10-QPeriod: Q3 FY2019

BERKSHIRE HATHAWAY INC Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 4, 2019For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc. (BRK-B) reported solid financial results for the nine months ended September 30, 2019, with net earnings attributable to shareholders increasing significantly to $52.3 billion, up from $29.4 billion in the prior year period. This substantial growth was largely driven by a significant increase in investment and derivative gains, which more than tripled year-over-year, reflecting strong performance in equity markets and the favorable impact of the new accounting standard for recognizing unrealized gains on equity securities. Operating earnings across most segments also demonstrated resilience, with notable growth in the railroad, utilities and energy, and manufacturing segments. Despite a slight decline in underwriting earnings for the insurance segment due to increased losses and loss adjustment expenses, the overall financial health of Berkshire Hathaway remains robust. The company maintained a strong liquidity position, with $75.3 billion in cash and cash equivalents and U.S. Treasury Bills at the end of the third quarter. Shareholder equity also saw a substantial increase, reflecting the strong earnings performance and continued share repurchases, which totaled $2.8 billion in the first nine months of the year. Management highlighted the company's commitment to financial strength and maintaining ample liquidity.

Financial Highlights

29 data points
Beta

Revenue

$64.97B

Net Income

$16.52B

25.4% Net Margin

Total Assets

$788.48B

Cash & Equivalents

$75.29B

Free Cash Flow

$5.46B

Financial Statements
Beta
Revenue$64.97B
Operating Expenses$56.05B
Net Income$16.52B

Key Highlights

  • 1Net earnings attributable to Berkshire Hathaway shareholders increased to $52.3 billion for the first nine months of 2019, a significant rise from $29.4 billion in the same period of 2018, largely due to investment gains.
  • 2Investment and derivative gains more than tripled, reaching $41.3 billion for the first nine months of 2019, driven by unrealized gains on equity securities due to favorable market conditions and the adoption of new accounting standards.
  • 3Insurance underwriting earnings saw a slight decrease to $1.18 billion for the first nine months of 2019 from $1.79 billion in 2018, primarily due to higher losses and loss adjustment expenses.
  • 4Cash, cash equivalents, and U.S. Treasury Bills stood at $75.3 billion as of September 30, 2019, indicating strong liquidity.
  • 5Shareholder equity increased to $401.6 billion at the end of the third quarter of 2019, up from $352.5 billion at the end of 2018.
  • 6Berkshire repurchased $2.8 billion of its Class A and B common stock in the first nine months of 2019, demonstrating continued commitment to returning value to shareholders.
  • 7The company made a significant investment of $10 billion in Occidental Petroleum Corporation's preferred stock and warrants in August 2019.

Frequently Asked Questions

The substantial increase in net earnings attributable to Berkshire Hathaway shareholders to $52.3 billion in the first nine months of 2019, compared to $29.4 billion in the prior year period, was primarily driven by a significant rise in investment and derivative gains. These gains, including unrealized gains on equity securities, more than tripled year-over-year.

The insurance segment's underwriting earnings experienced a slight decrease, reporting $1.18 billion in the first nine months of 2019, down from $1.79 billion in the same period of 2018. This was attributed to increased losses and loss adjustment expenses.

Berkshire Hathaway maintained a strong liquidity position, reporting $75.3 billion in cash, cash equivalents, and U.S. Treasury Bills as of September 30, 2019. This includes $71.1 billion held by the insurance and other businesses.

Yes, Berkshire Hathaway continued its share repurchase program. In the first nine months of 2019, the company repurchased $2.8 billion of its Class A and B common stock. The program continues indefinitely, provided that repurchases do not reduce the company's consolidated cash, cash equivalents, and U.S. Treasury Bills below $20 billion.