10-QPeriod: Q1 FY2023

BERKSHIRE HATHAWAY INC Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 8, 2023For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc. reported strong financial results for the first quarter of 2023, with net earnings attributable to shareholders surging to $35.5 billion, a significant increase from $5.6 billion in the same period last year. This impressive growth was largely driven by a substantial unrealized gain on investments, particularly in equity securities, which surged by $31.3 billion. The company also benefited from the consolidation of Pilot Travel Centers, LLC, acquired in January 2023, which contributed positively to revenues. Operating earnings across its diverse segments, including insurance, railroads, utilities, energy, manufacturing, service, and retailing, showed resilience, although some areas experienced pressures from increased costs and shifting economic conditions. Berkshire Hathaway maintained a robust financial position with consolidated shareholders' equity reaching $504.6 billion. The company continued its share repurchase program, buying back $4.4 billion in stock during the quarter, reflecting management's belief in the undervaluation of its shares. Despite ongoing macroeconomic uncertainties, including inflation and geopolitical conflicts, Berkshire Hathaway's strong liquidity, diversified operations, and disciplined capital allocation strategy position it well for continued performance.

Financial Highlights

28 data points
Beta

Revenue

$85.39B

Net Income

$35.76B

41.9% Net Margin

Total Assets

$997.07B

Cash & Equivalents

$27.30B

Free Cash Flow

$4.98B

Financial Statements
Beta
Revenue$85.39B
Operating Expenses$76.09B
Net Income$35.76B

Key Highlights

  • 1Net earnings attributable to Berkshire Hathaway shareholders increased significantly to $35.5 billion in Q1 2023, up from $5.6 billion in Q1 2022, largely driven by investment gains.
  • 2The company consolidated Pilot Travel Centers, LLC starting February 1, 2023, following the acquisition of an additional 41.4% stake for $8.2 billion, significantly expanding its presence in the travel center sector.
  • 3Investment and derivative contract gains totaled $34.8 billion in Q1 2023, primarily due to a $31.3 billion unrealized gain on equity securities, reflecting market appreciation.
  • 4Insurance underwriting earnings showed strength, with total pre-tax underwriting earnings of $1.2 billion, driven by improved results at GEICO and the Berkshire Hathaway Primary Group.
  • 5Berkshire Hathaway repurchased approximately $4.4 billion of its Class A and Class B common stock during the quarter.
  • 6Consolidated shareholders' equity stood at $504.6 billion as of March 31, 2023, an increase of $31.1 billion from the prior quarter, underscoring the company's strong financial foundation.

Frequently Asked Questions

The primary driver of the significant increase in net earnings was a substantial unrealized gain on investments, particularly equity securities, which amounted to $31.3 billion for the quarter. This gain reflects the appreciation in market value of Berkshire's equity portfolio.

Berkshire Hathaway acquired an additional 41.4% interest in Pilot Travel Centers, LLC on January 31, 2023, leading to its consolidation into Berkshire's financial statements starting February 1, 2023. Pilot contributed $9.5 billion in revenue and $83 million in net earnings attributable to Berkshire shareholders for the two months ending March 31, 2023, and also resulted in a one-time, non-cash remeasurement gain of approximately $3.0 billion.

GEICO's pre-tax underwriting earnings significantly improved in the first quarter of 2023, turning positive at $703 million compared to a loss of $178 million in the prior year. This improvement was attributed to higher average premiums per auto policy, a reduction in advertising costs, and favorable prior accident year development, despite some increases in claim severities.

Berkshire Hathaway maintains a strong liquidity position and a robust capital base. The company continued its share repurchase program, repurchasing approximately $4.4 billion of its Class A and Class B common stock during the first quarter, as management believes the stock is trading below its intrinsic value. The company also maintains a policy of not repurchasing shares if it would reduce its cash, cash equivalents, and U.S. Treasury Bill holdings below $30 billion.