Biglari Holdings Inc. (BH) Bundle
Understanding Biglari Holdings Inc. (BH) Revenue Streams
Understanding Biglari Holdings Inc.’s Revenue Streams
Biglari Holdings Inc. generates revenue from various sources, including restaurant operations, insurance premiums, oil and gas, and licensing and media. The breakdown for the third quarter and the first nine months of 2024 is detailed below:
| Revenue Source | Q3 2024 Revenue ($) | Q3 2023 Revenue ($) | First Nine Months 2024 Revenue ($) | First Nine Months 2023 Revenue ($) |
|---|---|---|---|---|
| Restaurant Operations | 62,384 | 61,886 | 188,855 | 187,506 |
| Insurance Premiums and Other | 18,247 | 16,624 | 53,674 | 50,400 |
| Oil and Gas | 9,574 | 12,159 | 27,755 | 35,123 |
| Licensing and Media | 202 | 268 | 715 | 1,624 |
| Total Revenues | 90,407 | 90,937 | 270,999 | 274,653 |
The total revenues for the third quarter of 2024 were $90,407, a slight decrease from $90,937 in the same quarter of 2023. For the first nine months, total revenues also decreased to $270,999 from $274,653 in 2023.
Year-over-Year Revenue Growth Rate
Year-over-year revenue growth has shown fluctuations across the various segments:
- Restaurant operations saw a marginal increase from $61,886 in Q3 2023 to $62,384 in Q3 2024, representing a growth of 0.8%.
- Insurance premiums increased from $16,624 to $18,247, reflecting a growth of 7.4%.
- Oil and gas revenues decreased from $12,159 to $9,574, indicating a decline of 21.5%.
- Licensing and media revenues dropped from $268 to $202, a decrease of 24.6%.
Contribution of Different Business Segments to Overall Revenue
The contribution of each revenue stream to overall revenue for the first nine months of 2024 is as follows:
| Revenue Source | Contribution ($) | Percentage of Total Revenue (%) |
|---|---|---|
| Restaurant Operations | 188,855 | 69.7% |
| Insurance Premiums and Other | 53,674 | 19.8% |
| Oil and Gas | 27,755 | 10.3% |
| Licensing and Media | 715 | 0.3% |
Analysis of Significant Changes in Revenue Streams
In 2024, notable changes in revenue streams include:
- A decrease in oil and gas revenue due to lower production and market prices, with revenues dropping from $35,123 in the first nine months of 2023 to $27,755 in 2024.
- Insurance premiums have shown growth, increasing from $50,400 to $53,674, attributed to improved underwriting performance.
- Licensing and media revenue has declined significantly, reflecting fewer licensing events, from $1,624 to $715.
Overall, the company's revenue analysis indicates a mixed performance across its various segments, with some areas experiencing growth while others face challenges.
A Deep Dive into Biglari Holdings Inc. (BH) Profitability
Profitability Metrics
Analyzing the profitability of Biglari Holdings Inc. involves looking closely at several key metrics: gross profit, operating profit, and net profit margins. These metrics are essential indicators of the company's financial health and operational efficiency.
Gross Profit, Operating Profit, and Net Profit Margins
For the first nine months of 2024, the following profitability metrics were recorded:
- Gross Profit: $11,691
- Operating Profit: $12,587
- Net Profit: $6,514
The gross profit margin for this period stands at 9.8%, while the operating profit margin is 10.6%, and the net profit margin is 5.5%.
Trends in Profitability Over Time
Examining the trends in profitability over the past few years reveals fluctuations:
| Year | Gross Profit Margin (%) | Operating Profit Margin (%) | Net Profit Margin (%) |
|---|---|---|---|
| 2024 | 9.8 | 10.6 | 5.5 |
| 2023 | 8.5 | 13.4 | -3.4 |
| 2022 | 10.1 | 12.0 | 6.2 |
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, Biglari Holdings Inc. shows varying performance:
| Metric | Biglari Holdings Inc. (2024) | Industry Average (%) |
|---|---|---|
| Gross Profit Margin | 9.8 | 15.0 |
| Operating Profit Margin | 10.6 | 12.5 |
| Net Profit Margin | 5.5 | 8.0 |
Analysis of Operational Efficiency
Operational efficiency is crucial for maintaining profitability. Cost management strategies have shown progress, particularly in labor and food costs:
- Cost of Food: $35,549, representing 29.8% of net sales in the first nine months of 2024.
- Labor Costs: $38,694, representing 32.5% of net sales.
These figures indicate a slight increase in both food and labor costs compared to the previous year, where food costs were 29.4% and labor costs were 31.2%.
Overall, while the company has improved its operating profit margins, it still faces challenges in gross profit margins compared to industry averages.
Debt vs. Equity: How Biglari Holdings Inc. (BH) Finances Its Growth
Debt vs. Equity: How Biglari Holdings Inc. Finances Its Growth
Debt Levels:
As of September 30, 2024, Biglari Holdings Inc. reported total liabilities of $263,353 thousand, which includes current liabilities of $112,045 thousand and long-term liabilities of $151,308 thousand. The company has a line of credit with an outstanding balance of $9,000 thousand as of the same date.
Debt-to-Equity Ratio:
The debt-to-equity ratio for Biglari Holdings Inc. as of September 30, 2024, is calculated as follows:
| Total Liabilities | Total Shareholders' Equity | Debt-to-Equity Ratio |
|---|---|---|
| $263,353 thousand | $601,763 thousand | 0.44 |
This ratio is below the industry average, which typically ranges from 0.5 to 1.5, indicating a conservative approach to leveraging.
Recent Debt Issuances and Credit Ratings:
Biglari Holdings amended its line of credit on September 13, 2024, increasing the available amount to $35,000 thousand. The company maintained compliance with all covenants associated with this credit facility. The interest rate on the line of credit was 7.71% as of September 30, 2024.
Balancing Debt Financing and Equity Funding:
The company utilizes a mix of debt and equity financing. The retained earnings as of September 30, 2024, stood at $637,972 thousand, reflecting the company's ability to reinvest profits into growth while managing debt levels effectively.
In summary, Biglari Holdings Inc. demonstrates a balanced approach to financing its operations, maintaining a manageable debt level relative to its equity base, which is critical for sustaining growth in a competitive environment.
Assessing Biglari Holdings Inc. (BH) Liquidity
Assessing Biglari Holdings Inc.'s Liquidity
Current and Quick Ratios
The current ratio of Biglari Holdings Inc. as of September 30, 2024, is 1.47, calculated from total current assets of $165,219,000 and total current liabilities of $112,045,000 . The quick ratio, which excludes inventories from current assets, is approximately 1.43, using cash and cash equivalents of $29,891,000, investments of $102,902,000, and receivables of $21,384,000 .
Analysis of Working Capital Trends
As of September 30, 2024, Biglari Holdings Inc. has a working capital of $53,174,000, reflecting a positive trend compared to $41,451,000 as of December 31, 2023 . This improvement indicates enhanced liquidity and operational efficiency.
Cash Flow Statements Overview
The cash flow from operating activities for the first nine months of 2024 is $31,665,000, compared to $48,676,000 in 2023 . Cash used in investing activities amounts to $34,916,000 in 2024, down from $56,226,000 in 2023 . Financing activities generated $4,869,000 in cash during 2024, slightly up from $4,382,000 in 2023 .
| Cash Flow Activity | 2024 (YTD) | 2023 (YTD) |
|---|---|---|
| Net cash provided by operating activities | $31,665,000 | $48,676,000 |
| Net cash used in investing activities | ($34,916,000) | ($56,226,000) |
| Net cash provided by financing activities | $4,869,000 | $4,382,000 |
| Increase (decrease) in cash | $1,576,000 | ($3,224,000) |
Potential Liquidity Concerns or Strengths
Despite a decrease in net cash provided by operating activities, the overall liquidity position remains strong, supported by a healthy current ratio and significant cash reserves. The company also maintains a line of credit of $35,000,000, with a current balance of $9,000,000 as of September 30, 2024 . This line of credit provides additional liquidity support, ensuring operational flexibility in the face of market fluctuations.
Overall, Biglari Holdings Inc. demonstrates a solid liquidity profile as of 2024, with manageable liabilities, a growing working capital base, and sufficient cash flow generation capabilities.
Is Biglari Holdings Inc. (BH) Overvalued or Undervalued?
Valuation Analysis
To assess the valuation of Biglari Holdings Inc. (BH), we will analyze key financial metrics, including the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and enterprise value-to-EBITDA (EV/EBITDA) ratio.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the net earnings attributable to Biglari Holdings Inc. shareholders were $32,125 thousand, leading to a P/E ratio of approximately 8.93 based on a stock price of $286.00 per share. This indicates a relatively low valuation compared to the industry average P/E of around 15.0.
Price-to-Book (P/B) Ratio
The total assets of Biglari Holdings Inc. as of September 30, 2024, stood at $865,116 thousand, with total liabilities of $263,353 thousand. This results in a book value of equity of $601,763 thousand. The P/B ratio is calculated as:
P/B Ratio = Stock Price / (Total Equity / Shares Outstanding)
With shares outstanding at 620,592, the P/B ratio is approximately 0.47, significantly lower than the industry average of 1.5.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is calculated as:
EV = Market Capitalization + Total Debt - Cash and Cash Equivalents
With a market capitalization of $286.00 per share and 620,592 shares outstanding, the market cap is $177,000 thousand. Total debt as of September 30, 2024, is $91,989 thousand, and cash and cash equivalents are $29,891 thousand.
Thus, EV = $177,000 + $91,989 - $29,891 = $238,098 thousand.
For the trailing twelve months (TTM), EBITDA is approximately $43,326 thousand. Therefore, the EV/EBITDA ratio is:
EV/EBITDA = $238,098 / $43,326 = 5.49
This ratio is lower than the industry average of 10.0, suggesting that the company may be undervalued.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $200.00 and a high of $300.00. The current price of $286.00 reflects a 15% increase year-to-date.
Dividend Yield and Payout Ratios
Biglari Holdings does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio is therefore not applicable.
Analyst Consensus on Stock Valuation
As of the latest reports, analysts have a consensus rating of Hold on the stock, with a target price averaging around $290.00, indicating a potential upside of approximately 1.92% from the current price.
| Metric | Value |
|---|---|
| P/E Ratio | 8.93 |
| P/B Ratio | 0.47 |
| EV/EBITDA Ratio | 5.49 |
| Stock Price (Current) | $286.00 |
| 52-Week Low | $200.00 |
| 52-Week High | $300.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Average Target Price | $290.00 |
Key Risks Facing Biglari Holdings Inc. (BH)
Key Risks Facing Biglari Holdings Inc. (BH)
The financial health of Biglari Holdings Inc. is influenced by various internal and external risk factors. These risks can significantly impact the company's performance and, consequently, its stock value.
Industry Competition
Biglari Holdings operates in a highly competitive environment, particularly in the restaurant and oil and gas sectors. The company reported that its franchise partner fees decreased from $54,604 for the first nine months of 2023 to $53,064 in 2024. This decline was attributed to increased food and labor expenses among franchise partners, which can affect overall profitability.
Regulatory Changes
Changes in regulations can pose significant risks. The company has to comply with numerous health, safety, and environmental regulations. Any changes in these regulations could lead to increased operational costs. As of September 30, 2024, the line of credit was amended to $35,000, reflecting adjustments to operational strategies to comply with financial covenants and regulations.
Market Conditions
Market fluctuations, particularly in the oil and gas sector, can impact revenues. For instance, oil and gas revenues decreased from $35,123 in the first nine months of 2023 to $27,755 in 2024 due to lower production and prices.
Operational Risks
Operational challenges include managing costs associated with food, labor, and occupancy. The cost of food for company-operated units was 30.8% of net sales in the third quarter of 2024, up from 30.3% in the same quarter of 2023. Labor costs also increased to 33.2% of net sales in 2024, compared to 31.1% in 2023.
Financial Risks
The company’s financial performance has shown volatility. For example, the net earnings for the first nine months of 2024 were $6,514, a decrease from $10,899 in 2023. Additionally, the interest expense on notes payable was $317 for the first nine months of 2024, compared to $469 in 2023.
Strategic Risks
Strategic decisions regarding expansion and investment can also pose risks. The company reported a decrease in the number of traditional franchise units from 134 in September 2023 to 116 in September 2024, reflecting a strategic shift that may affect long-term revenue.
Mitigation Strategies
To address these risks, Biglari Holdings has implemented various strategies. The company has maintained a line of credit to ensure liquidity, with a balance of $9,000 as of September 30, 2024. Furthermore, the company is focusing on improving operational efficiencies to mitigate rising costs and enhance profitability.
| Risk Factor | Description | Recent Data |
|---|---|---|
| Industry Competition | High competition in the restaurant sector affecting franchise fees. | Franchise fees decreased to $53,064 in 2024. |
| Regulatory Changes | Compliance with health and safety regulations. | Line of credit amended to $35,000. |
| Market Conditions | Volatility in oil and gas prices affecting revenues. | Oil and gas revenues decreased to $27,755 in 2024. |
| Operational Risks | Rising costs of food and labor impacting margins. | Cost of food increased to 30.8% of net sales. |
| Financial Risks | Volatility in earnings impacting financial stability. | Net earnings at $6,514 in 2024. |
| Strategic Risks | Reduction in number of franchise units affecting growth. | Traditional units decreased to 116 in 2024. |
| Mitigation Strategies | Maintaining liquidity through credit lines. | Line of credit balance at $9,000 as of September 30, 2024. |
Future Growth Prospects for Biglari Holdings Inc. (BH)
Growth Opportunities
Future growth prospects for Biglari Holdings Inc. are influenced by several key drivers.
Key Growth Drivers
- Product Innovations: The company’s focus on enhancing its restaurant offerings, particularly at Steak n Shake, has led to a reported 5.4% increase in same-store sales during the third quarter of 2024.
- Market Expansions: As of September 30, 2024, there were 177 franchise partner units compared to 181 units in the previous year, indicating a stable base for potential growth.
- Acquisitions: The company has a history of acquiring underperforming restaurant locations, with gains from the sale of former company-operated restaurants reported at $5,335 in the first nine months of 2024.
Future Revenue Growth Projections
For the first nine months of 2024, revenue increased to $119,210, a growth of 3.1% compared to the previous year. The overall revenue for the first nine months of 2023 was $115,613.
Earnings Estimates
Net earnings attributable to Biglari Holdings Inc. shareholders for the first nine months of 2024 was $6,514, down from $10,899 in the same period of 2023, reflecting challenges in the restaurant sector and oil and gas operations.
Strategic Initiatives and Partnerships
The company’s strategic initiatives include the management of its investment partnerships, with a fair value of interest in these partnerships reported at $491,589 as of September 30, 2024. This is an increase from $472,772 at the end of 2023.
Competitive Advantages
Biglari Holdings benefits from a diversified portfolio, including restaurant operations and insurance businesses. The company reported $29,891 in cash and cash equivalents as of September 30, 2024, providing liquidity for future investments.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Net Sales | $39,660 | $39,195 | $119,210 | $115,613 |
| Net Earnings | $32,125 | $(56,514) | $6,514 | $10,899 |
| Franchise Partner Units | 177 | 181 | 177 | 181 |
| Cash and Cash Equivalents | $29,891 | $33,993 | $29,891 | $33,993 |
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Updated on 16 Nov 2024
Resources:
- Biglari Holdings Inc. (BH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Biglari Holdings Inc. (BH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Biglari Holdings Inc. (BH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.