Ownership and Investments - As of March 31, 2023, Biglari Holdings owns approximately 66.3% of the economic interest and 70.4% of the voting interest in the company[85] - 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[85] - The carrying value of investment partnerships increased to $230,843 as of March 31, 2023, from $155,794 as of December 31, 2022[105] - The company reported gains from investment partnerships of $72,588 in the first quarter of 2023, contributing $56,029 to net earnings[110] - Investment partnership gains for Q1 2023 were $72.588 million, a substantial increase from a loss of $6.661 million in Q1 2022[221] - Contribution to net earnings from investment partnerships was $56.029 million in Q1 2023, compared to a loss of $4.801 million in Q1 2022[221] Restaurant Operations - As of March 31, 2023, the company operated 532 restaurants, including 172 company-operated Steak n Shake stores, with 36 of these stores closed[88][90] - The company plans to refranchise the remaining closed company-operated restaurants to improve operational efficiency[88] - The number of Steak n Shake traditional units decreased to 143 as of March 31, 2023, compared to 179 units on March 31, 2022[162] - The cost of food at company-operated units was $10,448, or 28.3% of net sales, down from $10,960 or 28.7% in Q1 2022[180] - Operating costs at company-operated restaurants decreased to $18,457, or 50.0% of net sales, from $20,032 or 52.4% in Q1 2022, primarily due to lower labor costs[181] Financial Performance - Net sales for the first quarter of 2023 were $36,894 million, compared to $38,216 million in the first quarter of 2022[145] - The company recorded an income tax expense of $19,738 million for the first quarter of 2023, compared to an income tax benefit of $171 million in the first quarter of 2022[158] - General and administrative expenses for Q1 2023 were $10,463, representing 17.1% of total revenue, up from $8,650 or 14.5% in Q1 2022[163] - Earnings before income taxes improved to $122 million in Q1 2023, compared to a loss of $336 million in Q1 2022[220] - Contribution to net earnings for Q1 2023 was $91 million, a significant recovery from a loss of $251 million in Q1 2022[220] Insurance and Underwriting - Incurred loss and loss adjustment expenses for the first quarter of 2023 were $8,596 million, a decrease from $9,588 million in the first quarter of 2022, with net reductions of estimated ultimate liabilities for prior accident years at 9.8% in 2023[127] - Net underwriting gain for the first quarter of 2023 was $1,383 million, compared to $312 million in the same period of 2022, representing a significant increase[210] - Premiums earned in Q1 2023 totaled $8,899 million, slightly up from $8,731 million in Q1 2022[212] - Insurance losses decreased to $5,244 million in Q1 2023, down from $6,188 million in Q1 2022, indicating improved loss management[212] - Pre-tax underwriting gain for Q1 2023 was $1,862 million, compared to $732 million in Q1 2022, reflecting strong operational performance[212] Liquidity and Debt Management - The balance of the line of credit was $6,500 million as of March 31, 2023, down from $10,000 million on December 31, 2022, with an interest rate of 7.3%[124] - The company maintains significant liquidity, with a revolving line of credit available until September 12, 2024[229] - The company reported cash paid for finance leases of $344 million in the first quarter of 2023, down from $421 million in the same period of 2022[131] - Cash and cash equivalents as of March 31, 2023, were $39,363, an increase from $37,467 on December 31, 2022[202] Impairments and Charges - The company recorded an impairment of $776 related to underperforming restaurant assets in the first quarter of 2023[114] - The company recorded impairment charges of $776 million in Q1 2023 related to underperforming stores, with no impairments reported in Q1 2022[208] Revenue Trends - Oil and gas revenues in Q1 2023 were $4,971 million, a decrease from $9,812 million in Q1 2022, primarily due to lower commodity prices[218] - Average West Texas Intermediate price per barrel in Q1 2023 was approximately $76.11, down from $94.82 in Q1 2022, indicating market volatility[217] - Contribution to net earnings from oil and gas operations was $739 million in Q1 2023, compared to $2,924 million in Q1 2022, reflecting the impact of lower revenues[218] - Licensing and media revenues for Q1 2023 were $595 million, down from $634 million in Q1 2022, representing a decrease of approximately 6.1%[220] - Licensing and media costs decreased significantly to $452 million in Q1 2023 from $953 million in Q1 2022, a reduction of about 52.7%[220] Investment Income - Net investment income for Q1 2023 was $462 million, significantly higher than $168 million in Q1 2022, showcasing effective investment strategies[214]
Biglari (BH_A) - 2023 Q1 - Quarterly Report