Biglari (US:BH)2023-05-04 16:00Financial Performance - Net sales for Q1 2023 were $36,894, a decrease of $1,322 or 3.5% compared to Q1 2022, primarily due to the transition from company-operated units to franchise partner units [38]. - Total revenue for Q1 2023 was $61,129, an increase from $59,847 in Q1 2022 [37]. - Net earnings attributable to Biglari Holdings Inc. shareholders were $64,886 in Q1 2023, compared to a loss of $298 in Q1 2022 [44]. - The company reported investment partnership pre-tax gains of $72,588 in Q1 2023, compared to pre-tax losses of $6,661 in Q1 2022 [16]. Franchise Operations - Franchise partner fees increased to $17,912 in Q1 2023 from $15,624 in Q1 2022, with 178 franchise partner units as of March 31, 2023, compared to 171 units a year earlier [39]. - The franchise royalties and fees from traditional franchising were $4,258 in Q1 2023, down from $5,146 in Q1 2022, attributed to reduced marketing by franchisees [50]. - As of March 31, 2023, 36 of the 172 company-operated Steak n Shake stores were closed, with plans to refranchise the remaining closed restaurants [35]. Cost Management - The cost of food at company-operated units was $10,448 or 28.3% of net sales in Q1 2023, slightly down from $10,960 or 28.7% in Q1 2022 [42]. - General and administrative expenses rose to $10,463 or 17.1% of total revenue in Q1 2023, up from $8,650 or 14.5% in Q1 2022, mainly due to increased support for franchise partnerships [51]. - Operating costs at company-operated restaurants were $18,457, or 50.0% of net sales, down from $20,032, or 52.4% of net sales in Q1 2022, primarily due to lower labor costs [58]. Investment Activities - The company purchased Series A Preferred Stock of Abraxas Petroleum for $80 million and exchanged it for 90% of the outstanding common stock of Abraxas Petroleum [43]. - Steak n Shake sold a former company-operated restaurant property for a gain of $1,431 in Q1 2023 [52]. - The company recorded impairment charges of $776 in Q1 2023, compared to no impairments in Q1 2022 [52]. Insurance Operations - Southern Pioneer's premiums earned were $5,865 in Q1 2023, up from $5,438 in Q1 2022, with insurance losses decreasing to $3,352, or 57.2% of premiums earned [57]. - First Guard's underwriting gain increased to $1,862 in Q1 2023 from $732 in Q1 2022, with a loss ratio of 58.9% compared to 70.9% in the prior year [61][73]. - Investment income for insurance operations was $585 in Q1 2023, compared to $213 in Q1 2022, contributing to a net investment income of $462 [75]. Cash Flow and Liquidity - Net cash provided by operating activities for Q1 2023 was $19,923, down from $21,092 in Q1 2022, reflecting a decrease of about 5.6% [104]. - Net cash used in investing activities was $12,735 in Q1 2023, compared to $16,077 in Q1 2022, showing a reduction of approximately 20% [104]. - The line of credit balance on March 31, 2023, was $6,500, with the total line of credit available being $30,000, indicating ongoing liquidity management [95]. - Biglari Holdings had a line of credit balance of $6,500 as of March 31, 2023, with an interest rate of 7.3% [84]. - The increase in cash, cash equivalents, and restricted cash in Q1 2023 was $2,146, compared to an increase of $3,428 in Q1 2022, indicating a decline in cash growth [104]. - The company continues to review available financing alternatives to meet working capital needs, emphasizing proactive financial management [104]. Market Conditions - Oil and gas revenues for Q1 2023 were $12,223, up from $9,812 in Q1 2022, but net earnings decreased to $1,670 from $2,924 [70]. - The average West Texas Intermediate price per barrel was approximately $76.11 in Q1 2023, down from $94.82 in Q1 2022, indicating volatility in oil and gas prices [70]. - Corporate and other net losses remained consistent in Q1 2023 compared to the same period in 2022 [85].