Biglari (US:BH)2022-08-05 20:10Financial Performance - Net sales for Q2 2022 were $37,681 million, a decrease of 23.7% compared to Q2 2021, and for the first six months of 2022, net sales were $75,897 million, down 27.3% from the same period in 2021[100]. - The net contribution to earnings for Q2 2022 was $3,006 million, compared to $2,543 million in Q2 2021[100]. - Franchise royalties and fees for Q2 2022 were $5,237 million, up from $4,594 million in Q2 2021, and for the first six months, they increased to $10,383 million from $9,729 million[102]. - Franchise partner fees increased to $16,425 million in Q2 2022 from $12,383 million in Q2 2021, and for the first six months, fees rose to $32,049 million from $20,236 million[101]. Costs and Expenses - Cost of food in Q2 2022 was $11,365 million, representing 30.2% of net sales, compared to $14,727 million or 29.8% in Q2 2021[103]. - Restaurant operating costs in Q2 2022 were $20,350 million, accounting for 54.0% of net sales, compared to $22,058 million or 44.6% in Q2 2021[104]. - General and administrative costs for Q2 2022 were $10,121 million, a slight decrease from $10,481 million in Q2 2021[105]. - Marketing expenses in Q2 2022 were $3,087 million, down from $3,287 million in Q2 2021[106]. - The company recorded impairment charges of $20 million in Q2 2022, significantly lower than $261 million in Q2 2021[106]. Insurance and Underwriting - Premiums earned for the second quarter of 2022 were $9,015 million, up from $8,225 million in 2021, representing an increase of 9.6%[112]. - Insurance losses for the second quarter of 2022 were $5,465 million, which is 60.6% of premiums earned, compared to $3,809 million (46.3%) in 2021[112]. - Total losses and expenses for the second quarter of 2022 amounted to $7,301 million, which is 81.0% of premiums earned, compared to $5,266 million (64.0%) in 2021[112]. - Pre-tax underwriting gain for the second quarter of 2022 was $1,714 million, down from $2,959 million in 2021[112]. Oil and Gas Operations - Oil and gas revenue for the second quarter of 2022 was $14,440 million, significantly higher than $8,365 million in 2021, marking a 72.5% increase[115]. - Contribution to net earnings from oil and gas operations for the second quarter of 2022 was $6,369 million, compared to $2,336 million in 2021, reflecting a substantial increase[115]. Investments and Cash Flow - Consolidated cash and investments as of June 30, 2022, totaled $461,622 million, down from $599,611 million at the end of 2021[126]. - Cash provided by operating activities was $34,204 in the first six months of 2022, a decrease of 81.7% compared to $187,208 in 2021[128]. - Cash used in investing activities was $32,819 in 2022, slightly lower than $32,839 in 2021, with capital expenditures decreasing by $10,425 due to a transition to a self-service model[129]. - Cash used in financing activities was $3,134 in 2022, significantly lower than $153,136 in 2021, as the company repaid Steak n Shake's debt in 2021[130]. Market and Risk Factors - A hypothetical 10% increase or decrease in the market price of investments would result in a respective change in carrying value of $22,352, affecting shareholders' equity by approximately 3%[136]. - The company has had minimal exposure to foreign currency exchange rate fluctuations in the first six months of 2022 and 2021[137]. - Southern Oil's operations may be significantly affected by changes in oil and gas prices, which depend on various local, regional, and global events[138]. Internal Controls and Accounting Policies - There have been no material changes to critical accounting policies as disclosed in the annual report for the year ended December 31, 2021[132]. - The company has effective disclosure controls and procedures as of June 30, 2022[139]. - There have been no changes in internal control over financial reporting that materially affected the company during the quarter ended June 30, 2022[140].