P&L as the continued expansion reflects the operating leverage of a scaled Framebridge. While there is much work to do, we remain optimistic and firm in our belief that Framebridge will become the biggest brand and business in custom framing. Overall, the Other Businesses group is poised to take a big step forward in 2024, with losses meaningfully reduced. I'd now like to pass the mic over to my colleague, Catherine Badalamente, who will provide an update on operations at Graham Media Group.

Thank you, Tim. As 2023 comes to a close, I want to start today by thanking the universe for making my first full year as CEO never dull and full of exciting opportunities for growth. While 2023 has no shortage of challenges, I am buoyed by the fact that the empirical truth remains: Our audience and our customers want and need the products, services and solutions we provide and produce. We provide considerable value: value to our communities, value to our employees and value to our stakeholders. As a reminder, we are comprised of 7 local media hubs covering just over 7% of the U.S., primarily in top 50 markets, with Houston as our largest market at #6 and Roanoke, our smallest market, at #70. The big change to the group this year includes market rank improvement for Houston, passing Atlanta to become the sixth largest TV market, along with Orlando and Roanoke also moving up 1 spot in the rankings. Another important note. Social News Desk, our SaaS-based social media management company under the new leadership of Vice President and General Manager, Aaron King, moved its headquarters to Michigan. No surprise that in this odd nonpolitical year, total revenue was down for the first 3 quarters of 2023 compared to 2022's significant political revenue. With no real political to speak of in 2023 and a challenging ad market, we saw operating income before amortization decrease by $38 million in the first 9 months of 2023. As mentioned, 2022 saw political dollars pour into our markets, most significantly in Detroit, while our Florida markets experienced less spending than in years past, as that state has moved from a swing state designation to being less competitive. We look forward to 2024 and a very competitive Michigan Senate race to help fuel robust political spend in Detroit. Speaking of the challenges, cord cutting is continuing to impact our business. Comparing June 2023 to June 2022, we have seen a 15% decline in traditional cable and satellite subscribers and an increase of 23% for the same time period of virtual streaming providers like YouTube TV, Peacock and Hulu Live. While the growth of virtual subscribers is a good story, it does not make up for the losses of subscribers on the traditional side, creating risk of a negative impact on our retransmission revenue. So what are we doing about it? We are working harder than ever to solidify our position in our markets as the go-to destination for uniquely local news, information, events and entertainment. We are not just pushing on information, but serving as the catalyst and the convener for our communities, bringing people together to learn, give back, celebrate and even more. With that in mind, I thought it makes sense to take a step back and talk a bit about how we see the broader local broadcast ecosystem. What we believe the historic model of the past is declining, disintermediation of the bundle and cord cutting reduces profits and makes distribution more challenging. What this means, earnings tied to net retransmission and the traditional linear broadcast will shrink from the levels of today. What we believe, the core news product in most markets is undifferentiated from our other local stations. And as a result, the industry has largely failed to cater to and develop younger audiences. What this means, local broadcast is now a misnomer. The value proposition for the community needs to leverage the brand but change meaningfully. What we believe, local operators need a balance sheet that allows them to innovate and embrace new ideas. Carrying leverage, particularly high levels of leverage, is limiting in terms of developing tomorrow's model. What this means, Graham Media Group is not going to carry substantial leverage in the current model and environment. What we believe, people continue to want community connection. There is an opportunity to drive shared culture locally. What this means, 10 years from now, the business lines that Graham Media Group operates as well as how we interact with the community are likely to be very different than today. We need to harvest from the past while building the future. I'll spend the rest of my time discussing how we plan to go about this while providing examples of where we think future opportunities will exist. So why is Graham Media Group uniquely positioned? It comes back to uniquely local. As I said, it is because uniquely local is our ethos. Compared to the larger station group, it is difficult to make programming uniquely local if it needs to scale across the country. This strategy also helps lessen our reliance on syndication and network programming. Graham Media is focused on people, process and product in a way that the larger players can't. We are restructuring and investing using research and technology to transform and create capacity for our sales teams, our newsrooms and our business workflows. As an example, our sales add-ups and ad support teams are now centralized so that our account executives can be out in our markets, face-to-face with clients, providing solutions and value that create unbreakable bonds and relationships with our customers. It also allows us to answer the ad community and industry demands to make our prospects, process and product easier to transact. We are laser focused on the metrics that matter, metrics that drive impact and results. My question to the team is always, how do we know that we are successful? And the relentless rigor of data and measurement is always key to our innovation process. Graham Media has partnered with a well-known strategy and consulting firm to help drive our newsroom transformation and workflow projects, again, focusing on creating capacity so our people can better answer our audience and customers' ever-changing and dynamic needs. How will I measure the success of this project? By growing audience on all platforms, including broadcast, and delivering a unique and hard to duplicate product that passionately informs and celebrates our communities. One example from our news transformation project is a renewed focus on getting into our communities. KSAT in San Antonio just launched Know My Neighborhood, a hyper-local, multi-platform news project that lets residents set the agenda for our coverage. Each month, Know My Neighborhood takes viewers on a walk-through of a different South Texas community, showcasing everything from its history and public safety concerns such as food and security to police presence and crime rates. WDIV in Detroit has launched In Your Neighborhood, a mix of stories covering what people love most about their community, what's new and happening, as well as what issues they may be facing, always through the lens of solutions journalism. The launch week of In Your Neighborhood saw increases during its 5:30 p.m. to 6:00 p.m. time slot, helping WDIV finish November with early evening news wins across the board and by a wide margin. This includes year-to-year growth of up 39% at 5:30 p.m. and up 32% at 6:00 p.m. in the adult 25-54 demographic. In addition to transforming news on all platforms, we are using our streaming and digital channels as a sandbox for unique local content. Shows like KPRC's, The Evidence Room, an award-winning true crime docuseries that brings a fresh perspective to the Houston area's most notorious crimes and convictions, utilizing unprecedented access to evidence stored at the Harris County criminal archive. Or KSAT's Big Game coverage, which brings the best local high school sports reporting in San Antonio. And WKMG's News 6 Plus takeover that broke the mold for local TV news, featuring unique stories surrounding Central Florida, a deep dive into the state's ever-changing weather and long-form journalism dedicated to finding solutions in their community. All of these efforts have resulted in significant year-over-year growth in streaming users, with the first 9 months of 2023 averaging 36% more daily average users over 2022. Our streaming platforms have seen an increase of more than 2 million hours watched over the same time period versus last year. We know we need to continue to drive even bigger results, but we are pleased with the continued traction. Another area of focus for Graham Media continues to be NextGen TV or the ATSC 3.0 transition. Four of our 6 markets are live and launched, with San Antonio and Jacksonville scheduled to roll out in 2024. The recently created FCC Future of TV initiative is a strong step towards planning the completion of the NextGen transition. Announced in April at NAB Show by the FCC Chairwoman, there are now monthly meetings of 3 working groups: backwards compatibility, completing the transition and the post-transition regulatory environment. This initiative is slated to last 1 year, and will result in recommendations issued to the FCC upon completing their work, taking us one step closer to fully transitioning to NextGen TV. While we believe this is a positive step for the industry and a critical move that allows broadcast to fully compete with digital, we are more reserved in our optimism than some of our counterparts as to the business potential. I mentioned earlier, we continue to grow our local event strategy, and I wanted to highlight 1 of Graham's biggest success stories, KSAT's Pigskin Classic. The second annual KSAT Pigskin Classic, which features San Antonio's biggest high school football matchups streamed and broadcast over 2 days at the Alamodome, resulted in meaningful revenue this year. And just to be clear, Pigskin Classic didn't exist before KSAT created it. This isn't a TV station slapping a logo on something. This is a homegrown, all-out effort on behalf of the station and staff to delight their audience and the future news consumers of San Antonio. We will launch, operate, stream and televise more large-scale events in 2024. Being woven into the fabric of local happenings helped cement our role and relevance in our local markets. It fuels much of the content and community connection central to our success. While other broadcasters are looking towards professional sports partnerships and licensing deals, Graham Media is leaning in now more than ever to high school sports. What is more uniquely local than the underreported high school and new sports category. KSAT's Big Game coverage has now grown beyond San Antonio to Houston, and we streamed over 400 high school football games this year across the 2 markets, in addition to 250 other high school sporting events. While it's early days, we're excited about the economic model that we're building. We stream and run advertising on the game, local partner sponsor replay of the game, and we provide access to games with high production value that family, friends and alumni would otherwise miss out on. This model does not rely on network content, drives both linear and streaming viewership and is uniquely local, further enhancing and differentiating our brand in market. We continue to focus on the user relationship, building our membership program to over 0.5 million members or insiders, moving people from TV and our big digital audiences down the user funnel into an engaged state where we can know them better. Registering as an insider on 1 of our digital sites allows us to super serve our audience and give them a premium user experience. It also gives us the latitude to develop multiple data points per user, customize audience segments, create first-party signals, and most importantly, experiment. All of this with the end goal of enhancing the user experience and creating deeper engagement. This increased engagement leads to more time spent on our platforms, increasing advertiser value and results. Our ideal clients are large enough to be looking for the specific audiences we uniquely serve. We can work with our clients to match this ideal audience with their marketing message and provide in-depth metrics that will make their marketing more valuable and successful. So what is the result of all of this invention, workflow improvement and creation of capacity? Well, in 2023, we saw an 18% increase year-over-year in new digital and new TV revenue business growth. Finally, Graham Media Group has once again helped drive new industry innovations. Developed 100% in-house by Graham Media employees, [ Wonder Stream ] allows employees to go live on all streaming platforms without the need for a full control room. It also allows us to run unscheduled dynamic ad breaks, creating new revenue opportunities for previously unmonetized content. Control Plus created a critical video infrastructure upgrade that leveraged established broadcast workflows and scheduling for digital streaming. It reads over-the-air commercial break times and translates these times for our streaming platforms. This results in the same viewing experience over the air on cable, apps, or streaming. And what would a media presentation in 2023 be without the mention of AI, more specifically, generative AI? Graham Media is partnering with industry leaders like NYU, the Associated Press and Google on multiple AI experiments, working to envision and secure a healthy future for local journalism. Now that we've discussed where we are headed, I wanted to add 1 more lens beyond my earlier comments around what we believe and what this means. Now I'd like to summarize that with what we're doing. What we're doing, creating new profitable earnings streams that are disconnected from both net retransmission and linear television. What we're doing, we are no longer solely a local broadcast company, and we do not believe you should view us this way. We will have larger audiences and connect with more people through platforms outside of the linear broadcast than within it. What we're doing, Graham Holdings will not do anything that constrains its balance sheet and our ability to drive the business forward. What we're doing, in addition to linear, we expect to have a profitable streaming and digital news business, a profitable live events business and a profitable high school sports operation. Thank you for your time today, and I am happy to answer any questions you may have during our Q&A session. Back to you, Tim.

Thank you, Catherine. Let's now move from our operations to capital allocation. So the company you own looks very different than it did a decade ago. Three new segments were created over the last decade: Manufacturing, Healthcare and Automotive. These segments were initially created via acquisitions and then have grown via subsequent bolt-on M&A, in addition to organic growth. While this is not a comprehensive view of every dollar the company has ever spent on acquisition, it does represent the lion's share, as well as the cleanest segments to conduct a review against. We'd like you today as an opportunity to show an initial assessment of these segments by discussing how much capital has gone into these businesses and the related returns. We'll start with Manufacturing. The segment is comprised of 4 operations: Forney, Joyce/Dayton, Dekko and Hoover Treated Wood Products. The companies operate as niche manufacturers in a diverse set of end markets, with a largely North American manufacturing footprint. Beginning with the Forney Corporation acquisition in 2013, the company has paid approximately $544 million to acquire the businesses, as well as several small bolt-ons. In the last 12 months, the business has generated approximately $64 million in adjusted operating cash flow. During the entirety of our ownership period, the companies have returned roughly 66% of our investment on a pretax adjusted free cash flow basis, leaving us with a net investment of about $186 million pretax. We believe the health of this segment is strong, and expect meaningful future contributions to Graham Holdings with minimal investment required. Our Healthcare operations have grown from 2 separate Home Health and Hospice businesses to become one unified scaled healthcare services provider with multiple service lines. To date, total capital invested since inception has been $244 million. This excludes noncontrolling interest balances of $65 million as of September 30. Also since inception, adjusted free cash flow of $170 million was generated from consolidated operations, while equity and earnings from joint ventures totaled $45 million. In the last 12 months, the business generated $45 million in adjusted operating cash flow and $10 million in equity earnings from joint ventures. These returns and growth occurred during a period where we have also been investing heavily to generate future year earnings. If we were not focused on building much larger earnings over the long-term, our 2023 adjusted operating cash flow could have been meaningfully higher. Lastly, our Automotive segment is the newest of the 3, with the first 2 dealerships purchased in 2019 and the most recent acquisition in September of this year. Cumulative capital invested through September 30, including real estate purchases but excluding our recent Toyota of Richmond acquisition, which closed on September 27, has been $258 million. Adjusted free cash flow generated to date has been $71 million or 28% of the investment amount. On a TTM basis, the business has generated $42 million in adjusted operating cash flow. In all 3 segments, we expect the original investment amount to continue to be paid down rapidly in the coming years. In aggregate, over the last 12 months, these 3 segments generated adjusted operating cash flow of $151 million plus $10 million in equity earnings from joint ventures against a total investment level of $1.05 billion. The returns on equity capital are somewhat higher, as the Automotive group and the Healthcare group have each carried moderate amounts of leverage. Total equity capital invested in these 3 segments has been roughly $900 million. We believe that these returns on equity are sustainable and realistic moving forward. Through September 30, the company has repurchased 224,871 shares, representing 4.7% of the total shares outstanding at the beginning of the year. As a reminder of our philosophy, we do not have a set program that commits us to buying shares regardless of price. We repurchase shares when we believe the price is materially below our view of intrinsic value. Price always matters. We do not repurchase with the intent of artificially impacting the share price. We will not introduce undue risk to our balance sheet or limit our strategic flexibility. Throughout 2023, the above parameters have been met, and we have bought and continue to buy shares at a brisk clip. Annualizing the company's share repurchase and dividends through September 30, we will have returned nearly 8% of our market cap to shareholders based on our share price on September 30, 2023. Since the spinoff of Cable ONE in 2015, the company has also raised its dividend each year. If our share price remains in the current range, assuming no major fundamental changes to the business, we expect to continue to repurchase shares as we head into 2024. The Q3 pace, with all practicalities aside, we would be out of B shares within a decade. I thought it may be helpful to lay out some of the key factors we look at when determining that a deep discount to intrinsic value exists. As of September 30, cash and marketable securities more than offset debt, leaving net debt positive, demonstrating our balance sheet has capacity. We have 2 segments, Kaplan and Graham Healthcare Group, that are growing their adjusted operating cash flow at strong rates. Year-to-date through September 30, Kaplan has grown this metric by 27%, while Graham Healthcare has grown by 47%. We expect organic growth and adjusted operating cash flow to continue to occur in both businesses for the foreseeable future. The business has reduced its reliance and cyclicality away from the every other year yo-yo cycle of political spending at Graham Media Group. Increased cash flow generation elsewhere has provided more consistent free cash flow and more certainty of earning power for the company broadly. As of 9/30, the overfunding of the pension plan is estimated to be $1.9 billion. Our current and retired employees received real value from the fund, and we have been able to increasingly figure out ways to leverage the pension plan for benefits previously paid for out of the company's treasury accounts. The overfunding level of the pension plan is now approximately 3.2x. Since 2020, the company has reduced its share count by 16%, increased the number of segments with scaled earning power to 5, and has several platform businesses, most notably at Kaplan, Graham Healthcare and Automotive, that can occasionally make accretive bolt-on acquisitions. The company has grown the combined trailing 12 -- 24 months adjusted operating cash flow through September 30 by 22% as compared to the combined results of 2019 and 2020. We've been able to do so even while investing in several growth opportunities that we expect to drive meaningful cash flow in the future, most notably at Framebridge and Graham Healthcare. Due to the above, we think the discount to intrinsic value has grown meaningfully wider and the rate of change of the discount has accelerated. Continued good performance at most of the units as well as this year's share repurchases have further widened the gap. The above focuses more on why we think the company has grown its per-share intrinsic value. I'd like to spend a little time on how we think about the value of the business. We look at 3 primary buckets: our scaled divisions, our nonconsolidated assets such as our health care joint ventures and pension overfunding, and cash investments and debt and the Other Businesses group. Let's start with the biggest group, our scaled divisions. This group is comprised of Graham Media, Kaplan and our Manufacturing, Healthcare and Automotive segments. Collectively, in the last 12 months, these divisions, inclusive of Graham Holdings' corporate costs, generated $455 million of adjusted operating cash flow. We believe the cash flow generation from this group is likely to increase next year and over time. Our second group is comprised of value that typically does not flow through the P&L. I'll briefly discuss the largest components. As discussed previously, our pension plan provides real benefits to employees by generously creating retirement savings. If today, we were to close the plan, withdraw the overfunding and pay the associated excise and income taxes, we would be left with somewhere in the neighborhood of $400 million to $500 million in proceeds. Now this has not made sense to us due to our confidence that we will continue to find alternatives to leverage the pension plan overfunding in ways that exceed the leakage. Year-to-date, our pension expense has increased from $17 million to $25 million. This is largely due to working with our businesses to better leverage pension benefits in lieu of benefits paid from our corporate treasury. We expect this to continue in 2024, as many of our businesses will eliminate a 401(k) match and instead offer an enhanced pension benefit to our employees. Our joint ventures at Graham Healthcare are partnerships with hospital systems to provide home health and hospice services in Pennsylvania, Michigan and Illinois. We are the operating partner of these joint ventures and are proud of the work we do alongside our partners. These partnerships have generated consistent profitability, and as previously mentioned, contributed $45 million of equity earnings since inception. Importantly, cash is regularly distributed to partners via a dividend. Beyond pensions and healthcare joint ventures, we have a set of minority investments and borrowings due to us where the book value is currently $269 million. Lastly, we look at our cash, marketable securities and debt obligations. Our final bucket is Other Businesses. As discussed previously, this group is currently in loss-making mode, but is likely to reduce aggregate losses significantly over the next several years. This group is currently made up of 3 profitable businesses, 1 breakeven business, several investment-stage businesses and the turnaround operations at the former Leaf Group. While placing a multiple against the current losses of this group would certainly be an acceptable way of assessing value, it is not how we view their value to the organization. We manage, assess and fund businesses within the group solely based on a clear, rational view of cash invested today against our view of the future discounted cash flows. Happily, there are a few businesses within the group that no longer need this assessment because they no longer require funding. Over time, businesses either become profitable or divested, or they shut down. We believe the cash invested today will yield positive returns in the coming years, and total aggregate investment levels are beginning to decline at a meaningful clip. While it's profoundly foolish to try to precisely value anything, we believe meaningful value exists in our other businesses. The company has spent considerable sums on share repurchases in 2023 and may do so in 2024, depending on price and the opportunity set ahead. My hope is that this is helpful to shareholders in understanding how we think about repurchases and why we believe this is an excellent use of capital. In closing, thank you for your time today, and we hope you feel more informed about the business. At this point, we'll open it up for questions. As a reminder, the chat and the online portal allows you to submit questions.

Thanks in advance to those that submitted some before the presentation. So we'll start with a few that came in there. And just to reiterate, you can continue as we go along to put more questions into the portal. Okay. So the first question was, Kaplan corporate and other expenses have increased significantly there. Is this due to renewed travel expenses or something else? It is largely due to the achievement of incentive compensation -- or incentive award compensation that has been achieved due to improved results of Kaplan. So not to say that there aren't some other modest things in there, but that is the lion's share of what has driven the increased corporate expenses at Kaplan. The next question is healthcare. The 44% increase in year-to-date Graham Healthcare Group revenues is mouthwatering. The pension credit retention program seems like a long-term competitive advantage. Is that correct? And explain why. Well, we hope it is. We are better off if it is. We are uniquely positioned because of the pension fund to create a program like that. Right now, we are in the midst of the first kind of batch of that program. So I would say it's too early to know whether it will be the success that we hoped for or not. But it genuinely is a unique position to be in. So we're optimistic that we'll have a version of it that will ultimately make a lot of sense, but it's just too early to read the results at this point. Next question is on Automotive. Adjusted cash flow growth has been tepid. Please explain. The -- I mean the growth has been up 14%, year-to-date. As I mentioned in the remarks, the front-end grosses have come down a bit from their highs, but we think we're -- the overall industry dynamics are solid. I mean, the only other thing I would add is that we -- over the course of the year, we did a transaction, we got a little expense on that. And there's been some start-up and investing costs in opening the Kia dealership that opens here in December. So overall, I think we've been pretty happy with the results of the Automotive business. Second part of the question is do you generally expect to buy dealerships in the future? I think we'll really approach it how we have, which is we have a really good operating group. There have occasionally been kind of what we view as strong acquisitions in market that we have been able to add to the group. I suspect there will be opportunities that will come up over time again. But it's not a -- it's nothing on the near-term horizon, but we do have a group. We're building one of the premier groups in the area, and we think we'll continue to be able to leverage that. Okay. The next question is, what do we plan to do with the Leaf Group over the next 12 to 36 months? What did we learn from that acquisition? So we've been doing a lot at Leaf Group. And I would encourage -- I did talk in the annual meeting in May about a lot of things that we were doing there with some level of detail. So I would encourage people to go back and look at that as well, it might be helpful. We really have taken the process or undergone the process in the last 6 months of turning Leaf into a holding company reporting to a holding company to 3 separate businesses that can really focus on the things that make sense for their individual operations. And as part of that, we have also pretty substantially altered the cost structures of those operations. And so now, I really don't view them as 1 group anymore. I really do view them as 3 separate businesses. And what the answer is -- is probably different on each of them and what their long-term future prospects hold. I am quite confident that the 2024 results will be substantially improved over 2023. And we'll see where that leads us to what the next steps are for those operations overall. Okay. Regarding Dekko, has the company explored opportunities to diversify its offerings as office buildings are converted to residential uses? Is the recovery of the business primarily predicated on the renovation and fit-up of office space as the market recovers? That's a big piece of it. Dekko, the biggest business line at Dekko has historically been driven by office build-outs or renovations. And there has not -- there's been greatly reduced volume on that front over the last 3 or 4 years. So they've seen huge reductions in unit volume in that biggest business line. They are continuing to expand and innovate. The lighting business is larger than it once was, and should continue to grow. But in that kind of power and data segment of Dekko's business, which has traditionally been its largest segment, there are opportunities, but the ability to fully recover is probably tied to the recovery in the commercial real estate end market. Regarding Automotive, how does management view the long-term profitability prospects for the business as the vehicle market transitions to electric vehicles, which may require significantly less service? So we think the parts and service piece of the dealership model is certainly a big and important part of that profitability. We remain pretty optimistic. When you look at the level of complexity of vehicles, the need and desire to service with dealers, I think, is going to increase over time. So I think franchise dealerships might get a bigger piece of the existing pipe. And from what we've seen on the EV front, we don't actually think it will -- it may not be a particularly negative outlook. If you look at some of the repair profile -- and it's basically calling the repair orders, the average repair order on a EV can be quite substantial. So even if there is a reduced service volume, which I think remains to be seen a bit, the overall increase in repair order could be pretty helpful to the business. So we are optimistic of that. And additionally, we think that -- we'll see. If we look at our -- in our group, if we look at 3 vehicle types, internal combustion, hybrid and EVs, the lowest days of inventory within our brands is within hybrids. And so the continued existence of internal combustion as part of the model, it seems like it will be there for some time to come, still. So obviously, we'll watch and continue to see how the world evolves. But from what we know and see so far, we think that a world that moves from internal combustion to a combination of internal combustion, hybrid and EV will ultimately be okay for the model. Okay. The company sounds pessimistic about being able to maintain profitability in the Broadcast business. Why not spin it off and allow shareholders to make their own decision about whether to have exposure to this sector? It's a good opportunity to probably talk about how we think about spins as well. Usually, when we have looked at doing something with the business, whether it was Don's selling of the Post, the spinning of Cable ONE, selling Megaphone, usually a driving force has been -- is -- is the company and the opportunity set for those operations? Are those operations enhanced under a different ownership structure? And that tends to be the first thing that we look at and try and answer. And to date, when we've asked that question about the Broadcast business, it hasn't been clear to us that the business actually would be able to increase its competitiveness, increase its ability to operate as a spun off company. I think the company gets a lot of benefits from being part of Graham Holdings. And Catherine talked about some of how she views the world is trying to take advantage of those benefits. And so we have, to date, not seen an answer that tells us that the company would be better off if it were spun off. So that's really a primary filter that we look at. Is it better off? And to date, the answer in our view has been no. Okay. We've got another question of -- similar. So would you consider spinning off Kaplan? Clearly, it would command a much higher multiple as the recurring revenue grow in international education business. Similar question here or similar answer, the business -- I think Kaplan has really benefited from being part of Graham Holdings during COVID. It was able to go and make a lot of decisions that were right for the long-term future of Kaplan that it likely would not have been able to make in an independent environment. So historically, there has been some volatility associated with Kaplan. And we think that -- that future is hopefully limited in a better spot. But same answer, we actually -- we don't think Kaplan is better served and will be a better business by -- if it were an independent company. Okay. Please give an update on Framebridge and its prospects. [ Sort of ] Framebridge, briefly in the remarks, we continue to be pretty optimistic that the Framebridge model and value proposition is the one that will win the day. The combination of quality, price and convenience is pretty -- pretty drastically better than most of the competitive set and our ability to have a differentiated model that is both kind of retail and online, so being multichannel really allows us to drive scale, which can allow us to, over time, continue to have that price differentiation. So we're optimistic about Framebridge and what's -- how customers love it and what we're continuing to build on that front. It is a business that requires you to be good at manufacturing and distribution, to be good at retail and to be good at e-commerce. And so it is a business that's required building up a skill set and a fixed cost base to service those skills and operations. And as I've mentioned in the remarks, we think we're at the point where unit volume is going to really start to show in terms of that operating leverage that -- well, the fixed cost base will likely grow modestly. The rate at which it has grown will decrease pretty substantially over the coming years. And so future volume growth should be very, very helpful to the Framebridge P&L. And so we mentioned that we'll have 6 new stores that open this year, and we think that Framebridge will -- will have a lot more stores than it does today. It is not unfathomable for Framebridge to be a world that adds dozens of stores and ends up in the multi-hundred unit retail footprint as well. Why not focus future acquisitions on targets that can utilize the overfunded pension versus the previous strategy of acquiring some of the more digital businesses? So look, we would very much like to continue to -- and we do see if we can use the pension plan as part of a transaction where we could acquire underfunded assets as part of the deal. And we did that in 2017, when we acquired 2 television stations. We would love to do that again. The challenge has been the set of opportunities out there is relatively small. And ultimately, we have a belief that you need to like the underlying business as well. And oftentimes -- and this is not universal, but oftentimes, operations that have had a substantially underfunded pension plan, there tends to be a correlation with the quality of the business alongside it. And they -- if the quality of the business was such that it could generate the cash flow, it would have had an underfunded plan. So that's not to say that there won't be opportunities in the future. We are very open to it. We would very much like to continue to leverage that. And I'm hopeful that we will, that so far in the last 9 years, we've been able to do it once. So I think it's hard to say. It is a consistent part of the formula, but we would very much like to and are very open to it. How is Clyde's doing? I see GHC is opening more restaurants. You must like to [ return apps ] and COVID issues. Yes. So we are opening up a couple of restaurants. One is really in an existing market where we're essentially moving from -- with a pre-existing customer base from one spot to another. But we are opening a couple of locations. We have a good team and a good infrastructure there. And we've been very patient in trying to find locations with the right lease and facility costs. And every so often, we think we'll opportunistically be able to do so. And so we were able to find a couple of those in the last year or 2 that will go live in the coming year or 2. And so we'll continue to be opportunistic, but the business is going well. We've been in a non-COVID environment, we've been happy that we've been owners of it, and it should have pretty good returns overall. Will Framebridge get its own segment under Other Businesses eventually to give more clarity to investors on the progress there? And what does physical store expansion look like in the coming years for Framebridge? We have some -- within the Other segment, we do have the revenue breakout of the voluntary disclosure that we do. We do think it is -- when there is the appropriate level of growth and when we're required to disclose, we will. We do think there are some benefits competitively to not having to disclose before we have to. And -- but we'll continue to try and keep people updated and abreast on developments that happen there over time. Okay. Also on Framebridge. What does physical store expansion look like in the coming years for Framebridge? Touched on this a little bit, but maybe I'll expand a bit more. We really feel like we have done a lot of good work in figuring out what a store model looks like in terms of square footage footprint, CapEx build-out costs, kind of neighborhood profile and retail profile. And so we've continued to build that out. So we're at a little over 20 stores at this point in time. We will open more stores in 2024. I expect the pace to accelerate over time. We are largely with 20-plus stores. We are really only in a handful of markets at this point. And most of those markets are not close to being fully penetrated with what we think that retail footprint can be. So we do expect that for really, I mean, I'm sure probably the rest of this decade, that we'll continue to focus on the retail expansion and -- and that will be a key growth driver at Framebridge. In -- alongside the online business, we expect the online business to continue to grow as well. It really is a dual threat model. All right. Lots of Framebridge. All right. Susan has said she wanted a Framebridge in almost every city in the U.S. Do we need a partner to help shoulder the cost to get this done? We are -- making -- sorry, the question just disappeared here. I think it was -- do we need a partner to make this -- we are making, I presume that meant large investments in it. I don't think so. I think it's well within our scope of what we can afford to invest within the company. And we very much look at what we think the return profiles associated with those investments will be. And it seems based on everything I know right now, unlikely that we would need an investment partner to be able to do so. Okay. All right. We've got a big Framebridge question set today. So what is your vision for Framebridge? And can you talk about unit economics? Well, we -- as mentioned in the remarks, we think Framebridge will be the biggest way that people custom frame in the U.S. And that there is both an existing market that we can become a large player in, but then also, we will -- our skills and capabilities will give people more reasons to frame and more things to think about framing so that we can make market a bit as well. The unit economic model is one where we have a kind of a cost of goods sold. We have a gross margin that we think will continue to improve with scale. And that gross margin needs to cover the fixed cost structure associated with the business. And that -- those units come from both retail stores and they come from online. And so our view is that we are on a path from a unit economic model standpoint that will allow the company to have substantial profitability and cash flow when we continue to invest to grow the business. And we are expecting to -- this year, we're in the low 20s in terms of stores. Next year, we expect we'll close out the year somewhere probably in the 30s in terms of stores. So we expect continued growth on that front. Okay. Does the mix shift from traditional MVPD to virtual MVPD lead to lower operating profit on a per-subscriber basis? We have not broken out the specifics of operating profit on a per-subscriber standpoint. I think there's 2 ways to -- I would recommend people think about this question though. What does the sub to sub view look like? And how many subs go from the traditional MVP model to a virtual MVP model? And what's the leakage of subs? I am more concerned about the latter than the former. So the number of people that actually go from being a traditional MVPD to not being a virtual MVPD, in our view, has a much bigger impact on the model than the traditional MVPD to a virtual MVPD sub. So that is the piece that I would encourage people to come and form their views upon. You believe the discount to intrinsic value has widened. You have no debt, and your businesses are generating sizable cash. Why aren't we even more aggressive with buybacks, even possibly using a Dutch Tender? I ask this, realizing that repurchasing 15.9% of shares is hardly a tepid buyback pace. Well, I would say we have no debt. We have no net debt, but we do carry debt. We're -- we've been pretty comfortable with the levels that we've been buying. We've been buying. And as I referenced, we've been continuing to buy into Q4, what I think is a pretty aggressive and healthy pace. And as mentioned in the remarks, barring substantive changes in business or opportunities, that we're likely to continue to buy at a pretty good clip. So we're always open to evaluating other uses of capital and on the repurchase front. But we're comfortable. We're buying back what we -- in our view, is a lot of shares. And we continue to do so, and we're pretty comfortable with what the pace is that we're at. What Catherine and the team are doing at Media is so admirable, but is cord cutting making it too tough? Warren says the reputation of the business usually outweighs the management reputation in the long-term. I'll weigh in on this a little and then give Catherine opportunity to answer. So look, we think that there's a lot of cash flow that is in the broadcast businesses and will continue to be, and it's a change in environment. And I think you've got a sense from Catherine about what we're looking to do. And I think it really comes down to 2 things. There's an existing pie, and we want to figure out how can we get as large of a piece of that existing pie for as long as we can. And also grow new pies and have as big a piece of that new pie as we can. So that's really what Catherine and her team are going towards. Catherine, do you want to chime in at all on this?

Sure. So I think that when we're talking about the future, I think that it's always under the -- the premise of chance favors the prepared. I think that we absolutely have a very strong Broadcast business today. We're just looking towards the future at all the opportunities that exist. And the ways that we can be -- in some instances, we may be one of the last man standing, but we absolutely intend to be the ones that are continuing to serve the community in the way that we do. It just means it's going to look different. And so the idea is continuing to invest in all of the new opportunities while also maintaining the great reputation and the things that we do for our communities today.

Okay. Thank you, Catherine. Next question is, can you talk about how you balance making investments in an area with low profitability like Framebridge versus some of the more profitable scale businesses? What drives you to allocate $1 of capital, one versus another? With something like Framebridge, it is definitely a view on what is the discounted value of future cash flows. And it's not just low profitability, it's negative profitability today. There's an investment stage business. But it really comes down to that, our view of the opportunity set. And on a risk-adjusted basis, what is the value of the future cash flows that we expect to get. The other thing I think is important to think about is to be humble about the fact that we can be wrong, and that we have been wrong and we will be wrong again in the future and that hopefully, our batting average tends to be pretty good. But it will still have some swings and misses. And so making sure that the dosage on any particular capital allocation decision is kind of appropriate in the context of the larger company and the risk profile associated with what we're looking at. So that's -- that's a little bit about how we think about that. All right. Next question. What is a good way to think of the Broadcasting segment long-term? If you smooth out election years, is this a stable business that grows with inflation? Or could it do better than that, perhaps? You all manage it very well with a great local emphasis. Look, I think -- going back to Catherine's presentation once again, I think it depends on how nice -- how well we do in terms of building some of the new business opportunities that leverage the existing business and operations that we have today. So I do think the business, as it has been constructed for most of the last 15 years in a retrans world, is probably harder over the next 5 to 10 years than it has been. And I think we try to make that pretty clear in some of the comments here. Really, the question is, can we leverage those operations to build new businesses and new profitable income driving pieces? And -- and we're optimistic that we can. But obviously, there's no guarantees on anything. But the business, as we've historically thought about broadcast, is a harder business than it was. And that means that future profitability there is -- is not guaranteed, but one of the real possibilities is it could decline. What is your thesis with regards to your investment portfolio? Why won't you sell it to repurchase GHC shares at current prices? Well, I think there's kind of -- when I hear that question, I feel -- I hear kind of 2 things embedded within it: investment portfolio and then sale of things to repurchase shares. One, on the selling of any asset to repurchase shares, we would really only want to sell the assets if it made sense to sell the asset. And that -- a lot of things, taken into account, ranging from what's our future view of the prospects, what level of tax would go along with the sale of the asset. And so each one of those is kind of an individual view and decision that is not necessarily tied to a share repurchase sort of question. So it's really much more of the broader capital allocation question. On the investment portfolio, look, we think it's been a good ballast to the company that has been positive to the company over time. On investment portfolio, in particular, we do have a relatively large unrealized gain within there. So the opportunity set that would -- we would need to see in order to go and sell those but have to take into account that gain. And if it did, then we would look at it. And if it did not, then we wouldn't. All right. what incentives determine the executive compensation for the subsidiaries -- division -- subsidiaries and division companies? It is very specific to the business. So different companies, different operations, so it makes sense to have different incentive plans. Normally, there can be an annual piece of things. But for the senior management and the leaders of the businesses, normally, we have conversations around what do we think drives long-term value creation and create incentive plans that are tied to that long-term value creation. So that is -- at the senior levels of the organization, that is very much the case. And it tends to be very cash-based. For those that are followers of the company, you probably noted we have -- we have very little stock-related compensation, and it tends to be results -- compensation tied to the results of their individual businesses. GHC has $87 million of land, according to the PP&E disclosure in the 2022 10-K. Where is this land located? Any thoughts of where fair value would be if the land were to be sold today. Wally, are you on the line here? I think this -- I might turn that over to you.

The balance that we disclose annually is [indiscernible] basis. And there's a variety of businesses that we have acquired over the years become part of the company. And some of those are older values, like in some of the broadcast divisions, for example. But there's a lot of different pieces of that, and I'm not really in a position to provide any information with respect to what we would estimate the fair value of that land to be. In certain cases, it would be substantially higher, particularly ones that are older. But we're not able to really provide an estimate at this time.

Okay. Thank you, Wally. Do you see a day where we don't have an Other category or a greatly reduced Other category? I don't really know. I mean, in a lot of ways, it's an accounting and reporting designation. And so it is somewhat dependent on -- on that and how that evolves over time, combined with how the business has evolved over time. So I think if we see opportunities for value and they're of a scale where they are not broken out on their own, that is where they would naturally live. We've had things that grow out of other. I think the segments that I went through earlier, where we did a little bit of a financial analysis around them, all started living within other. So to some degree, it's been a pretty dynamic segment overall. As things have graduated out of it, there are things that have been divested or things have been shut down. So the foreseeable future, I suspect that will continue to be there, but it somewhat depends on how the company evolves and how kind of disclosure rules evolve. Will Framebridge components, [ glass, wood ] continue to be sourced in the U.S.? Framebridge components, glass, wood, I mean -- I suspect that the supply chain will leverage all sorts of suppliers. There's some premium moldings that come from Italy today. So it kind of depends on consumer demand, and we want to try and offer the products that consumers will want. If the consistent buybacks are not changing the discount to intrinsic value, what else could you do in terms of strategy or investor communications to narrow that gap for long-term holders? Well, I actually think that consistent buybacks are probably increased. They are changing the discount because I suspect they're increasing the discount to intrinsic value. Look, I think the best thing that we can do as a company is continue to grow intrinsic value and continue to try and drive long-term free cash flow, particularly when looking at it on a per-share basis. So I think if free cash flow goes up and share count goes down, it's likely to work out pretty well over time. And usually, the market figures it out. So I think it's less around kind of marketing and more around just continuing to do the right things that we think will grow the value of the company. And if we think there's an opportunity to do share repurchases to address some of that gap, then we'll clearly have demonstrated and we'll clearly continue to look at that as part of the answer. In the view of management, why do you think the discount to NAV has widened so much over the last 5 years? It's a very tough question to answer. I think any answer is really pretty speculative. It's hard to know the answer to that question. So I really wouldn't -- I wouldn't try and give an answer to it because whatever I give will probably be -- probably wrong and only -- only able to be point it out to something that, well, of course, it can't be that or it could be that. I guess the thing that I would say is -- the company -- and this summary, I actually talked a little bit about this with the Graham Holdings Board. The company went public in 1971. And interestingly, the -- there are roughly 5 periods of at least 5 years or more, one of them might have been 4.5 or something, where the share price had a peak and then it took at least that 5-year period or more to surpass the previous share price. And yet, if you had just bought at that IPO and you had held up through sometime last summer, you're -- and never done anything else, even though you would have had 5 periods of roughly 5 years or more where the share price was flat -- so in cumulative, it was over half of that 50 -- 2-year period of time, you would have actually done really, really well as an investor in the company if you had bought shares at the time of the IPO. And so I do think sometimes -- we -- the market usually does figure it out. And hopefully, this gives people a sense of how we view the company and the opportunity. And we expect that just like the past of this company, you have periods where that occurs, and you do the right things to grow the intrinsic value per share of the business, and the market catches up over time. So we have confidence that that's -- we've seen that in the company in the past, and we'll likely see that again. Can you talk more about the dynamics in Kaplan's International business when you think about it over the next 5 years? And what are the biggest obstacles to growth there? Andy, do you want to take that one?

You were doing great, Tim, but I'll give you a break for a second. Tim, actually, you spoke about this earlier on. I think the macro dynamics are that there's going to be, as you said, about 1 billion more people in the global middle class by 2030, at 150 million, 160 million additional students in higher ed over that period. So that's going to create this substantial demand for higher ed. I mean, 150 million, that's -- 3,200 University of Michigan. You can't create universities fast enough to meet that kind of demand. So there are going to be different types of higher ed that are made available. At the same time, you've got a U.S. market, for example, that has been -- in higher ed, that has been in decline for the last decade. And the demographics tell us that it's going to be in decline for the next 15 years as well. Less so in the U.K. or Australia, but you've got this huge demand coming in non-Western countries, mainly Asia and Africa. You've got capacity available in the West. We think that we are very well positioned to help address that mismatch. And in addition, because of our capabilities with online education, artificial intelligence and so on, we think we can deliver in country educational opportunities that will be very attractive to students. So we think we're very well positioned on that. That said, there are certain things that create problems for us. I know we've had geopolitical friction. So wars or tensions between countries makes parents less likely to send their students, their children to faraway countries. Obviously, global health pandemics. We obviously had COVID, but years ago, we had SARS, and that impacted the number of students who would move, immigration. If countries are resistant to immigrants or foreign students coming, that hurts our business. Currency changes, so that if a destination country becomes much more expensive. So there are all kinds of things that do happen that constrain our ability to access the opportunity that exists. I think I'll pass it back to you, Tim, unless you want me to keep going.

No, that was great. It was a good break for me, and an even better answer. So thank you, Andy. We've got about time for just a few more questions, another 7 minutes or so in the presentation window. So if you have anything else, please put them in now. A couple more that are in the queue. Can you expand on the thematic investment and your opinion of the business? I think -- I don't want to discuss individual securities analysis. And so I don't think that that's a good or appropriate thing to be doing here. So I will -- I will move on, on that. What has been the most challenging aspect of running GHC during your tenure? I would really say that the COVID period was a very challenging -- the initial onset of it was very challenging for the company in operations. And I know I'm far from alone in probably giving that answer over the last 5 to 10 years. In the holding company structure, we are built to work with our businesses in a certain type of way. We are built to get involved substantially with a handful of businesses at any given point in time. What was unique about the COVID period was that I think almost every one of our operations really went into its own separate version of challenge and crisis at the same time. And that was a real stress test for the organization and the corporate structure, and one that I -- I think we passed and got through, but that was a very challenging time for the company, not just because of all of the kind of societal and health-related pieces of things and the standard operating pieces. But really, our structure never really envisioned all of the companies really going into a similar version of crisis at the same time. And yet that's what happened. And so I am -- I don't think you can -- you should build or plan for a structure that does that as well. And I think we were able to handle it, but it was a challenging part of -- an period of operations for the company. Okay. Next question is, have you considered significantly raising the dividend? The dividend has gone up pretty consistently, including in the vast majority of years, even prior to the spinoff of Cable ONE. I think right now, we think that capital spent on repurchases is -- has been and is likely to be a better use than increased capital going to dividends. But I expect over time that the dividend will continue to go up. And how much it goes up depends on what the set of circumstances are at the moment when we're evaluating it. But for now, we really think that repurchases are a better use of capital than a much more substantial raise in the dividend. Okay. Next question is, does the presence of large publicly traded auto dealer groups make it difficult to acquire new dealerships for GHC? What enabled you to win, presuming these are auctions? To date, you don't always know who other people -- who the other parties are that are looking at transactions. But to date, we have been able to purchase a set of dealerships that have really met the criteria of what we're looking for. Our partner is Chris Ourisman. He and his family have long been operating in the area. They have relationships with a lot of other operators, smaller operators in the area, some of which we have gone on to acquire their businesses. I think there is a -- in many cases, Graham Holdings is a family-run and -controlled company that has partnered with Chris Ourisman, which has a long-standing family history from a company standpoint. And if you have been running and operating a 1 or 2 or 3 dealership family business for a long time, you really do care about where it lands. And you care about the ethos of the people that are looking to acquire it. And I think that is actually an advantage for us that we've seen, and I'm hopeful that we'll continue to see in the future. Kaplan higher ed, much improved year-over-year. Do you view the earnings power of this division has improved in a sustainable way? Or was the step-up in second quarter a one-off? I would just -- I'll make one comment and then maybe ask Andy to chime in as well. So I do think it makes sense when you're viewing the higher ed to really look at much more of what's the trailing 12 months look like because any particular quarter can have a little lumpiness, based on some things related to the fee. So I do think that that's a better way of viewing it. And we're pretty pleased with what we have seen recently. Andy, over to you as to how you view the future potential there.

Yes. I mean we don't typically try to project the future here, but I will say that there wasn't something abnormal that took place in the second quarter. We think Purdue Global, which is the key driver of earnings in the higher ed segment, has continued to grow in its census. Students are happy. They're staying. So -- we -- our job is to make sure that keeps on happening, working with folks in Purdue, who are, I think, doing a great job.

Okay. And with that, we'll call it the end of the Investor Day for 2023. I'd like to thank everybody for both their time as well as all of the questions that people submitted both in advance and thoughtfully as we went through the presentation. So appreciate everybody's time. I appreciate everybody's questions, and have a great rest of your day, and happy holidays.