Berkshire Hathaway(BRK_B) - 2024 Q2 - Quarterly Report

Part I – Financial Information Financial Statements This section presents Berkshire Hathaway Inc.'s unaudited consolidated financial statements and related notes for the periods ended June 30, 2024 Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $1,108,860 | $1,069,978 | | Cash and cash equivalents | $42,324 | $38,022 | | Short-term investments in U.S. Treasury Bills | $234,618 | $129,619 | | Investments in equity securities | $284,871 | $353,842 | | Goodwill | $84,411 | $84,626 | | Total Liabilities | $500,889 | $499,208 | | Unpaid losses and loss adjustment expenses | $146,298 | $145,729 | | Notes payable and other borrowings | $123,628 | $128,271 | | Total Shareholders' Equity | $607,971 | $567,509 | Consolidated Earnings Highlights (in millions, except per share) | Metric | Q2 2024 | Q2 2023 | First Six Months 2024 | First Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $93,653 | $92,503 | $183,522 | $177,896 | | Investment gains (losses) | $23,857 | $33,061 | $25,733 | $67,819 | | Net Earnings Attributable to BRK | $30,348 | $35,912 | $43,050 | $71,416 | | Net earnings per avg. Class A share | $21,122 | $24,775 | $29,936 | $49,152 | Consolidated Cash Flow Highlights - First Six Months (in millions) | Cash Flow Category | 2024 | 2023 | | :--- | :--- | :--- | | Net cash flows from operating activities | $24,168 | $21,127 | | Net cash flows from investing activities | ($10,651) | $2,736 | | Net cash flows from financing activities | ($8,948) | ($9,633) | - In January 2024, Berkshire acquired the remaining noncontrolling interests in Pilot Travel Centers for $2.6 billion, increasing its ownership to 100%[14] - As of June 30, 2024, approximately 72% of the equity portfolio's fair value was concentrated in five companies: American Express ($35.1 billion), Apple ($84.2 billion), Bank of America ($41.1 billion), Coca-Cola ($25.5 billion), and Chevron ($18.6 billion)[19] - Significant legal contingencies exist: PacifiCorp recorded cumulative estimated probable wildfire losses of approximately $2.7 billion through June 30, 2024, and HomeServices agreed to a proposed nationwide class action settlement of $250 million related to antitrust claims[73][74] Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's financial condition and results of operations, highlighting key drivers such as investment gains, insurance performance, and segment-specific impacts After-Tax Earnings by Segment - First Six Months (in millions) | Segment | 2024 | 2023 | | :--- | :--- | :--- | | Insurance – underwriting | $4,861 | $2,158 | | Insurance – investment income | $5,918 | $4,338 | | BNSF | $2,370 | $2,511 | | Berkshire Hathaway Energy (BHE) | $1,372 | $1,201 | | Pilot Travel Centers (Pilot) | $238 | $197 | | Manufacturing, service and retailing | $6,230 | $6,371 | | Investment gains | $20,230 | $53,308 | | Total Net Earnings | $43,050 | $71,416 | - The company emphasizes that investment gains and losses, driven by market fluctuations, are generally meaningless for understanding periodic operating results and cause significant volatility in reported earnings[86][128] Insurance—Underwriting This section details the significant increase in insurance underwriting earnings, primarily driven by GEICO's improved performance and the absence of major catastrophe events Pre-Tax Underwriting Earnings by Insurance Group - First Six Months (in millions) | Group | 2024 | 2023 | | :--- | :--- | :--- | | GEICO | $3,714 | $1,217 | | Berkshire Hathaway Primary Group | $765 | $540 | | Berkshire Hathaway Reinsurance Group | $1,694 | $1,058 | | Total | $6,173 | $2,815 | - GEICO's underwriting results improved dramatically due to an 11.3% increase in average written premiums per auto policy and lower claims frequencies, with the loss ratio improving by 10.4 percentage points to 73.3% in the first half of 2024[89] - BHRG's property/casualty reinsurance business experienced no significant catastrophe loss events in the first half of 2024, compared to $530 million in losses in the same period of 2023[96] Insurance—Investment Income This section highlights the significant increase in insurance investment income, primarily driven by higher interest rates and increased holdings of U.S. Treasury Bills Insurance Investment Income - First Six Months (in millions) | Income Source | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Dividend income | $2,690 | $2,766 | (2.7)% | | Interest and other investment income | $4,530 | $2,531 | 79.0% | | Pre-tax net investment income | $7,220 | $5,297 | 36.3% | - The float of the insurance businesses was approximately $169 billion at June 30, 2024, with cash, cash equivalents, and U.S. Treasury Bills held by insurance operations increasing to $224.2 billion from $121.8 billion at year-end 2023[103][104] BNSF BNSF's pre-tax earnings decreased due to lower average revenue per car/unit and litigation costs, despite an increase in total car/unit volumes BNSF Key Metrics - First Six Months 2024 vs 2023 | Metric | 2024 (in millions) | 2023 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Railroad operating revenues | $11,361 | $11,592 | (2.0)% | | Railroad operating earnings | $3,543 | $3,676 | (3.6)% | | Net earnings | $2,370 | $2,511 | (5.6)% | - Volume changes by segment (First Six Months 2024 vs 2023): Consumer products: +17.0%, Industrial products: -0.9%, Agricultural products: +7.1%, Coal: -24.7%[107] - Operating expenses in Q2 and H1 2024 included litigation costs related to a legal case with the Swinomish Tribe, which BNSF has appealed[109] Berkshire Hathaway Energy (BHE) BHE's net earnings were impacted by wildfire-related charges and real estate litigation, partially offset by strong performance in natural gas pipelines BHE Net Earnings by Business - First Six Months (in millions) | Business | 2024 | 2023 | | :--- | :--- | :--- | | U.S. utilities | $643 | $593 | | Natural gas pipelines | $733 | $556 | | Other energy businesses | $661 | $572 | | Real estate brokerage | ($116) | $0 | | Corporate interest and other | ($411) | ($376) | | Total BHE Net Earnings | $1,510 | $1,345 | - PacifiCorp's results were negatively affected by pre-tax loss accruals for wildfires, amounting to $251 million in the first six months of 2024[111] - The real estate brokerage business (HomeServices) recorded a significant decline in earnings due to expense accruals related to ongoing real estate industry litigation matters[111] Pilot Travel Centers, LLC ('Pilot') Pilot's revenues and pre-tax earnings declined due to lower fuel prices, reduced volumes, and increased operating expenses - Berkshire began consolidating Pilot's results on February 1, 2023, after increasing its stake to 80%, and acquired the remaining 20% in January 2024[112] Pilot Financial Summary (in millions) | Metric | First Six Months 2024 | Five Months Ending June 30, 2023 | | :--- | :--- | :--- | | Revenues | $25,502 | $24,262 | | Pre-tax earnings | $269 | $322 | | Net earnings attributable to BRK | $238 | $197 | Manufacturing, Service and Retailing The manufacturing, service, and retailing group's pre-tax earnings slightly decreased, with manufacturing strength offset by declines in service and retailing segments Pre-tax Earnings by MSR Sub-segment - First Six Months (in millions) | Sub-segment | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Manufacturing | $6,043 | $5,714 | 5.8% | | Service and retailing | $2,184 | $2,725 | (19.9)% | | Total | $8,227 | $8,439 | (2.5)% | - Industrial products earnings rose 8.8% in H1 2024, driven by a 12.6% revenue increase at PCC (aerospace) and a 48.8% earnings jump at Lubrizol (specialty chemicals)[117] - Service group earnings fell 26.3% in H1 2024, largely due to a 50.0% earnings decline at TTI (electronics distribution) caused by lower demand and reduced margins[122] - Retailing group earnings dropped 20.6% in H1 2024, with BHA's earnings down 9.8% on lower vehicle margins and other retailers seeing a 42.3% aggregate decline[124] Quantitative and Qualitative Disclosures About Market Risk This section confirms no material changes to market risks since the 2023 Annual Report on Form 10-K - There were no material changes in market risks since the year-ended December 31, 2023 Form 10-K filing[136] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no significant changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective[137] - No significant changes were made to internal controls over financial reporting during the second quarter[137] Part II – Other Information Legal Proceedings This section addresses routine legal actions and refers to Note 23 for significant litigation involving subsidiaries - Berkshire and its subsidiaries are party to routine legal actions arising from the normal course of business, which are not expected to have a material effect[138] - Significant legal matters concerning subsidiaries are detailed in Note 23 to the Consolidated Financial Statements[138] Risk Factors This section refers to the detailed description of significant business risks in the 2023 Annual Report on Form 10-K, with no material updates for the quarter - The report references Item 1A of the Form 10-K for the year ended December 31, 2023, for a description of significant business risks[139] Issuer Repurchases of Equity Securities This section details the company's Class A common stock repurchases during the second quarter of 2024, outlining the program's terms and conditions Share Repurchases in Q2 2024 | Period | Class | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | :--- | | April 2024 | A | 455 | $620,809.76 | | May 2024 | A | 100 | $626,685.61 | | June 2024 | A | — | — | | Total Q2 | A | 555 | N/A | - The repurchase program allows for repurchases when the price is below Berkshire's intrinsic value, as determined by Warren Buffett, and does not specify a maximum number of shares[140] Other Information This section confirms that no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or executive officers during Q2 2024 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2024[143]