Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

ý
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

2024

or

¨
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission file number 001-38477

BIGLARI HOLDINGS INC.

(Exact name of registrant as specified in its charter)

BIGLARI HOLDINGS INC.
INDIANA(Exact name of registrant as specified in its charter)

Indiana82-3784946
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)


17802 IH 10 West,

19100 Ridgewood ParkwaySuite 400

1200

San Antonio, Texas

Texas

78257

78259
(Address of principal executive offices)(Zip Code)

(210) 344-3400

Registrant’s telephone number, including area code

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolsName of each exchange on which registered
Class A Common Stock, no par value BH.ANew York Stock Exchange
Class B Common Stock, no par valueBHNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx    Noo

¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesxNoo

¨



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filero

☐Accelerated filer☒
Non-accelerated filer☐Smaller reporting company☒
Emerging growth companyo

Accelerated filerxNon-accelerated filero

Smaller reporting companyo

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso☐Nox

Number of shares of common stock outstanding as of May 2, 2018:

8, 2024:
Class A common stock –206,864
Class B common stock –2,068,640


IndexTable of Contents

BIGLARI HOLDINGS INC.

INDEX

Page No.
Page No.
1
Item 1.Financial Statements
1
2
23
Consolidated Statements of Cash Flows — First Quarter 2018 and 20173
43
4
5
1918
2628
2728
29
29
Legal Proceedings27
Item 1A.Risk Factors27
Item 2.
2829
2829
2829
2829
2930
3031



IndexTable of Contents

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIGLARI HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

  March 31,
2018		 December 31, 2017
   (Unaudited)     
Assets        
Current assets:        
Cash and cash equivalents $45,444  $58,577 
Investments  24,157   23,289 
Receivables  12,187   16,284 
Inventories  7,312   7,268 
Other current assets  9,299   7,221 
Total current assets  98,399   112,639 
Property and equipment  291,625   295,800 
Goodwill and other intangible assets  66,774   66,645 
Investment partnerships  545,939   566,021 
Other assets  17,846   22,479 
Total assets $1,020,583  $1,063,584 
         
Liabilities and shareholders’ equity        
Liabilities        
Current liabilities:        
Accounts payable and accrued expenses $106,708  $128,744 
Current portion of notes payable and other borrowings  6,524   6,748 
Total current liabilities  113,232   135,492 
Long-term notes payable and other borrowings  254,988   256,994 
Deferred taxes  89,387   88,401 
Other liabilities  11,269   11,369 
Total liabilities  468,876   492,256 
Shareholders’ equity        
Common stock  1,071   1,071 
Additional paid-in capital  381,975   382,014 
Retained earnings  563,780   565,504 
Accumulated other comprehensive loss  (966)  (1,404)
Treasury stock, at cost  (394,153)  (375,857)
Biglari Holdings Inc. shareholders’ equity  551,707   571,328 
Total liabilities and shareholders’ equity $1,020,583  $1,063,584 

March 31,
2024		December 31,
2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents$34,536 $28,066 
Investments97,725 91,879 
Receivables24,198 22,241 
Inventories3,565 2,980 
Other current assets8,410 7,385 
Total current assets168,434 152,551 
Property and equipment377,363 380,491 
Operating lease assets34,073 32,215 
Goodwill and other intangible assets76,642 76,760 
Investment partnerships220,757 199,103 
Other assets8,048 8,302 
Total assets$885,317 $849,422 
Liabilities and shareholders’ equity
Liabilities
Current liabilities:
Accounts payable and accrued expenses$72,811 $66,743 
Loss and loss adjustment expenses16,013 15,168 
Unearned premiums14,939 14,334 
Current portion of lease obligations14,519 14,855 
Total current liabilities118,282 111,100 
Lease obligations91,912 86,389 
Deferred taxes41,801 37,939 
Asset retirement obligations14,402 14,316 
Other liabilities348 348 
Total liabilities266,745 250,092 
Shareholders’ equity
Common stock1,138 1,138 
Additional paid-in capital385,594 385,594 
Retained earnings654,037 631,458 
Accumulated other comprehensive loss(2,549)(2,518)
Treasury stock, at cost(419,648)(416,342)
Biglari Holdings Inc. shareholders’ equity618,572 599,330 
Total liabilities and shareholders’ equity$885,317 $849,422 
See accompanying Notes to Consolidated Financial Statements.

1

1
IndexTable of Contents

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(dollars in thousands except per share amounts)

  First Quarter
  2018 2017
  (Unaudited)
Revenues    
Restaurant operations $193,934  $195,694 
Insurance premiums and other  6,547   6,080 
Media advertising and other  1,744   1,619 
   202,225   203,393 
Cost and expenses        
Restaurant cost of sales  158,350   157,298 
Insurance losses and underwriting expenses  5,928   5,020 
Media cost of sales  1,517   1,493 
Selling, general and administrative  32,650   29,486 
Depreciation and amortization  4,946   5,621 
   203,391   198,918 
Other income (expenses)        
Interest expense  (2,754)  (2,824)
Interest on obligations under leases  (2,186)  (2,280)
Investment partnership gains (losses)  3,495   (24,968)
Total other income (expenses)  (1,445)  (30,072)
Earnings (loss) before income taxes  (2,611)  (25,597)
Income tax benefit  (797)  (9,776)
Net earnings (loss) $(1,814) $(15,821)
Earnings per share        
Net earnings (loss) per equivalent Class A share * $(5.15) $(42.72)

First Quarter
20242023
(Unaudited)
Revenues  
Restaurant operations$61,996 $61,129 
Insurance premiums and other17,733 16,229 
Oil and gas9,510 12,223 
Licensing and media212 595 
Total revenues89,451 90,176 
Costs and expenses
Restaurant cost of sales34,421 32,738 
Insurance losses and underwriting expenses15,063 13,013 
Oil and gas production costs4,499 5,471 
Licensing and media costs503 452 
Selling, general and administrative18,275 17,263 
Gain on sale of oil and gas properties(481)— 
Impairments107 776 
Depreciation, depletion, and amortization10,053 9,940 
Interest expense on leases1,314 1,307 
Interest expense on debt— 167 
Total costs and expenses83,754 81,127 
Other income
Investment gains1,713 3,638 
Investment partnership gains21,985 72,588 
Total other income23,698 76,226 
Earnings before income taxes29,395 85,275 
Income tax expense6,816 19,738 
Net earnings22,579 65,537 
Earnings attributable to noncontrolling interest— 651 
Net earnings attributable to Biglari Holdings Inc. shareholders$22,579 $64,886 
Net earnings per average equivalent Class A share*$79.56 $222.28 
*Net earnings (loss) per average equivalent Class B share outstanding are one-fifth of the average equivalent Class A share or $(1.03)$15.91 for the first quarter of 20182024 and $(8.54)$44.46 for the first quarter of 2017.        

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

  First Quarter
  2018 2017
  (Unaudited)
   
Net earnings (loss) $(1,814) $(15,821)
Other comprehensive income:        
Net change in unrealized gains and losses on investments  —     191 
Applicable income taxes  —     (67)
Reclassification to earnings    (73)  —   
Applicable income taxes  15   —   
Foreign currency translation  496   185 
Other comprehensive income, net  438   309 
Total comprehensive loss $(1,376) $(15,512)

2023.

See accompanying Notes to Consolidated Financial Statements.

2


2

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

COMPREHENSIVE INCOME

(dollars in thousands)

  First Quarter
  2018 2017
  (Unaudited)
Operating activities        
Net earnings (loss) $(1,814) $(15,821)
Adjustments to reconcile net earnings (loss) to operating cash flows:        
Depreciation and amortization  4,946   5,621 
Provision for deferred income taxes  380   (10,281)
Asset impairments and other non-cash expenses  239   435 
Loss on disposal of assets  96   99 
Investment partnership (gains) losses  (3,495)  24,968 
Distributions from investment partnerships  5,200   5,015 
Changes in receivables and inventories  3,861   5,202 
Changes in other assets  1,121   (114)
Changes in accounts payable and accrued expenses  (19,979)  (5,261)
Net cash provided by (used in) operating activities  (9,445)  9,863 
Investing activities        
Capital expenditures  (2,452)  (1,990)
Proceeds from property and equipment disposals  1,524   50 
Purchases of investments  (18,340)  (16,945)
Redemptions of fixed maturity securities  17,492   18,653 
Net cash used in investing activities  (1,776)  (232)
Financing activities        
Payments on revolving credit facility  (39)  (20)
Principal payments on long-term debt  (550)  (15,550)
Principal payments on direct financing lease obligations  (1,400)  (1,356)
Proceeds from exercise of stock options  42   30 
Net cash used in financing activities  (1,947)  (16,896)
Effect of exchange rate changes on cash  35   17 
Decrease in cash, cash equivalents and restricted cash  (13,133)  (7,248)
Cash, cash equivalents and restricted cash at beginning of year  67,230   75,833 
Cash, cash equivalents and restricted cash at end of first quarter $54,097  $68,585 

 First Quarter
 20242023
 (Unaudited)
Net earnings$22,579 $65,537 
Foreign currency translation(31)332 
Comprehensive income22,548 65,869 
Comprehensive income attributable to noncontrolling interest— 651 
Total comprehensive income attributable to Biglari Holdings Inc. shareholders$22,548 $65,218 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(dollars in thousands)
(Unaudited)

Biglari Holdings Inc. Shareholders’ Equity
Common
Stock		Additional Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive 
Income (Loss)		Treasury
Stock		Non-controlling InterestsTotal
For the first quarter of 2024
Balance at December 31, 2023$1,138 $385,594 $631,458 $(2,518)$(416,342)$— $599,330 
Net earnings22,579 22,579 
Other comprehensive income (loss)(31)(31)
Adjustment for holdings in investment partnerships(3,306)(3,306)
Balance at March 31, 2024$1,138 $385,594 $654,037 $(2,549)$(419,648)$— $618,572 

For the first quarter of 2023
Balance at December 31, 2022$1,138 $381,788 $576,510 $(2,790)$(409,680)$8,602 $555,568 
Net earnings64,886 651 65,537 
Other comprehensive income (loss)332 332 
Adjustment for holdings in investment partnerships(239)(239)
Balance at March 31, 2023$1,138 $381,788 $641,396 $(2,458)$(409,919)$9,253 $621,198 
See accompanying Notes to Consolidated Financial Statements.

3

3


BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

CASH FLOWS

(dollars in thousands)

  Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total
Balance at December 31, 2017 $1,071  $382,014  $565,504  $(1,404) $(375,857) $571,328 
Net earnings (loss)          (1,814)          (1,814)
Adoption of accounting standards          90           90 
Other comprehensive income, net              438       438 
Adjustment to treasury stock for holdings in investment partnerships                  (18,377)  (18,377)
Exercise of stock options      (39)          81   42 
Balance at March 31, 2018 $1,071  $381,975  $563,780  $(966) $(394,153) $551,707 
                         
                         
Balance at December 31, 2016 $1,071  $381,906  $515,433  $(3,584) $(362,886) $531,940 
Net earnings (loss)          (15,821)          (15,821)
Other comprehensive income, net              309       309 
Adjustment to treasury stock for holdings in investment partnerships      116           (1,600)  (1,484)
Exercise of stock options      (8)          38   30 
Balance at March 31, 2017 $1,071  $382,014  $499,612  $(3,275) $(364,448) $514,974 

First Quarter
20242023
(Unaudited)
Operating activities  
Net earnings$22,579 $65,537 
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization10,053 9,940 
Provision for deferred income taxes3,877 18,450 
Asset impairments107 776 
Gains on sale of assets(1,431)(1,590)
Investment and investment partnerships gains(23,698)(76,226)
Distributions from investment partnerships1,000 — 
Changes in receivables and inventories(2,249)2,006 
Changes in accounts payable and accrued expenses8,887 1,030 
Net cash provided by operating activities19,125 19,923 
Investing activities
Capital expenditures(4,596)(5,929)
Proceeds from property and equipment disposals920 2,140 
Purchases of interests in limited partnerships(3,975)(2,700)
Purchases of investments(20,856)(27,255)
Sales of investments and redemptions of fixed maturity securities17,265 21,009 
Net cash used in investing activities(11,242)(12,735)
Financing activities
Repayments of borrowings— (3,500)
Principal payments on direct financing lease obligations(1,403)(1,550)
Net cash used in financing activities(1,403)(5,050)
Effects of foreign currency exchange rate changes(10)8 
Increase in cash, cash equivalents and restricted cash6,470 2,146 
Cash, cash equivalents and restricted cash at beginning of year29,654 38,805 
Cash, cash equivalents and restricted cash at end of first quarter$36,124 $40,951 
First Quarter
20242023
(Unaudited)
Cash and cash equivalents$34,536 $39,363 
Restricted cash in other long-term assets1,588 1,588 
Cash, cash equivalents and restricted cash at end of first quarter$36,124 $40,951 
See accompanying Notes to Consolidated Financial Statements.

4

4

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2018

2024

(dollars in thousands, except share and per share data)

Note 1. Summary of Significant Accounting Policies

Description of Business

The accompanying unaudited consolidated financial statements of Biglari Holdings Inc. (“Biglari Holdings” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In our opinion, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist only of normal recurring adjustments. The results for the interim periods shown are not necessarily indicative of results for the entire fiscal year. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2017.

2023.

Biglari Holdings Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities, including media, property and casualty insurance, licensing and restaurants.media, restaurants, and oil and gas. The Company’s largest operating subsidiaries are involved in the franchising and operating of restaurants. Biglari Holdings is founded and led by Sardar Biglari, Chairman and Chief Executive Officer of the Company. The Company’s long-term objective is to maximize per-share intrinsic value.

Biglari Holdings’ management system combines decentralized operations with centralized financial decision-making. Operating decisions for the various business units are made by their respective managers. All major operating, investment and capital allocation decisions are made for the Company and its subsidiaries by Mr. Biglari.
As of March 31, 2018,2024, Mr. Biglari’s beneficial ownership of the Company’s outstanding common stock was approximately 54.8%.

On March 5, 2018, the Company entered into an agreement with NBHSA Inc. (“New BH”), a direct, wholly owned subsidiaryBiglari beneficially owns shares of the Company and BH Merger Company (“Merger Sub”), a wholly owned subsidiary of New BH. Pursuant to the agreement, on April 30, 2018, Merger Sub merged with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of New BH. Upon completionthat represent approximately 71.5% of the merger, New BH changed its name to “Biglari Holdings Inc.” and replaced the Company as the publicly held corporation through which our collection of businesses is conducted.

New BH has two classes of common stock designated Class A common stock and Class B common stock. A share of Class B common stock has economic rights equivalent to 1/5th of a share of Class A common stock; however, Class B common stock has no voting rights.

As a result of the April 30, 2018 transaction, the current shareholders of the Company became shareholders of New BH and received, for every ten (10) shares of common stock of the Company they owned on April 30, 2018, (i) ten (10) shares of Class B common stock of New BH and (ii) one (1) share of Class A common stock of New BH. In other words, shareholders received for a share of common stock of the Company (i) one (1) share of Class B common stock of New BH and (ii) 1/10th of one share of Class A common stock of New BH.

Starting on May 1, 2018, the shares of New BH Class A common stock trade on the New York Stock Exchange (“NYSE”) under the ticker symbol “BH.A,” whereas the New BH Class B common stock trades on the NYSE under the ticker symbol “BH,” which is the former ticker symbol for the Company’s common stock.

For accounting purposes, the April 30, 2018 transaction will be treated as a merger of entities under common control. Accordingly, the consolidated financial position and results of operations of the Company will be included in the consolidated financial statements of New BH on the same basis as currently presented, except for earnings per share which is impacted by the issuance of the new common shares. The Company has applied the “two-class method” of computing earnings per share as prescribed in ASC 260, “Earnings Per Share.” 

interest.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-ownedwholly owned subsidiaries, including Steak n Shake Inc. (“Steak n Shake”), Western Sizzlin Corporation, (“Western”), Maxim Inc. (“Maxim”) and First Guard Insurance Company, Maxim Inc., Southern Pioneer Property & Casualty Insurance Company, Southern Oil Company, and its agency, 1st Guard Corporation (collectively “First Guard”).Abraxas Petroleum Corporation. Intercompany accounts and transactions have been eliminated in consolidation.

5

Note 2. New Accounting Standards

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04,Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. ASU 2017-04 provides for the elimination of Step 2 from the goodwill impairment test. If impairment charges are recognized, the amount recorded will be the amount by which the carrying amount exceeds the reporting unit’s fair value with certain limitations. The ASU is effective for public companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. The Company does not currently anticipate ASU 2017-04 will have a material impact on the consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13,Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP; however ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02,Leases. ASU 2016-02 requires a lessee to recognize lease assets and lease liabilities on the balance sheet, along with additional qualitative and quantitative disclosures. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the effect this amended guidance will have on our consolidated balance sheet and results of operations. We anticipate the ASU will have a material impact on our balance sheet, but the ASU is non-cash in nature and will not affect our cash position.

In August 2016, the FASB issued ASU 2016-15,Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.The objective of the update is to reduce diversity in how certain transactions are classified in the statement of cash flows. The amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of ASU 2016-15 did not have a material effect on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09,Revenue from Contracts with Customers (Topic 606). On January 1, 2018, we adopted FASB accounting standards codification Topic 606 (“ASC 606”). In accordance with ASC 606, we changed certain characteristics of our revenue recognition accounting policy as described below. ASC 606 was applied using the modified retrospective method, where the cumulative effect of the initial application is recognized as an adjustment to opening retained earnings at January 1, 2018. Comparative prior periods have not been adjusted.

The following table summarizes the impact of the adoption of ASC 606 on revenues, operating expenses and net earnings for the three months ended March 31, 2018.

  As Reported Adjustments
for the
Adoption of
ASC 606		 Amounts without the
Adoption of
ASC 606
Statements of Earnings            
Revenues            
Restaurant operations            
Net sales $185,571  $—    $185,571 
Franchise royalties and fees  7,102   2,369   4,733 
Other  1,261   279   982 
Selling, general and administrative  32,650   2,522   30,128 
Earnings (loss) before income taxes  (2,611)  126   (2,737)
Income tax expense (benefit)  (797)  31   (828)
Net earnings (loss)  (1,814)  95   (1,909)

The impact of ASC 606 on the Company’s balance sheet as of March 31, 2018 was not material. The cumulative change in retained earnings as of January 1, 2018 was $90. Upon adoption of ASC 606, the Company changed its restaurant operations accounting policies for the recognition of franchise fees, recording of advertising arrangements, and recognition of gift card revenue. See additional revenue disclosures in Note 8 Restaurant Operations Revenues. The adoption of ASC 606 did not have any significant impact on our insurance or media businesses.

6

Index

Note 3.2. Earnings Per Share

Earnings per share of common stock is based on the weighted averageweighted-average number of shares outstanding during the year. The shares of Company stock attributable to our limited partner interest in The Lion Fund, L.P., and The Lion Fund II, L.P. (collectively, the “investment partnerships”) — based on our proportional ownership during this period — are considered treasury stock on the consolidated balance sheet and thereby deemed not to be included in the calculation of weighted averageweighted-average common shares outstanding. However, these shares are legally outstanding.

On September 16, 2017, The Lion Fund II, L.P. entered into a Rule 10b5-1 trading plan to purchase up to an aggregate of 110,000 shares of Biglari Holdings common stock at prevailing market prices. During the first quarter of 2018, 45,302 shares were purchased. All of the shares to be purchased under the trading plan remain legally outstanding.

On April 30, 2018 the Company’s shareholders exchanged their shares of Company common stock for dual common stock – Class A common stock and Class B common stock.

The following table presents shares authorized, issued, and outstanding on March 31, 20182024 and December 31, 2017.

  March 31,
2018		 December 31,
2017
Common stock authorized  2,500,000   2,500,000 
         
Common stock issued  2,142,202   2,142,202 
Treasury stock held by the Company  (73,667)  (74,589)
Outstanding shares  2,068,535   2,067,613 

The issuance2023.

 March 31, 2024December 31, 2023
 Class AClass BClass AClass B
Common stock authorized500,000 10,000,000 500,000 10,000,000 
Common stock issued and outstanding206,864 2,068,640 206,864 2,068,640 


5
Note 2. Earnings Per Share (continued)
The Company has applied the “two-class method” of computing earnings per share as prescribed in ASCAccounting Standards Codification (“ASC”) 260, “Earnings“Earnings Per Share.Share”

As. (Class B shares are economically equivalent to one-fifth of March 31, 2018, the total outstanding shares of the Company were 2,068,535. The calculation of earnings per share reflects an exchange of 2,068,535 outstanding shares of the Company for 206,854 shares of New BHa Class A common stock and 2,068,535 shares of New BH Class B common stock. On anshare.) The equivalent Class A common stock basis, there were 620,592 shares outstanding as of March 31, 2018 and 620,284 shares outstanding as of December 31, 2017.

For financial reporting purposes,applied for computing earnings per share excludes the proportional ownershipshares of the Company’s commonBiglari Holdings’ stock ownedheld by the investment partnershipspartnerships. In the tabulation below is excluded in the earnings per share calculation. After giving effect for the investment partnerships’ proportional ownership of New BH’s common stock, theweighted-average equivalent Class A weighted average common shares duringstock for earnings per share.

March 31, 2024March 31, 2023
Equivalent Class A common stock outstanding620,592 620,592 
Proportional ownership of Company stock held by investment partnerships336,804 328,681 
Equivalent Class A common stock for earnings per share283,788 291,911 
Note 3. Investments
We classify investments in fixed maturity securities at the acquisition date as available-for-sale. Realized gains and losses on disposals of investments are determined on a specific identification basis. Dividends and interest earned on investments are reported as investment income by our insurance companies. We consider investment income as a component of our aggregate insurance operating results. However, we consider investment gains and losses, whether realized or unrealized, as non-operating.

Investment gains for the first quarter of 20182024 and 20172023 were 352,191$1,713 and 370,344,$3,638, respectively.

Each Class A common share is entitled to one vote. Class B common stock possesses economic rights equal to one-fifth (1/5th) of such rights of Class A common stock; however, Class B common stock has no voting rights.

Note 4. Investments

Investments consisted of the following.

  March 31,
2018		 December 31,
2017
Cost $24,099  $23,216 
Gross unrealized gains  58   73 
Fair value $24,157  $23,289 

Investments in equity securities and a related put option of $4,463 are included in other current assets as of March 31, 2018 and in other assets as of December 31, 2017. The investments are recorded at fair value.

7

Note 5.4. Investment Partnerships

The Company reports on the limited partnership interests in investment partnerships under the equity method of accounting. We record our proportional share of equity in the investment partnerships but exclude Company common stock held by said partnerships. The Company’s pro-rata share of its common stock held by the investment partnerships is recorded as treasury stock even though theythese shares are legally outstanding. The Company records gains/losses from investment partnerships (inclusive of the investment partnerships’ unrealized gains and losses on their securities) in the consolidated statements of earnings based on our carrying value of these partnerships. The fair value is calculated net of the general partner’s accrued incentive fees. Gains and losses on Company common stock included in the earnings of these partnerships are eliminated because they are recorded as treasury stock. 

Biglari Capital Corp. is the general partner of the investment partnerships. Biglari Capital Corp. is solely owned by Mr. Biglari.
The fair value and adjustment for Company common stock held by the investment partnerships to determine the carrying value of our partnership interest isare presented below.

  Fair Value Company Common Stock Carrying Value
Partnership interest at December 31, 2017 $925,279  $359,258  $566,021 
Investment partnership gains (losses)  (1,850)  (5,345)  3,495 
Contributions (net of distributions) to investment partnerships  (5,200)      (5,200)
Increase in proportionate share of Company stock held      18,377   (18,377)
Partnership interest at March 31, 2018 $918,229  $372,290  $545,939 
             
   Fair Value   Company Common Stock   Carrying Value 
Partnership interest at December 31, 2016 $972,707  $395,070  $577,637 
Investment partnership gains (losses)  (59,517)  (34,549)  (24,968)
Contributions (net of distributions) to investment partnerships  (5,015)      (5,015)
Increase in proportionate share of Company stock held      1,484   (1,484)
Partnership interest at March 31, 2017 $908,175  $362,005  $546,170 

 Fair ValueCompany
Common Stock		Carrying Value
Partnership interest at December 31, 2023$472,772 $273,669 $199,103 
Investment partnership gains (losses)69,162 47,177 21,985 
Contributions (net of distributions)2,975 2,975 
Changes in proportionate share of Company stock held3,306 (3,306)
Partnership interest at March 31, 2024$544,909 $324,152 $220,757 
 Fair ValueCompany
Common Stock		Carrying Value
Partnership interest at December 31, 2022$383,004 $227,210 $155,794 
Investment partnership gains (losses)121,795 49,207 72,588 
Contributions2,700 2,700 
Changes in proportionate share of Company stock held239 (239)
Partnership interest at March 31, 2023$507,499 $276,656 $230,843 
6
Note 4. Investment Partnerships(continued)

The carrying value of the investment partnerships net of deferred taxes is presented below.

  March 31,
2018		 December 31,
2017
Carrying value of investment partnerships $545,939  $566,021 
Deferred tax liability related to investment partnerships  (96,327)  (95,309)
Carrying value of investment partnerships net of deferred taxes $449,612  $470,712 

 March 31,
2024		December 31, 2023
Carrying value of investment partnerships$220,757 $199,103 
Deferred tax liability related to investment partnerships(31,314)(27,896)
Carrying value of investment partnerships net of deferred taxes$189,443 $171,207 
We expect that a majority of the $31,314 and $27,896 deferred tax liabilities enumerated above will not become due until the dissolution of the investment partnerships.
The Company’s proportionate share of Company stock held by investment partnerships at cost is $373,316was $419,648 and $354,939 at$416,342 as of March 31, 20182024, and December 31, 2017, respectively, and is recorded as treasury stock.

2023, respectively. 

The carrying value of the partnership interest approximates fair value adjusted by the value of held Company stock. Fair value of our partnership interest is assessed according to our proportional ownership interest of the fair value of investments held by the investment partnerships. The fair value measurement is classified as level 3 withinUnrealized gains and losses on marketable securities held by the fair value hierarchy.

Gains (losses)investment partnerships affect our net earnings. 

Gains/losses from investment partnerships recorded in the Company’s consolidated statements of earnings are presented below.

    First Quarter 
   2018   2017 
Gains (losses) on investment partnership $3,495  $(24,968)
Tax expense (benefit)  420   (9,761)
Contribution to net earnings (loss) $3,075  $(15,207)

8

Index

 First Quarter
 20242023
Gains from investment partnerships$21,985 $72,588 
Tax expense4,837 16,559 
Contribution to net earnings$17,148 $56,029 

On December 31 of each year, the general partner of the investment partnerships, Biglari Capital Corp. (“Biglari Capital”), will earn an incentive reallocation fee for the Company’s investments equal to 25% of the net profits above aan annual hurdle rate of 6% over the previous high-water mark. Our policy is to accrue an estimated incentive fee throughout the year. The Company did not accrue antotal incentive feereallocation from Biglari Holdings to Biglari Capital Corp. includes gains on the Company’s common stock. Gains and losses on the Company’s common stock and the related incentive reallocations are eliminated in our financial statements.
There were no incentive reallocations accrued during the first quarterquarters of 2018 or 2017. Our investments in these partnerships are committed on a rolling 5-year basis. Biglari Capital is an entity solely owned by Mr. Biglari. 

2024 and 2023.


7
Note 4. Investment Partnerships(continued)

Summarized financial information for The Lion Fund, L.P., and The Lion Fund II, L.P., is presented below.

   Equity in Investment Partnerships 
   Lion Fund   Lion Fund II 
Total assets as of March 31, 2018 $198,286  $1,057,316 
Total liabilities as of March 31, 2018 $1,481  $200,831 
Revenue for the first quarter ended March 31, 2018 $(4,135) $3,069 
Earnings (loss) for the first quarter ended March 31, 2018 $(4,151) $922 
Biglari Holdings’ ownership interest as of March 31, 2018  65.1%  92.3%
         
Total assets as of December 31, 2017 $203,560  $1,060,737 
Total liabilities as of December 31, 2017 $157  $199,974 
Revenue for the first quarter ended March 31, 2017 $(15,696) $(52,652)
Earnings (loss) for the first quarter ended March 31, 2017 $(15,716) $(53,514)
Biglari Holdings’ ownership interest as of March 31, 2017  63.6%  92.5%

 Equity in Investment Partnerships
 Lion FundLion Fund II
Total assets as of March 31, 2024$425,899 $412,720 
Total liabilities as of March 31, 2024$31,718 $193,830 
Revenue for the first quarter of 2024$50,262 $31,118 
Earnings for the first quarter of 2024$49,820 $28,237 
Biglari Holdings’ ownership interest as of March 31, 202489.9 %86.3 %
Total assets as of December 31, 2023$371,365 $373,302 
Total liabilities as of December 31, 2023$26,594 $185,024 
Revenue for the first quarter of 2023$63,558 $78,592 
Earnings for the first quarter of 2023$63,404 $76,341 
Biglari Holdings’ ownership interest as of March 31, 202388.6 %86.1 %
Revenue in the above summarized financial information of the investment partnerships, summarized above, includes investment income and unrealized gains and losses on investments. The investments held by the investment partnerships are largely concentrated in the common stock of one investee, Cracker Barrel Old Country Store, Inc.

Note 6.5. Property and Equipment

Property and equipment is composed of the following.

  March 31, 2018 December 31, 2017
Land $156,176  $156,506 
Buildings  151,669   152,610 
Land and leasehold improvements  162,518   162,652 
Equipment  200,240   203,145 
Construction in progress  1,797   1,782 
   672,400   676,695 
Less accumulated depreciation and amortization  (380,775)  (380,895)
Property and equipment, net $291,625  $295,800 
 March 31,
2024		December 31,
2023
Land$138,076 $139,897 
Buildings156,694 151,716 
Land and leasehold improvements150,244 149,795 
Equipment212,706 212,424 
Oil and gas properties145,078 145,065 
Construction in progress845 1,629 
 803,643 800,526 
Less accumulated depreciation, depletion, and amortization(426,280)(420,035)
Property and equipment, net$377,363 $380,491 
Depletion expense related to oil and gas properties was $2,568 and $2,648 during the first quarter of 2024 and 2023, respectively.
The Company recorded an impairment to restaurant long-lived assets of $107 in the first quarter of 2024 and $776 in the first quarter of 2023 related to underperforming stores.
Property and equipment held for sale of $1,149 and $773 are recorded in other current assets as of March 31, 2024, and December 31, 2023, respectively. The assets classified as held for sale include properties owned by Steak n Shake, which were previously company-operated restaurants.
During the first quarter of 2024 and 2023, the Company sold former company-operated restaurants for a gain of $767 and $1,431, respectively.
8

Note 7.6. Goodwill and Other Intangible Assets

Goodwill

Goodwill consists of the excess of the purchase price over the fair value of the net assets acquired in connection with business acquisitions.

A reconciliation of the change in the carrying value of goodwill is as follows.

  Restaurants Other Total
Goodwill at December 31, 2017 $28,168  $11,913  $40,081 
Change in foreign exchange rates during first quarter 2018  18   —     18 
Goodwill at March 31, 2018 $28,186  $11,913  $40,099 

9
Goodwill
Goodwill at December 31, 2023
Goodwill$53,830 
Accumulated impairment losses(300)
$53,530 
Change in foreign exchange rates during the first quarter of 2024(9)
Goodwill at March 31, 2024$53,521 

Index




We are required to assess goodwill

Goodwill and any indefinite-lived intangible assets forasset impairment annually, or more frequently if circumstances indicate impairmentreviews include determining the estimated fair values of our reporting units and indefinite-lived intangible assets. The key assumptions and inputs used in such determinations may have occurred. When evaluating goodwill for impairment, we may first perform a qualitative assessment to determine whether itinclude forecasting revenues and expenses, cash flows and capital expenditures, as well as an appropriate discount rate and other inputs. Significant judgment by management is more likely than not thatrequired in estimating the fair value of a reporting unit and in performing impairment reviews. Due to the inherent subjectivity and uncertainty in forecasting future cash flows and earnings over long periods of time, actual results may differ materially from the forecasts. If the carrying value of the indefinite-lived intangible asset exceeds fair value, the excess is impaired.charged to earnings as an impairment loss. If we do not performthe carrying value of a qualitative assessment, or if we determine that it is not more likely than not thatreporting unit exceeds the estimated fair value of the reporting unit, exceeds itsthen the excess, limited to the carrying amount we test for potential impairment using a two-step approach. The first is the estimation of fair value of each reporting unit. If step one indicates that impairment potentially exists, the second step is performed to measure the amount of impairment, if any. Goodwill impairment occurs when the estimated fair value of goodwill, is less than its carrying value.

The valuation methodology and underlying financial information included in our determination of fair value require significant management judgments. We use both market and income approacheswill be charged to derive fair value. The judgments in these two approaches include, but are not limited to, comparable market multiples, long-term projections of future financial performance, and the selection of appropriate discount rates used to determine the present value of future cash flows. Changes in such estimates or the application of alternative assumptions could produce significantly different results. Noearnings as an impairment chargesloss. There was no impairment recorded for goodwill were recorded induring the first three monthsquarters of 20182024 or 2017.

2023.

Other Intangible Assets

Other intangible

Intangible assets with indefinite lives are composed of the following.

  March 31, 2018 December 31, 2017
  Gross carrying amount Accumulated amortization Total Gross carrying amount Accumulated amortization Total
Franchise agreement $5,310  $(4,248) $1,062  $5,310  $(4,116) $1,194 
Other  810   (751)  59   810   (743)  67 
Total  6,120   (4,999)  1,121   6,120   (4,859)  1,261 
Intangible assets with indefinite lives:                        
Trade names  15,876   —     15,876   15,876   —     15,876 
Other assets with indefinite lives  9,678   —     9,678   9,427   —     9,427 
Total intangible assets $31,674  $(4,999) $26,675  $31,423  $(4,859) $26,564 

Intangible assets subject to amortization consist of franchise agreements connected with the purchase of Western as well as rights to favorable leases related to prior acquisitions. These intangible assets are being amortized over their estimated weighted average of useful lives ranging from eight to twelve years.

Amortization expense for each of the first quarters of 2018 and 2017 was $140 and $142, respectively. The Company’s intangible assets with definite lives will fully amortize in 2020. Total annual amortization expense for 2019 is expected to be approximately $500.

Intangible assets with indefinite lives consist of trade names, franchise rights as well as lease rights.

 Trade NamesLease RightsTotal
Balance at December 31, 2023
Intangibles$15,876 $11,102 $26,978 
Accumulated impairment losses— (3,748)(3,748)
$15,876 $7,354 $23,230 
Change in foreign exchange rates during the first quarter of 2024— (109)(109)
Balance at March 31, 2024$15,876 $7,245 $23,121 

Note 8.7. Restaurant Operations Revenues

Restaurant operations revenues were as follows.

   First Quarter 
   2018   2017 
Net sales $185,571  $189,051 
Franchise royalties and fees  7,102   5,556 
Other  1,261   1,087 
  $193,934  $195,694 

The Company’s accounting policies and practices related to restaurant operations revenues consist of the following under ASC 606.

10

Index

 First Quarter
 20242023
Net sales$38,735 $36,894 
Franchise partner fees17,758 17,912 
Franchise royalties and fees3,477 4,258 
Other2,026 2,065 
 $61,996 $61,129 

Net sales

Sales

Net sales were comprisedare composed of retail sales of food through Company-ownedcompany-operated stores. Company-ownedCompany-operated store revenues are recognized, net of discounts and sales taxes, when control of the food items are transferredour obligation to our customersperform is satisfied at the point of sale. Sales taxes related to these sales are collected from customers and remitted to the appropriate taxing authority and are not reflected in the Company’s consolidated statements of incomeearnings as revenue.

9
Note 7. Restaurant Operations Revenues (continued)

Franchise royalties and fees

Partner Fees

Franchise royalties andpartner fees are comprisedcomposed of up to 15% of sales as well as 50% of profits. We are therefore fully affected by the operating results of the business, unlike in a traditional franchising arrangement, where the franchisor obtains a royalty fee based on sales only. We generate most of our revenue from our share of the franchise partners’ profits. An initial franchise fee of ten thousand dollars is recognized when the operator becomes a franchise partner. The Company recognizes franchise partner fees monthly as underlying restaurant sales occur.
The Company leases or subleases property and equipment to franchise partners under lease arrangements. Both real estate and equipment rental payments are charged to franchise partners and are recognized in accordance with ASC 842, “Leases”. During the first quarter of 2024 and 2023, restaurant operations recognized $5,705 and $5,575, respectively, in franchise partner fees related to rental income.
Franchise Royalties and Fees
Franchise royalties and fees from Steak n Shake and Western Sizzlin franchisees. Royalty revenuesfranchisees are based onupon a percentage of sales of the franchise salesrestaurant and are recognized when the retail food itemsas earned. Franchise royalties are purchased by franchise customers.billed on a monthly basis. Initial franchise fees receivedwhen a new restaurant opens or at the start of a new franchise term are recorded as deferred revenue when amounts are received and recognized as revenue on a straight-line basis over the term of each respectivethe franchise agreement, which is typically 20 years. This represents a change in methodology for we have historically recognized initial franchise fees upon the opening of a franchise restaurant.

During the quarter ended March 31, 2018, restaurant operations recognized $369 in revenue related to initial franchise fees. As of March 31, 2018 and January 1, 2018, restaurant operations had deferred revenue related to franchise fees of $10,818 and $10,581, respectively. agreement.

Other Revenue
Restaurant operations expects to recognize approximately $450 of deferred revenue balance during the remainder of 2018, approximately $600 in 2019 and the balance in the years 2020 through 2037.

Our advertising arrangements with franchisees are reported in franchise royalties and fees. This represents a change in methodology as we have historically reported advertising funds from the franchisees as an offset to marketing expense in our consolidated statement of earnings.

During the quarter ended March 31, 2018, restaurant operations recognized $2,437 in revenue related to franchise advertising fees. As of March 31, 2018 and January 1, 2018, restaurant operations had deferred revenue related to franchisee advertising fees of $2,065 and $2,064, respectively. Restaurant operations expect to recognize approximately $900 of deferred revenue balance during the remainder of 2018 and the balance in 2019.

Gift card revenue

Restaurant operations sellssell gift cards to customers which can be redeemed for retail food sales within our stores. Gift cards are recorded as deferred revenue when issued and are subsequently recorded as net sales upon redemption. Restaurant operations estimatesestimate breakage related to gift cards when the likelihood of redemption is remote. This estimate utilizes historical trends based on the vintage of the gift card. Breakage on gift cards is recorded as other revenue in proportion to the rate of gift card redemptions by vintage. This represents a change in the methodology used to estimate breakage as we have historically recognized breakage for the portion of the gift card balances that remained outstanding following 48 months of issuance.

For the quarter ended March 31, 2018, restaurant operations recognized $9,287 of revenue from gift card redemptions. As of March 31, 2018 and January 1, 2018, restaurant operations had deferred revenue related to unredeemed gift cards of $14,993 and $20,968, respectively. The Company expects to recognize approximately $8,700 of deferred revenue balance during the remainder of 2018, approximately $4,200 in 2019, and the balance in the years 2020 through 2022.

11

Note 9.8. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses include the following.

  March 31,
2018		 December 31,
2017
Accounts payable $36,342  $40,616 
Gift card liability  14,993   27,436 
Salaries, wages, and vacation  9,389   22,875 
Taxes payable  11,786   10,571 
Workers' compensation and other self-insurance accruals  7,915   9,047 
Deferred revenue  17,744   9,522 
Other  8,539   8,677 
Accounts payable and accrued expenses $106,708  $128,744 

 March 31,
2024		December 31,
2023
Accounts payable$21,829 $22,448 
Gift cards and other marketing5,877 7,089 
Insurance accruals2,318 2,565 
Compensation14,015 12,821 
Deferred revenue7,066 5,314 
Taxes payable14,672 11,050 
Oil and gas payable3,751 3,560 
Other3,283 1,896 
Accounts payable and accrued expenses$72,811 $66,743 

Note 9. Line of Credit and Note Payable
Biglari Holdings’ Line of Credit
Biglari Holdings’ available line of credit is $30,000. The line of credit matures on September 12, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants. There was no balance on the line of credit on March 31, 2024, or December 31, 2023.
Western Sizzlin Revolver
Western Sizzlin’s available line of credit is $500. As of March 31, 2024, and December 31, 2023, Western Sizzlin had no debt outstanding under its revolver.
10
Note 10. Borrowings

Notes payableUnpaid Loss and other borrowingsLoss Adjustment Expenses

Our liabilities for unpaid losses and loss adjustment expenses (also referred to as “claim liabilities”) under insurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. A reconciliation of the changes in claim liabilities, net of reinsurance, for each of the three-month periods ended March 31, 2024 and 2023 follows.
March 31,March 31,
20242023
Balances at beginning of year:
Gross liabilities$16,105 $17,520 
Reinsurance recoverable on unpaid losses(937)(715)
Net liabilities15,168 16,805 
Incurred losses and loss adjustment expenses:
Current accident year14,197 10,247 
Prior accident years(3,319)(1,651)
Total10,878 8,596 
Paid losses and loss adjustment expenses:
Current accident year7,031 4,433 
Prior accident years3,002 5,454 
Total10,033 9,887 
Balances at March 31:
Net liabilities16,013 15,514 
Reinsurance recoverable on unpaid losses687 2,207 
Gross liabilities$16,700 $17,721 
We recorded net reductions of estimated ultimate liabilities for prior accident years of $3,319 and $1,651 in the first quarter of 2024 and 2023, respectively, which produced corresponding reductions in incurred losses and loss adjustment expenses in those periods. These reductions as a percentage of the net liabilities at the beginning of each year were 21.9% in 2024 and 9.8% in 2023.
Note 11. Lease Assets and Obligations
Lease obligations include the following.

Current portion of notes payable and other borrowings March 31,
2018		 December 31,
2017
Notes payable $2,200  $2,200 
Unamortized original issue discount  (324)  (321)
Unamortized debt issuance costs  (591)  (585)
Obligations under leases  5,103   5,279 
Western revolver  136   175 
Total current portion of notes payable and other borrowings $6,524  $6,748 
         
Long-term notes payable and other borrowings        
Notes payable $183,148  $183,698 
Unamortized original issue discount  (690)  (772)
Unamortized debt issuance costs  (1,255)  (1,405)
Obligations under leases  73,785   75,473 
Total long-term notes payable and other borrowings $254,988  $256,994 

Steak n Shake Credit Facility

On March 19, 2014,

Current portion of lease obligationsMarch 31,
2024		December 31,
2023
Finance lease liabilities$1,251 $1,258 
Finance obligations4,564 4,826 
Operating lease liabilities8,704 8,771 
Total current portion of lease obligations$14,519 $14,855 
Long-term lease obligations
Finance lease liabilities$3,645 $3,581 
Finance obligations60,127 56,471 
Operating lease liabilities28,140 26,337 
Total long-term lease obligations$91,912 $86,389 
11
Note 11. Lease Assets and Obligations (continued)
Nature of Leases
Steak n Shake and its subsidiaries entered intoWestern Sizzlin operate restaurants that are located on sites owned by us or leased from third parties. In addition, they own sites and lease sites from third parties that are leased and/or subleased to franchisees.
Lease Costs
A significant portion of our operating and finance lease portfolio includes restaurant locations. We recognize fixed lease expense for operating leases on a credit agreement which provided for a senior secured term loan facility in an aggregate principal amount of $220,000straight-line basis over the lease term. For finance leases, we recognize amortization expense on the right-of-use asset and a senior secured revolving credit facility in an aggregate principal amount of up to $30,000. On October 27, 2017, Steak n Shake determined to endinterest expense on the use of its senior secured revolving credit facility. In 2017, Steak n Shake deposited $8,628 to satisfy required collateral for casualty insurance previously collateralized by letters of credit issued throughlease liability over the revolving credit facility. The deposits are recorded in other assets as restricted cash in the consolidated balance sheets.

The term loan is scheduled to mature on March 19, 2021. It amortizes at an annual rate of 1.0% in equal quarterly installments, beginning June 30, 2014, at 0.25%lease term.

Total lease cost consists of the original principal amount of the term loan, subject to mandatory prepayments from excessfollowing.
First Quarter
20242023
Finance lease costs:
Amortization of right-of-use assets$226 $242 
Interest on lease liabilities84 91 
Operating and variable lease costs2,829 3,167 
Sublease income(2,989)(3,091)
Total lease costs$150 $409 
Supplemental cash flow asset salesinformation related to leases is as follows.
 First Quarter
 20242023
Cash paid for amounts included in the measurement of lease liabilities:  
Financing cash flows from finance leases$326 $344 
Operating cash flows from finance leases$84 $91 
Operating cash flows from operating leases$2,666 $3,355 


Supplemental balance sheet information related to leases is as follows.
March 31,
2024		December 31,
2023
Finance leases:
Property and equipment, net$3,644 $3,574 
Weighted-average lease terms and other events described in the credit agreement. The balance will be due at maturity.

discount rates are as follows.
12
March 31,
2024
Weighted-average remaining lease terms:
Finance leases4.79 years
Operating leases5.82 years
Weighted-average discount rates:
Finance leases7.0 %
Operating leases7.0 %

12

Steak n Shake has the right to request an incremental term loan facility from participating lenders and/or eligible assignees at any time, up to an aggregate total principal amount not to exceed $70,000 if certain customary conditions within the credit agreement are met.

The interest rate on the term loan was 5.40%

Note 11. Lease Assets and Obligations (continued)
Maturities of lease liabilities as of March 31, 2018.

2024 are as follows.

YearOperating
Leases		Finance
Leases
Remainder of 2024$8,368 $1,134 
20259,697 1,486 
20267,215 1,163 
20274,927 828 
20284,108 437 
After 202810,307 728 
Total lease payments44,622 5,776 
Less interest7,778 880 
Total lease liabilities$36,844 $4,896 
Lease Income
The credit agreement includes customary affirmativecomponents of lease income are as follows.
First Quarter
20242023
Operating lease income$4,181 $4,085 
Variable lease income1,799 1,784 
Total lease income$5,980 $5,869 

The following table displays the Company’s future minimum rental receipts for non-cancelable leases and negative covenants and events of default. Steak n Shake’s credit facility contains restrictions on its ability to pay dividends to Biglari Holdings.

The term loan is secured by first priority security interests in substantially all the assets of Steak n Shake. Biglari Holdings is not a guarantor under the credit facility. Assubleases as of March 31, 2018, $185,348 was outstanding under2024. Franchise partner leases and subleases are short-term leases and have been excluded from the term loan.

Western Revolver

As of March 31, 2018, Western has $136 due June 13, 2018.

Fair Value of Debt

The fair value of long-term debt, excluding capitalized lease obligations, was approximately $165,000 at March 31, 2018. The fair value of our debt was estimated based on quoted market prices. The fair value was determined to be a Level 3 fair value measurement.

Note 11. Accumulated Other Comprehensive Income

During the first quarters of 2018 and 2017, the changes in the balances of each component of accumulated other comprehensive income, net of tax, were as follows.

  Three months ended March 31, 2018 Three months ended March 31, 2017
   Foreign currency translation adjustments   

Investment gain (loss)		   Accumulated other comprehensive income (loss)   Foreign currency translation adjustments   

Investment gain (loss)		   Accumulated
other
comprehensive income (loss)		 
Beginning Balance   $(1,462) $58  $(1,404) $(3,447) $(137) $(3,584)
Other comprehensive income (loss) before reclassifications  —     —     —     —     124   124 
Reclassification to (earnings) loss  —     (58)  (58)  —     —     —   
Foreign currency translation  496       496   185       185 
Ending Balance $(966) $—    $(966) $(3,262) $(13) $(3,275)

Reclassifications made from accumulated other comprehensive income to the consolidated statement of earnings during the first quarter of 2018 was $58; there were no reclassifications from accumulated other comprehensive income to earnings during the first quarter of 2017.

table.


Operating Leases
YearSubleasesOwned Properties
Remainder of 2024$457 $297 
2025544 404 
2026225 406 
2027206 415 
202886 424 
After 2028— 2,435 
Total future minimum receipts$1,518 $4,381 
Note 12. Income Taxes

In determining the quarterly provision for income taxes, the Company usesused an estimated annual effective tax rate based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which the Company operates. Unusual or infrequently occurring items are separately recognized during the quarter in which they occur.

Income tax benefit for the first quarter of 2018 was $797 compared2024 and 2023. Our periodic effective income tax rate is affected by the relative mix of pre-tax earnings or losses and underlying income tax rates applicable to $9,776the various taxing jurisdictions.

Income tax expense for the first quarter of 2017. The Tax Cuts and Jobs Act2024 was signed into law on December 22, 2017. The U.S. corporate federal statutory income tax rate was reduced from 35.0%$6,816 compared to 21.0%$19,738 for tax years beginning in 2018.the first quarter of 2023. The variance in income taxes between 20182024 and 20172023 is primarily attributable to the reduced corporate tax rate and taxes on income and losses generated by the investment partnerships.

As Investment partnership pre-tax gains were $21,985 during the first quarter of March 31, 2018 and December 31, 2017, we had approximately $363 and $357, respectively,2024 compared to pre-tax gains of unrecognized tax benefits, which are included in other liabilities in$72,588 during the consolidated balance sheets.

13
first quarter of 2023. 

13

Note 13. Commitments and Contingencies


We are involved in various legal proceedings and have certain unresolved claims pending. We believe, based on examination of these matters and experiences to date, that the ultimate liability, if any, in excess of amounts already provided in our consolidated financial statements, is not likely to have a material effect on our results of operations, financial position or cash flows.

On January 29, 2018, a shareholder of the Company filed a purported class action complaint against the Company and the members of our Board of Directors in the Superior Court of Hamilton County, Indiana. The shareholder generally alleges claims for breach of fiduciary duty by the individual defendants and unjust enrichment to Mr. Biglari as a result of the agreement with NBHSA Inc. and the issuance of dual class common stock. The shareholder seeks, for himself and on behalf of all other shareholders as a class (other than the individual defendants and those related to or affiliated with them), to seek a declaration that the defendants breached their duty to the shareholder and the class and that Mr. Biglari would be unjustly enriched, and to recover unspecified damages, pre-judgment and post-judgment interest, and an award of their attorneys’ fees and other costs.

On March 26, 2018, a second shareholder of the Company filed a purported class action complaint against the Company, the members of our Board of Directors, New BH, and Merger Sub in the Superior Court of Hamilton County, Indiana. This shareholder generally alleges claims of breach of fiduciary duty by the members of our Board of Directors. This shareholder sought to enjoin the shareholder vote on April 28, 2018 to approve the agreement with NBHSA Inc. and the issuance of dual class common stock. On April 16, 2018, the shareholder withdrew his motion to enjoin the special meeting.

The Company believes the claims in each case are without merit and intends to defend these cases vigorously.

flow.

Note 14. Fair Value of Financial Assets

The fair values of substantially all of our financial instruments were measured using market or income approaches. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, the fair values presented are not necessarily indicative of the amounts that could be realized in an actual current market exchange. The use of alternative market assumptions and/or estimation methodologies may have a material effect on the estimated fair value.

The hierarchy for measuring fair value consists of Levels 1 through 3, which are described below.

•Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.
•Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations, and yields for other instruments of the issuer or entities in the same industry sector.
•Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities and we may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities.

The following methods and assumptions were used to determine the fair value of each class of the following assets recorded at fair value in the consolidated balance sheet:

sheets:

Cash equivalents: Cash equivalents primarily consist of money market funds which are classified withinas Level 1 of the fair value hierarchy.

Equity securities:The Company’s investments in equity securities are classified withinas Level 1 of the fair value hierarchy. 

Bonds: The Company’s investments in bonds consist of both corporate and government debt. Bonds are classified withinas Level 2l of the fair value hierarchy.

14

14

Non-qualified deferred compensation plan investments:The assetsTable of the non-qualified plan are set up in a rabbi trust. They represent mutual funds and are classified within Level 1Contents

Note 14. Fair Value of the fair value hierarchy.

Derivative instruments: Options related to equity securities are marked to market each reporting period and are classified within Level 2 of the fair value hierarchy.

Financial Assets (continued)

As of March 31, 20182024, and December 31, 2017,2023, the fair values of financial assets were as follows.

  March 31, 2018 December 31, 2017
     
   Level 1   Level 2   Level 3   Total   Level 1   Level 2   Level 3   Total 
Assets                                
Cash equivalents $4,997  $—    $—    $4,997  $5,785  $—    $—    $5,785 
Equity securities: Consumer goods  2,290   —     —     2,290   2,445   —     —     2,445 
Bonds  —     26,767   —     26,767   —     25,901   —     25,901 
Options on equity securities  —     2,173   —     2,173   —     2,018   —     2,018 
Non-qualified deferred compensation plan investments  3,277   —     —     3,277   3,459   —     —     3,459 
Total assets at fair value $10,564  $28,940  $—    $39,504  $11,689  $27,919  $—    $39,608 

March 31, 2024December 31, 2023
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
Cash equivalents$4,100 $— $— $4,100 $2,374 $— $— $2,374 
Equity securities
Consumer goods28,193 — — 28,193 26,660 — — 26,660 
Other4,083 — — 4,083 3,171 — — 3,171 
Bonds
Government65,041 — — 65,041 61,536 — — 61,536 
Corporate879 — — 879 3,199 — — 3,199 
Total assets at fair value$102,296 $— $— $102,296 $96,940 $— $— $96,940 
There were no changes in our valuation techniques used to measure fair values on a recurring basis.

Note 15. Related Party Transactions

Services

Service Agreement

On September 15, 2017, the

The Company entered intois party to a servicesservice agreement with Biglari Enterprises LLC (“Biglari Enterprises”), under which Biglari Enterprises provides business and administrative related services to the Company. Biglari Capital (collectively, the “Biglari Entities”). The Biglari Entities areEnterprises is owned by Mr. Biglari.

The services agreement replaces the shared services agreement between the Company paid Biglari Enterprises $2,400 and Biglari Capital dated July 1, 2013. The services agreement was executed$2,100 in connection with a review of the relationships and transactions between the Company and Biglari Capital. After careful consideration, including an assessment by a public accounting firm of administrative-related costs incurred by the Company in connection with its investments, the Company’s Governance, Compensation and Nominating Committee, comprised solely of independent board members, approved the services agreement. Under the terms of the services agreement, the Company will no longer provide business and administrative-related services to Biglari Capital. Instead, the Biglari Entities will assume the responsibility to provide the services and the Company will pay a fixed fee to the Biglari Entities.

The services agreement has a five-year term, effective on October 1, 2017. The fixed fee is $700 per month forservice fees during the first year with adjustments in years two through five.quarter of 2024 and 2023, respectively. The servicesservice agreement does not alter the hurdle rate connected with the incentive reallocation paid to Biglari Capital byCorp.  

Incentive Agreement
The Incentive Agreement establishes a performance-based annual incentive payment for Mr. Biglari contingent upon the Company.

Investmentsgrowth in The Lion Fund, L.P. and The Lion Fund II, L.P.
As of March 31, 2018, the Company’s investmentsadjusted equity in The Lion Fund, L.P. and The Lion Fund II, L.P. had a fair value of $918,229.

Distributions from The Lion Fund II, L.P. were $5,200 and $5,015 during the first quarters of 2018 and 2017, respectively.

As the general partner of the investment partnerships, Biglari Capital on December 31 of each year will earn an incentive reallocation feeattributable to our operating businesses. In order for the Company’s investments equal to 25% of the net profits above a hurdle rate of 6% over the previous high water mark. Our policy is to accrue an estimated incentive fee throughout the year. The Company did not accrue incentive fees for Biglari Capital during the first quarters of 2018 and 2017.

15

Index

Incentive Agreement Amendment

During 2013, Biglari Holdings and Mr. Biglari entered into an amendment to the Incentive Agreement to exclude earnings by the investment partnerships from the calculation of Mr. Biglari’s incentive bonus. Under the Amended and Restated Incentive Agreement Mr. Biglari would receive a payment of approximately $13,000 if an event occurred entitling him to a severance payment.

License Agreement

On January 11, 2013, the Company entered into a Trademark License Agreement (the “License Agreement”) with Mr. Biglari. The License Agreement was unanimously approved by the Governance, Nominating and Compensation Committee (comprised of independent members of the Company’s Board of Directors). In addition, the license under the License Agreement is provided on a royalty-free basis in the absence of specified extraordinary events described below. Accordingly, the Company and its subsidiaries have paid no royalties to Mr. Biglari under the License Agreement since its inception.

Under the License Agreement, Mr. Biglari granted to the Company an exclusive license to use the Biglari and Biglari Holdings names (the “Licensed Marks”) in association with various products and services (collectively the “Products and Services”). Upon (a) the expiration of twenty years from the date of the License Agreement (subject to extension as provided in the License Agreement), (b) Mr. Biglari’s death, (c) the termination of Mr. Biglari’s employment by the Company for Cause (as defined in the License Agreement), or (d) Mr. Biglari’s resignation from his employment with the Company absent an Involuntary Termination Event (as defined in the License Agreement), the Licensed Marks for the Products and Services will transfer from Mr. Biglari to receive any incentive, our operating businesses must achieve an annual increase in shareholders’ equity in excess of 6% (the “hurdle rate”) above the Company, without any compensation, if the Company is continuing to use the Licensed Marks in the ordinary course of its business. Otherwise, the rights will revert to Mr. Biglari.

If (i) a Change of Control (as defined in the License Agreement) of the Company; (ii) the termination of Mr. Biglari’s employment by the Company without Cause; or (iii) Mr. Biglari’s resignation from his employment with the Company due to an Involuntary Termination Event (each, a “Triggering Event”previous highest level (the “high-water mark”) were to occur,. Mr. Biglari would be entitled towill receive a 2.5% royalty on “Revenues” with respect to25% of any incremental book value created above the “Royalty Period.” The royalty payment to Mr. Biglari would not apply to all revenues received by Biglari Holdings and its subsidiaries nor would it apply retrospectively (i.e., to revenues received with respect tohigh-water mark plus the period prior to the Triggering Event). The royalty would apply to revenues recorded by the Company on an accrual basis under GAAP, solely with respect to the defined period of time after the Triggering Event equal to the Royalty Period, from a covered Product, Service or business that (1) has used the Biglari Holdings or Biglari name at any time during the term of the License Agreement, whether prior to or after a Triggering Event, or (2) the Company has specifically identified, prior to a Triggering Event, will use the name Biglari or Biglari Holdings.

“Revenues” means all revenues received, on an accrual basis under GAAP, by the Company, its subsidiaries and affiliates from the following: (1) all Products and Services covered by the License Agreement bearing or associated with the names Biglari and Biglari Holdings at any time (whether prior to or after a Triggering Event). This category would include, without limitation, the use of Biglari or Biglari Holdings in the public name of a business providing any covered Product or Service; and (2) all covered Products, Services and businesses that the Company has specifically identified, prior to a Triggering Event, will bear, use or be associated with the name Biglari or Biglari Holdings.

The Governance, Nominating and Compensation Committee unanimously approved the association of the Biglari name and mark with all of Steak n Shake’s restaurants (including Company operated and franchised locations), products and brands. On May 14, 2013, the Company, Steak n Shake, LLC and Steak n Shake Enterprises, Inc. entered into a Trademark Sublicense Agreement in connection therewith. Accordingly, revenues received by the Company, its subsidiaries and affiliates from Steak n Shake’s restaurants, products and brands would come within the definition of Revenues for purposes of the License Agreement.

16
hurdle rate.

The “Royalty Period” is a defined period of time, after the Triggering Event, calculated as follows: (i) if, following three months after a Triggering Event, the Company or any of its subsidiaries or affiliates continues to use the Biglari or Biglari Holdings name in connection with any covered product or service, or continues to use Biglari as part of its corporate or public company name, then the Royalty Period will equal (a) the period of time during which the Company or any of its subsidiaries or affiliates continues any such use, plus (b) a period of time after the Company, its subsidiaries and affiliates have ceased all uses of the names Biglari and Biglari Holdings equal to the length of the term of the License Agreement prior to the Triggering Event, plus three years. As an example, if a Triggering Event occurs five years after the date of the License Agreement, and the Company ceases all uses of the Biglari and Biglari Holdings names two years after the Triggering Event, the Royalty Period will equal a total of ten years (the sum of two years after the Triggering Event during which the Biglari and Biglari Holdings names are being used, plus a period of time equal to the five years prior to the Triggering Event, plus three years); or (ii) if the Company, its subsidiaries and affiliates cease all uses of the Biglari and Biglari Holdings names within three months after a Triggering Event, then the Royalty Period will equal the length of the term of the License Agreement prior to the Triggering Event, plus three years. As an example, if a Triggering Event occurs five years after the date of the License Agreement, and the Company ceases all uses of the Biglari and Biglari Holdings names two months after the Triggering Event, the Royalty Period will equal a total of eight years (the sum of the period of time equal to the five years prior to the Triggering Event, plus three years). Notwithstanding the above methods of determining the Royalty Period, the minimum Royalty Period is five years after a Triggering Event.

The actual amount of royalties paid to Mr. Biglari following the occurrence of a Triggering Event (as defined in the License Agreement) would depend on the Company’s revenues during the applicable period following the Triggering Event, and, therefore, depends on material assumptions and estimates regarding future operations and revenues. Assuming for purposes of illustration a Triggering Event occurred on December 31, 2017, using revenue from 2017 as an estimate of future revenue and calculated according to terms of the License Agreement, Mr. Biglari would receive approximately $20,000 in royalty payments annually. At a minimum, the royalties would be earned on revenue generated from January 1, 2018 through December 21, 2024. Royalty payments beyond the minimum period would be subject to the licensee's continued use of the licensed marks.

17

Index

Note 16. Business Segment Reporting

Our reportable business segments are organized in a manner that reflects how management views those business activities. Our restaurant operations includesinclude Steak n Shake and Western.Western Sizzlin. Our insurance operations include First Guard and Southern Pioneer. Our oil and gas operations include Southern Oil and Abraxas Petroleum. The Company also reports segment information for First Guard and Maxim. Other business activities not specifically identified with reportable business segments are presented in “other” within total operating businesses. We report our earnings from investment partnerships separate from our corporate expenses. We assess and measure segment operating results based on segment earnings as disclosed below. Segment earnings from operations are neither necessarily indicative of cash available to fund cash requirements, nor synonymous with cash flow from operations. The tabular information that follows shows data of our reportable segments reconciled to amounts reflected in the consolidated financial statements.

Revenue and earnings (losses) before income taxes

15
Note 16. Business Segment Reporting (continued)


A disaggregation of our consolidated data for the first quarters of 20182024 and 2017 were as follows.

  Revenue
   First Quarter 
   2018   2017 
Operating Businesses:        
Restaurant Operations:        
Steak n Shake $190,293  $192,690 
Western  3,641   3,004 
Total Restaurant Operations  193,934   195,694 
First Guard  6,547   6,080 
Maxim  1,744   1,619 
  $202,225  $203,393 

  Earnings (Losses) Before Income Taxes
   First Quarter 
   2018   2017 
Operating Businesses:        
Restaurant Operations:        
Steak n Shake $(992) $3,352 
Western  374   450 
Total Restaurant Operations  (618)  3,802 
First Guard  510   969 
Maxim  (217)  (324)
Other  139   148 
Total Operating Businesses  (186)  4,595 
Corporate and Investments:        
Corporate  (3,166)  (2,400)
Investment partnership gains  3,495   (24,968)
Total Corporate and Investments  329   (27,368)
Interest expense on notes payable and other borrowings  (2,754)  (2,824)
  $(2,611) $(25,597)

18
2023 is presented in the tables which follow.

Revenues
First Quarter
20242023
Operating Businesses:
Restaurant Operations:
Steak n Shake$59,354 $58,487 
Western Sizzlin2,642 2,642 
Total Restaurant Operations61,996 61,129 
Insurance Operations:
Underwriting:
First Guard9,310 8,899 
Southern Pioneer6,612 5,865 
Investment income and other1,811 1,465 
Total Insurance Operations17,733 16,229 
Oil and Gas Operations:
Abraxas Petroleum5,868 7,252 
Southern Oil3,642 4,971 
Total Oil and Gas Operations9,510 12,223 
Maxim212 595 
$89,451 $90,176 



16

Note 16. Business Segment Reporting (continued)


 Earnings (Loss) Before Income Taxes
 First Quarter
 20242023
Operating Businesses:
Restaurant Operations:
Steak n Shake$4,237 $7,325 
Western Sizzlin641 472 
Total Restaurant Operations4,878 7,797 
Insurance Operations:
Underwriting:
First Guard800 1,862 
Southern Pioneer59 (111)
Investment income and other1,387 1,036 
Total Insurance Operations2,246 2,787 
Oil and Gas Operations:
Abraxas Petroleum1,387 1,209 
Southern Oil79 894 
Total Oil and Gas Operations1,466 2,103 
Maxim(354)122 
Interest expense not allocated to segments— (167)
Total Operating Businesses8,236 12,642 
Corporate and other(2,539)(3,593)
Investment gains1,713 3,638 
Investment partnership gains21,985 72,588 
 $29,395 $85,275 
17

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations 
(dollars in thousands except per share data)

Overview

Biglari Holdings Inc. (“Biglari Holdings” or the “Company”) is a holding company owning subsidiaries engaged in a number of diverse business activities, including media, property and casualty insurance, licensing and restaurants. The Company’s largest operating subsidiaries are involved in the franchisingmedia, restaurants, and operating of restaurants.oil and gas. Biglari Holdings is founded and led by Sardar Biglari, Chairman and Chief Executive Officer of the Company. The Company’s long-term objective is to maximize per-share intrinsic value.

Biglari Holdings’ management system combines decentralized operations with centralized financial decision-making. Operating decisions for the various business units are made by their respective managers. All major operating, investment and capital allocation decisions are made for the Company and its subsidiaries by Mr. Biglari.

On

As of March 5, 2018 the Company entered into an agreement with NBHSA Inc. (“New BH”), a direct, wholly owned subsidiary31, 2024, Mr. Biglari beneficially owns shares of the Company and BH Merger Company (“Merger Sub”), a wholly owned subsidiary of New BH. Pursuant to the agreement, on April 30, 2018, Merger Sub merged with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of New BH. Upon completionthat represent approximately 71.5% of the merger, New BH changed its name to “Biglari Holdings Inc.” and replaced the Company as the publicly held corporation through which our collection of businesses is conducted.

New BH has two classes of common stock designated Class A common stock and Class B common stock. A share of Class B common stock has economic rights equivalent to 1/5th of a share of Class A common stock, however, Class B common stock has no voting rights.

As a result of the April 30, 2018 transaction, the current shareholders of the Company became shareholders of New BH and received, for every ten (10) shares of common stock of the Company they owned on April 30, 2018, (i) ten (10) shares of Class B common stock of New BH and (ii) one (1) share of Class A common stock of New BH. In other words, shareholders received for a share of common stock of the Company (i) one (1) share of Class B common stock of New BH and (ii) 1/10th of one share of Class A common stock of New BH.

Starting on May 1, 2018, the shares of New BH Class A common stock trade on the New York Stock Exchange (“NYSE”) under the ticker symbol “BH.A,” whereas the New BH Class B common stock trade on the NYSE under the ticker symbol “BH,” which is the former ticker symbol for the Company’s common stock.

interest.

Net earnings (loss) attributable to Biglari Holdings Inc. shareholders are disaggregated in the table that follows. Amounts are recorded after deducting income taxes.

   First Quarter 
   2018   2017 
Operating businesses:        
Restaurant $(456) $2,497 
Insurance  394   626 
Media  (168)  (208)
Other  102   90 
Total operating businesses  (128)  3,005 
Corporate  (2,695)  (1,868)
Investment partnership gains (losses)  3,075   (15,207)
Interest expense on notes payable and other borrowings  (2,066)  (1,751)
  $(1,814) $(15,821)

19

 First Quarter
 20242023
Operating businesses: 
Restaurant$3,473 $5,840 
Insurance1,738 2,169 
Oil and gas1,149 1,670 
Brand licensing(265)91 
Interest expense— (129)
Corporate and other(1,996)(2,998)
Total operating businesses4,099 6,643 
Investment partnership gains17,148 56,029 
Investment gains1,332 2,865 
Net earnings22,579 65,537 
Earnings attributable to noncontrolling interest— 651 
Net earnings attributable to Biglari Holdings Inc. shareholders$22,579 $64,886 

18


Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Restaurants
Our restaurant businesses, which include Steak n Shake Inc. (“Steak n Shake”) and Western Sizzlin, Corporation (“Western”). comprise 485 company-operated and franchise restaurants as of March 31, 2024.
Steak n ShakeWestern Sizzlin
 Company-
operated		Franchise
Partner		Traditional
Franchise		Company-
operated		FranchiseTotal
Total stores as of December 31, 2023148 181 128 3 32 492 
Corporate stores transitioned3 (3)— — — — 
Net restaurants opened (closed)(3)— (3)— (1)(7)
Total stores as of March 31, 2024148 178 125 3 31 485 
Total stores as of December 31, 2022177 175 154 3 36 545 
Corporate stores transitioned(3)3 — — — — 
Net restaurants opened (closed)(2)— (11)— — (13)
Total stores as of March 31, 2023172 178 143 3 36 532 
As of March 31, 2018,2024, 15 of the 148 company-operated Steak n Shake comprised 415stores were closed. Steak n Shake plans to sell or lease 9 of the 15 locations and refranchise the balance.

19

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Restaurant operations are summarized below.
First Quarter
20242023
Revenue
Net sales$38,735 $36,894 
Franchise partner fees17,758 17,912 
Franchise royalties and fees3,477 4,258 
Other revenue2,026 2,065 
Total revenue61,996 61,129 
Restaurant cost of sales
Cost of food10,974 28.3 %10,448 28.3 %
Labor costs12,429 32.1 %11,603 31.4 %
Occupancy and other11,018 28.4 %10,687 29.0 %
Total cost of sales34,421 32,738 
Selling, general and administrative
General and administrative11,730 18.9 %10,463 17.1 %
Marketing2,945 4.8 %2,953 4.8 %
Other expenses (income)(234)(0.4)%(1,612)(2.6)%
Total selling, general and administrative14,441 23.3 %11,804 19.3 %
Impairments107 0.2 %776 1.3 %
Depreciation and amortization6,835 11.0 %6,707 11.0 %
Interest on finance leases and obligations1,314 1,307 
Earnings before income taxes4,878 7,797 
Income tax expense1,405 1,957 
Contribution to net earnings$3,473 $5,840 
Cost of food, labor costs, and occupancy and other costs are expressed as a percentage of net sales.
General and administrative, marketing, other expenses, impairments, and depreciation are expressed as a percentage of total revenue.

Net sales for the first quarter of 2024 were $38,735 as compared to $36,894 during the first quarter of 2023. The increase in net sales was primarily due to an increase in Steak n Shake’s same-store sales of 9.9% during the first quarter of 2024.

For company-operated units, sales to the end customer are recorded as revenue generated by the Company, but for franchise partner units, only our share of the restaurant’s profits, along with certain fees, are recorded as revenue. Because we derive most of our revenue from our share of the profits, revenue will decline as we transition from company-operated units to franchise partner units.
Our franchise partner fees were $17,758 during the first quarter of 2024, as compared to $17,912 during the first quarter of 2023.As of March 31, 2024 and 2023, there were 178 franchise partner units. Included in franchise partner fees were $5,705 and $5,575 of rental income during the first quarter of 2024 and 2023, respectively. Franchise partners rent buildings and equipment from Steak n Shake. Our share of franchise partner fees was lower primarily because our franchise partners’ food and labor expenses were 1.8 percentage points higher during the first quarter of 2024 as compared to the first quarter of 2023.


20

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
The franchise royalties and fees generated by the traditional franchising business were $3,477 during the first quarter of 2024, as compared to $4,258 during the first quarter of 2023. The decrease in franchise royalties and fees was primarily due to the closing of traditional franchise stores. There were 125 Steak n Shake traditional units open on March 31, 2024, as compared to 143 units open on March 31, 2023.
The cost of food at company-operated units during the first quarter of 2024 was $10,974 or 28.3% of net sales, as compared to $10,448 or 28.3% of net sales during the first quarter of 2023. The cost of food expressed as a percentage of net sales in 2024 remained consistent with 2023.

Labor costs at company-operated restaurants during the first quarter of 2024 were $12,429 or 32.1% of net sales, as compared to $11,603 or 31.4% of net sales during the first quarter of 2023. Labor costs expressed as a percentage of net sales in 2024 remained consistent with 2023.
General and 201 franchised units.administrative expenses during the first quarter of 2024 were $11,730 or 18.9% of total revenue, as compared to $10,463 or 17.1% of total revenue during the first quarter of 2023. General and administrative expenses increased in 2024 as compared to 2023 primarily because of higher salaries and wages. Salaries and wages were higher due to an increase in Steak n Shake’s personnel.
Interest on obligations under leases was $1,314 during the first quarter of 2024 versus $1,307 during the first quarter of 2023.
Other income was $234 during the first quarter of 2024 versus $1,612 during the first quarter of 2023. Western comprised 4 company-operated restaurantsSizzlin received a settlement of $450 during 2024 and 58 franchised units.

Steak n Shake recorded gains of sales of properties of $1,431 during 2023.

To better convey the performance of the franchise partnership model, the table below shows the underlying sales, cost of food, labor costs, and other restaurant costs of the franchise partners. We believe the franchise partner information is useful to readers, as they have a direct effect on Steak n Shake’s profitability.
First Quarter
20242023
Revenue
Net sales and other$80,788 $77,952 
Restaurant cost of sales
Cost of food$23,170 28.7 %$20,871 26.8 %
Labor costs21,765 26.9 %20,940 26.9 %
Occupancy and other16,778 20.8 %15,867 20.4 %
Total cost of sales$61,713 $57,678 

The Company’s consolidated financial statements do not include data in the table above. Figures are shown for information purposes only.
Insurance
We view our insurance businesses as possessing two activities: underwriting and investing. Underwriting decisions are the responsibility of the unit managers, whereas investing decisions are the responsibility of our Chairman and CEO, Sardar Biglari. Our business units are operated under separate local management. Biglari Holdings’ insurance business is composedoperations consist of First Guard and Southern Pioneer.

21

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Underwriting results of our insurance operations are summarized below.
First Quarter
20242023
Underwriting gain attributable to:
First Guard$800 $1,862 
Southern Pioneer59 (111)
Pre-tax underwriting gain859 1,751 
Income tax expense180 368 
Net underwriting gain$679 $1,383 

Earnings of our insurance operations are summarized below.
First Quarter
20242023
Premiums earned$15,922 $14,764 
Insurance losses10,878 8,596 
Underwriting expenses4,185 4,417 
Pre-tax underwriting gain859 1,751 
Other income and expenses 
Investment income915 585 
Other income and expenses472 451 
Total other income1,387 1,036 
Earnings before income taxes2,246 2,787 
Income tax expense508 618 
Contribution to net earnings$1,738 $2,169 
Insurance Companypremiums and its agency, 1stother on the consolidated statement of earnings includes premiums earned, investment income, other income, and commissions.

First Guard Corporation (collectively “First Guard”).

First Guard is a direct underwriter of commercial truckingtruck insurance, selling physical damage and nontrucking liability insurance to truckers.

Our media business is composed of Maxim Inc. (“Maxim”). Maxim’s business lies principally in media and licensing.

Restaurants

Steak n Shake and Western comprise 678 company-operated and franchised restaurants as of March 31, 2018.

 Steak n Shake Western Sizzlin  
  Company- operated Franchised Company-operated Franchised Total
Total stores as of December 31, 2017  415   200   4   58   677 
Net restaurants opened (closed)  —     1   —     —     1 
Total stores as of March 31, 2018  415   201   4   58   678 
                     
Total stores as of December 31, 2016  417   173   3   64   657 
Net restaurants opened (closed)  —     9   —     (2)  7 
Total stores as of March 31, 2017  417   182   3   62   664 

20

Index

Earnings of our restaurant operations are summarized below.

    First Quarter     
   2018       2017     
Revenue                
Net sales $185,571      $189,051     
Franchise royalties and fees  7,102       5,556     
Other revenue  1,261       1,087     
Total revenue  193,934       195,694     
                 
Restaurant cost of sales                
Cost of food  55,928   30.1%  54,401   28.8%
Restaurant operating costs  97,815   52.7%  98,347   52.0%
Rent  4,607   2.5%  4,550   2.4%
Total cost of sales  158,350       157,298     
                 
Selling, general and administrative                
General and administrative  15,087   7.8%  13,952   7.1%
Marketing  13,593   7.0%  12,435   6.4%
Other expenses  552   0.3%  678   0.3%
Total selling, general and administrative  29,232   15.1%  27,065   13.8%
                 
Depreciation and amortization  4,784   2.5%  5,249   2.7%
                 
Interest on obligations under leases  2,186       2,280     
                 
Earnings (loss) before income taxes  (618)      3,802     
                 
Income tax expense (benefit)  (162)      1,305     
                 
Contribution to net earnings $(456)     $2,497     
                 

Cost of food, restaurant operating costs and rent expense are expressed as a percentage of net sales.

General and administrative, marketing, other expenses and depreciation and amortization are expressed as a percentage of total revenue. 

Net sales during the first quarter of 2018 were $185,571, representing a decrease of $3,480 over the first quarter of 2017. The decreased performance of our restaurant operations was largely driven by Steak n Shake’s same-store sales, which decreased 1.7% whereas customer traffic decreased 7.2% during the first quarter. The term “same-store sales” refers to the sales of company-operated units open at least 18 months at the beginning of the current period and have remained open through the end of the period.

In the first quarter of 2018 franchise royalties and fees increased $1,546 or 27.8% compared to those in 2017.  The adoption of the new accounting guidance increased franchise fees and royalties by $2,369. The first quarter of 2017 included $987 in international decommitment fees. Steak n Shake opened eight franchise units and closed seven franchise units during the first quarter of 2018. There were 201 Steak n Shake franchise units as of March 31, 2018 compared to 182 franchise units as of March 31, 2017.

Cost of food in the first quarter of 2018 was $55,928 or 30.1% of net sales compared to the first quarter in 2017 of $54,401 or 28.8% of net sales. The increase during 2018 was attributable to increased costs primarily related to bacon, cheese and beef.

Restaurant operating costs during the first quarter of 2018 were $97,815 or 52.7% of net sales compared to $98,347 or 52.0% of net sales in 2017. The increase in costs as a percentage of net sales during the first quarter of 2018 compared to 2017 was principally due to higher wages and benefits.

21

Index

General and administrative expenses during the first quarter of 2018 were $15,087 or 7.8% of total revenues compared to expenses in the first quarter of 2017, which were $13,952 or 7.1% of total revenues. The increase in general and administrative expenses during the first quarter of 2018 compared to 2017 was principally tied to higher recruiting expenses.

Marketing expenses during the first quarter of 2018 were $13,593 or 7.0% of total revenues compared to expenses in the first quarter of 2017, which were $12,435 or 6.4% of total revenues. The increase in marketing expenses during the first quarter of 2018 compared to 2017 was principally due to the adoption of the new accounting guidance. The new ASC 606 accounting guidance requires the Company to expense franchise ad funds and recognize franchise fees as revenue instead of marketing expenses.

Insurance

First Guard is a direct underwriter of commercial trucking insurance, selling physical damage and nontrucking liability insurance to truckers. Earnings of our insurance business are summarized below.

    First Quarter 
   2018   2017 
Premiums written $6,328  $5,907 
         
Insurance losses  4,360   3,762 
Underwriting expenses  1,568   1,258 
Pre-tax underwriting gain  400   887 
Other income and expenses        
Investment income and commissions  219   173 
Other expense  (109)  (91)
Total other income  110   82 
Earnings before income taxes  510   969 
Income tax expense  116   343 
Contribution to net earnings $394  $626 

First Guard’s insurance products are marketed primarily through direct response methods via the Internet or by telephone. First Guard’s cost-efficient direct response marketing methods enable it to be a low-cost trucking insurer.

Premiums written A summary of First Guard’s underwriting results follows.

First Quarter
20242023
Amount%Amount%
Premiums earned$9,310 100.0 %$8,899 100.0 %
Insurance losses6,775 72.8 %5,244 58.9 %
Underwriting expenses1,735 18.6 %1,793 20.1 %
Total losses and expenses8,510 91.4 %7,037 79.0 %
Pretax underwriting gain$800 $1,862 

First Guard produced an underwriting gain in the first quarter of 2024, despite having a higher ratio of losses and loss adjustment expenses to premiums earned (72.8%) than it had during the first quarter of 2018 were $6,328, an increase2023 (58.9%).
22

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Southern Pioneer

Southern Pioneer underwrites garage liability and commercial property insurance, as well as homeowners and dwelling fire insurance. A summary of Southern Pioneer’s underwriting results follows.
First Quarter
20242023
Amount%Amount%
Premiums earned$6,612 100.0 %$5,865 100.0 %
Insurance losses4,103 62.1 %3,352 57.2 %
Underwriting expenses2,450 37.0 %2,624 44.7 %
Total losses and expenses6,553 99.1 %5,976 101.9 %
Pretax underwriting gain (loss)$59 $(111)
Southern Pioneer’s underwriting gain was $400primarily attributable to a lower expense ratio. The prior year’s higher expense ratio was caused by information technology projects related to the implementation of a new policy administration system.
A summary of net investment income attributable to our insurance operations follows.
First Quarter
20242023
Interest, dividends and other investment income:
First Guard$570 $387 
Southern Pioneer345 198 
Pre-tax investment income915 585 
Income tax expense192 123 
Net investment income$723 $462 
We consider investment income as a component of our aggregate insurance operating results. However, we consider investment gains and losses, whether realized or unrealized, as non-operating.
23

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Oil and Gas
A summary of revenues and earnings of our oil and gas operations follows.
First Quarter
20242023
Oil and gas revenues$9,510 $12,223 
Oil and gas production costs4,499 5,471 
Depreciation, depletion and accretion2,792 2,850 
Gain on sale of properties(481)— 
General and administrative expenses1,234 1,799 
Earnings before income taxes1,466 2,103 
Income tax expense317 433 
Contribution to net earnings$1,149 $1,670 
Our oil and gas business is highly dependent on oil and natural gas prices. The lower natural gas prices and lower production during 2024 caused decreases in revenues and production costs. Production decreases were primarily because several gas wells were shut-in along with the natural depletion of oil and gas reserves.
During the third quarter of 2023, Abraxas Petroleum entered into a royalty-based arrangement with an unaffiliated party to conduct development activities; however, Abraxas Petroleum will not be required to fund any exploration expenditures on its undeveloped properties. In the first quarter of 2024, Abraxas Petroleum sold additional undeveloped reserves, which resulted in a gain of $481.
Abraxas Petroleum
Abraxas Petroleum operates oil and gas properties in the Permian Basin of West Texas. Earnings for Abraxas Petroleum are summarized below.
First Quarter
20242023
Oil and gas revenues$5,868 $7,252 
Oil and gas production costs2,819 3,131 
Depreciation, depletion and accretion1,547 1,666 
Gain on sale of properties(481)— 
General and administrative expenses596 1,246 
Earnings before income taxes1,387 1,209 
Income tax expense319 278 
Contribution to net earnings$1,068 $931 
24

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Southern Oil
Southern Oil primarily operates oil and natural gas properties offshore in the shallow waters of the Gulf of Mexico. Earnings for Southern Oil are summarized below.
First Quarter
20242023
Oil and gas revenues$3,642 $4,971 
Oil and gas production costs1,680 2,340 
Depreciation, depletion and accretion1,245 1,184 
General and administrative expenses638 553 
Earnings before income taxes79 894 
Income tax expense (benefit)(2)155 
Contribution to net earnings$81 $739 

Brand Licensing
Maxim’s business lies principally in licensing and media. Earnings of operations are summarized below.
First Quarter
20242023
Licensing and media revenues$212 $595 
Licensing and media costs503 452 
General and administrative expenses63 21 
Earnings (loss) before income taxes(354)122 
Income tax expense (benefit)(89)31 
Contribution to net earnings$(265)$91 
Licensing revenue was lower during 2024 as compared to 2023 primarily due to fewer licensing events in the first quarter of 2018 compared to $887 in the first quarter of 2017.

Insurance premiums and other on the statement of earnings includes premiums written, investment income and commissions. In the preceding table, commissions are included in other income.

22
2024.

Index

Media

Maxim’s business lies principally in media and licensing. Earnings of our media operations are summarized below.

    First Quarter 
   2018   2017 
Revenue $1,744  $1,619 
         
Media cost of sales  1,517   1,493 
General and administrative expenses  436   437 
Depreciation and amortization  8   13 
Earnings (loss) before income taxes  (217)  (324)
Income tax expense (benefit)  (49)  (116)
Contribution to net earnings $(168) $(208)

We acquired Maxim in 2014 with the idea of transforming its business model. The magazine developed the Maxim brand, a franchise we are utilizing to generate nonmagazine revenue, notably through licensing, a cash-generating business related to consumer products, services, and events.

We have taken the risk on the belief that the probability for gain in value more than justifies the risk of loss.

Investment Gains and Investment Partnership Gains (Losses)


Investment gains net of tax for the first quarter of 2024 and 2023 were $1,332 and $2,865, respectively. Dividends and interest earned on investments are reported as investment income by our insurance companies. We consider investment income as a component of our aggregate insurance operating results.However, we consider investment gains and losses, whether realized or unrealized, as non-operating.
Earnings (loss) from our investments in partnerships are summarized below.

    First Quarter 
   2018   2017 
Investment partnership gains (losses) $3,495  $(24,968)
Tax expense (benefit)  420   (9,761)
Contribution to net earnings $3,075  $(15,207)

The Company recorded after-tax

 First Quarter
 20242023
Investment partnership gains$21,985 $72,588 
Tax expense4,837 16,559 
Contribution to net earnings$17,148 $56,029 
25

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Investment partnership gains from investment partnerships of $3,075 during the first quarter of 2018 and after-tax include gains/losses of $15,207 during the first quarter of 2017. The volatility of the gains and losses during the various periods is attributable tofrom changes in market values of underlying investments heldand dividends earned by the investment partnerships. The investments held by the investment partnerships are largely concentratedDividend income has a lower effective tax rate than income from capital gains. These gains and losses have caused and will continue to cause significant volatility in the common stock of one investee, Cracker Barrel Old Country Store, Inc.

our periodic earnings.  


The investment partnerships hold the Company’s common stock as investments. The Company’s pro-rata share of its common stock held by the investment partnerships is recorded as treasury stock even though these shares are legally outstanding. Gains and losses on Company common stock included in the earnings of the partnerships are eliminated.

23
eliminated in the Company’s consolidated financial results.

Index


Investment gains and losses in 2024 and 2023 were mainly derived from our investments in equity securities and included unrealized gains and losses from market price changes during the period. We believe that investment and derivative gains/losses are generally meaningless for analytical purposes in understanding our reported quarterly and annual results. These gains and losses have caused and will continue to cause significant volatility in our periodic earnings.
Interest Expense

The Company’s interest expense is summarized below.

    First Quarter 
   2018   2017 
Interest expense on notes payable and other borrowings $2,754  $2,824 
Tax benefit  688   1,073 
Interest expense net of tax $2,066  $1,751 

Interest expense during the first quarter

 First Quarter
 20242023
Interest expense on note payable and other borrowings$— $(167)
Tax benefit— (38)
Interest expense net of tax$— $(129)

On September 13, 2022, Biglari Holdings entered into a line of 2018credit in an aggregate principal amount of up to $30,000. There was $2,754 compared to $2,824 for the first quarter of 2017. The outstandingno balance on Steak n Shake’sthe line of credit facility on March 31, 2018 was $185,348 compared to $187,548 on March2024, or December 31, 2017. The interest rate was 5.40% as of March 31, 2018.

2023.

Corporate

and Other

Corporate expenses exclude the activities inof the restaurant, insurance, mediabrand licensing, and oil and gas businesses. Corporate and other companies. Corporate net losses during the first quarter of 20182024 were $2,695 versus net losses of $1,868relatively consistent to the same period during the first quarter of 2017. Legal and professional expenses associated with shareholder lawsuits and the implementation of dual class stock increased expenses during the first quarter of 2018 as compared to 2017.

2023.

Income Tax Expense

Taxes

Income tax benefitexpense for the first quarter of 20182024 was $797$6,816 compared to $9,776an income tax expense of $19,738 for the first quarter of 2017. The Tax Cuts and Jobs Act was signed into law on December 22, 2017. The U.S. corporate federal statutory income tax rate was reduced from 35.0% to 21.0% for tax years beginning in 2018.2023. The variance in income taxes between 20182024 and 20172023 is attributable to the reduced corporate tax rate and taxes on income and losses generated by the investment partnerships.

Financial Condition

Our consolidated shareholders’ equity on March 31, 2018 was $551,707, a decrease of $19,621 compared to the December 31, 2017 balance. The decrease Investment partnership pretax gains were $21,985 during the first quarter of 2018 was primarily attributable2024 compared to an increase in treasury stock. The increase in treasury stock was primarily a resultpretax gains of recording our proportionate interest in 45,302 shares of the Company’s stock purchased$72,588 during the first quarter of 2018 by The Lion Fund II, L.P. under a Rule 10b5-1 trading plan. The shares purchased by the investment partnership are legally outstanding but under accounting convention the Company’s proportional ownership of the shares is reflected as treasury shares in the consolidated financial statements.

2023.

Financial Condition
Consolidated cash and investments are summarized below.

  March 31,
2018		 December 31,
2017
Cash and cash equivalents $45,444  $58,577 
Investments  28,620   27,752 
Fair value of interest in investment partnerships  918,229   925,279 
Total cash and investments  992,293   1,011,608 
Less portion of Company stock held by investment partnerships  (372,290)  (359,258)
Carrying value of cash and investments on balance sheet $620,003  $652,350 

24

 March 31, 2024December 31,
2023
Cash and cash equivalents$34,536 $28,066 
Investments97,725 91,879 
Fair value of interest in investment partnerships544,909 472,772 
Total cash and investments677,170 592,717 
Less: portion of Company stock held by investment partnerships(324,152)(273,669)
Carrying value of cash and investments on balance sheet$353,018 $319,048 

Unrealized gains/losses of Biglari Holdings’ stock held by the investment partnerships are eliminated in the Company’s consolidated financial results.

26


Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Liquidity

Our balance sheet continues to maintain significant liquidity. Consolidated cash flow activities are summarized below.

   First Quarter 
   2018   2017 
Net cash provided by (used in) operating activities $(9,445) $9,863 
Net cash used in investing activities  (1,776)  (232)
Net cash used in financing activities  (1,947)  (16,896)
Effect of exchange rate changes on cash  35   17 
Decrease in cash, cash equivalents and restricted cash $(13,133) $(7,248)

 First Quarter
 20242023
Net cash provided by operating activities$19,125 $19,923 
Net cash used in investing activities(11,242)(12,735)
Net cash used in financing activities(1,403)(5,050)
Effect of exchange rate changes on cash(10)8 
Increase in cash, cash equivalents and restricted cash$6,470 $2,146 
The increase in cash during 2024 was $6,470 compared to $2,146 during 2023. The increase is primarily due to a decrease in cash used in investing activities and financing activities. Cash from operating activities in the first quarter of 2024 remained consistent with the first quarter of 2023.
Cash used in operatinginvesting activities was $9,445$1,493 lower during the first quarter of 20182024 as compared to cash provided2023. The decrease is primarily due to lower investment activity during 2024. Purchases of investments, net of proceeds from redemptions of fixed maturity securities, decreased by operating$2,655 in 2024 compared to 2023.
Cash used by financing activities of $9,863was $3,647 lower during the first quarter of 2017. Net earnings adjusted for non-cash items decreased by $4,669 because of lower revenues and earnings. Cash used in working capital accounts increased $14,8242024 as compared to 2023 primarily due to the timing of the 2017 incentive fee payment of $7,353.

Net cash used in investing activities during the first quarter of 2018 of $1,776 was primarily due to capital expenditures of $2,452 and increases of fixed maturity securities (net of maturing securities) of $848 offset by proceeds from property and equipment disposals of $1,524. Net cash used in investing activities during the first quarter of 2017 of $232 was primarily due to capital expenditures of $1,990 offset by reductions of fixed maturity securities (net of purchases) of $1,708.

During the first quarter of 2018 and 2017 we incurred debt payments of $589 and $15,570, respectively. Debt obligations were reduced during 2017 because of additional principal payments on long-term debt.

We intend to meet the working capital needs of our operating subsidiaries principally through anticipated cash flows generated from operations, cash on hand, existing credit facilities, and the sale of excess properties and investments. We continually review available financing alternatives.

Steak n Shake Credit Facility

On March 19, 2014, Steak n Shake and its subsidiaries entered into a credit agreement which provided for a senior secured term loan facility in an aggregate principal amount of $220,000 and a senior secured revolving credit facility in an aggregate principal amount of up to $30,000. On October 27, 2017, Steak n Shake determined to end the use of its senior secured revolving credit facility. In 2017, Steak n Shake deposited $8,628 to satisfy required collateral for casualty insurance previously collateralized by lettersCompany’s line of credit issued through the revolvingin 2023.

Biglari Holdings’ Line of Credit
Biglari Holdings’ available line of credit facility.is $30,000. The deposits are recorded in other assets as restricted cash in the consolidated balance sheets.

line of credit matures on September 12, 2024. The term loan is scheduled to mature on March 19, 2021. It amortizes at an annual rateline of 1.0% in equal quarterly installments, beginning June 30, 2014, at 0.25% of the original principal amount of the term loan, subject to mandatory prepayments from excess cash flow, asset sales and other events described in the credit agreement. The balance will be due at maturity.

Steak n Shake has the right to request an incremental term loan facility from participating lenders and/or eligible assignees at any time, up to an aggregate total principal amount not to exceed $70,000 if certain customary conditions within the credit agreement are met.

The interest rate on the term loan was 5.40% as of March 31, 2018.

The credit agreement includes customary affirmative and negative covenants, and events of default.as well as financial maintenance covenants. As of March 31, 2018,2024, we were in compliance with all covenants. Steak n Shake’sThere was no balance on the line of credit facility contains restrictions on its ability to pay dividends to Biglari Holdings.

The term loanMarch 31, 2024, or December 31, 2023.

Western Sizzlin Revolver
Western Sizzlin’s available line of credit is secured by first priority security interests in substantially all the assets of Steak n Shake. Biglari Holdings is not a guarantor under the credit facility.$500. As of March 31, 2018, $185,348 was2024, and December 31, 2023, Western Sizzlin had no debt outstanding under the term loan.

Western Revolver

As of March 31, 2018, Western has $136 due June 13, 2018.

25
on its revolver.

Critical Accounting Policies

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Certain accounting policies require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized in our consolidated financial statements from such estimates are necessarily based on numerous assumptions involving varying and potentially significant degrees of judgment and uncertainty. Accordingly, the amounts currently reflected in our consolidated financial statements will likely increase or decrease in the future as additional information becomes available. There have been no material changes to critical accounting policies previously disclosed in our annual report on Form 10-K for the year ended December 31, 2017.

2023.

Recently Issued Accounting Pronouncements

For detailed information regarding

No recently issued accounting pronouncements and the expected impact on our consolidated financial statements, see Note 2, “New Accounting Standards” in the accompanying notes to consolidated financial statements included in Part I, Item 1 ofwere applicable for this Quarterly Report on Form 10-Q.

27
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Cautionary Note Regarding Forward-Looking Statements

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In general, forward-looking statements include estimates of future revenues, cash flows, capital expenditures, or other financial items, and assumptions underlying any of the foregoing. Forward-looking statements reflect management’s current expectations regarding future events and use words such as “anticipate,” “believe,” “expect,” “may,” and other similar terminology. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. These forward-looking statements are all based on currently available operating, financial, and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially depending on a variety of factors, many beyond our control, including, but not limited to, the risks and uncertainties described in Item 1A, Risk Factors of our annual report on Form 10-K.10-K and Item 1A of this report. We undertake no obligation to publicly update or revise them, except as may be required by law.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The majority of our investments are conducted through investment partnerships which generally hold common stocks. We also hold marketable securities directly. Through investments in the investment partnerships we hold a concentrated position in the common stock of Cracker Barrel Old Country Store, Inc. A significant decline in the general stock market or in the prices of major investments may produce a large net loss

Item 3.Quantitative and decrease in our consolidated shareholders’ equity. Decreases in values of equity investments can have a materially adverse effect on our earnings and on consolidated shareholders’ equity.

We prefer to hold equity investments for very long periods of time so we are not troubled by short-term price volatility with respect to our investments. Our interests in the investment partnerships are committed on a rolling 5-year basis, and any distributions upon our withdrawal of funds will be paid out over two years (and may be paid in kind rather than in cash).Qualitative Disclosures About Market prices for equity securities are subject to fluctuation. Consequently the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. A hypothetical 10% increase or decrease in the market price of our investments would result in a respective increase or decrease in the carrying value of our investments of $57,456 along with a corresponding change in shareholders’ equity of approximately 8%.

Borrowings on Steak n Shake’s credit facility bear interest at a rate per annum equal to a base rate or a Eurodollar rate (minimum of 1%) plus an applicable margin. Interest on the term loan is based on a Eurodollar rate plus an applicable margin of 3.75% or on the prime rate plus an applicable margin of 2.75%. Interest on loans under the revolver is based on a Eurodollar rate plus an applicable margin ranging from 2.75% to 4.25% or on the prime rate plus an applicable margin ranging from 1.75% to 3.25%. At March 31, 2018, a hypothetical 100 basis point increase in short-term interest rates would have an impact of approximately $1,400 on our net earnings.

We have had minimal exposure to foreign currency exchange rate fluctuations in the first quarters of 2018 and 2017.

26
Risk

Index

Not applicable.

ITEM 4.CONTROLS AND PROCEDURES

Item 4.Controls and Procedures
Based on an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), our Chief Executive Officer and Controller have concluded that our disclosure controls and procedures were effective as of March 31, 2018.

2024.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 20182024, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

28
PART II Other Information

Item 1.lEGALPROCEEDINGS

OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS
Information in response to this Item is included in Note 13 to the Consolidated Financial Statements included in Part 1, Item 1 of this Form 10-Q and is incorporated herein by reference.

Item 1A.Risk Factors

The following are

ITEM 1A. RISK FACTORS
There have been no material changes infrom the risk factors as previously disclosed in Item 1A to the Company’s Annual Report on Form 10-K for 2017.

The Class B common stock may not be attractive as acquisition currency.

We may use shares of Class B common stock from time to time as consideration in connection with the acquisition of other companies. It is possible that companies that we are interested in acquiring will not agree to accept shares of Class B common stock because such shares of stock carry no voting rights or because of the then prevailing trading characteristics of such shares.

The trading price for Class A and Class B common stock will depend on a variety of factors.

The trading prices of shares of Class A common stock and Class B common stock will depend on many factors, including the future performance of Biglari Holdings, general market conditions, market activity in the Class A and Class B shares, the number of shares of each class outstanding, the relative rights between the two classes of stock, and other pertinent factors. Accordingly, we cannot predict the prices at which shares of Class A common stock and Class B common stock will trade.

The issuance of dual stock may negatively affect the decision of institutional investors to invest in the Company, and could have implications for the inclusion of shares of Class A common stock or Class B common stock in certain stock indices.

The issuance of dual class stock may negatively affect the decision by certain institutional investors to purchase or hold shares of the Company’s common stock. The holding of non-voting stock, such as the Class B common stock, may not be permitted by the investment policies of certain institutional investors or may be less attractive to the portfolio managers of certain institutional investors. Significant sales of shares of Class A and Class B common stock by investors who receive such shares as part of the recapitalization may occur if such investors are unwilling, unable or choose not to hold such shares. These sales could depress trading prices for our common stocks, particularly in the period immediately following the recapitalization. Some stock index providers have announced decisions to exclude companies with multi-class capital structures or limited public voting rights from their indices. There can be no assurance that either class of our stock will be listed in the indices.

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year ended December 31, 2023.

Potential changes in law or regulations may have a negative impact on our Class A and Class B common stock.

In prior years, bills have been introduced in Congress that, if enacted, would have prohibited the listing of common stock on a national securities exchange if such common stock was part of a class of securities that has no voting rights or carried disproportionate voting rights. Although these bills have not been acted upon by Congress, there can be no assurance that such a bill (or a modified version thereof) will not be introduced in Congress in the future. Legislation or other regulatory developments could make the shares of Class A common stock and Class B common stock ineligible for trading on the NYSE or other national securities exchanges. We are unable to predict whether any such legislation or regulatory proposals will be adopted or whether they will have such effect.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

On September 16, 2017,

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
From March 4 through March 15, 2024, The Lion Fund, II, L.P. entered into a, purchased 1,021 shares of Class A common stock and 11,405 shares of Class B common stock. The Lion Fund, L.P., may be deemed to be an “affiliated purchaser” as defined in Rule 10b5-1 trading plan pursuant to Rule 10b5-110b-18(a)(3) under the Securities Exchange Act of 1934, as amended. Under the Rule 10b5-1 trading plan, a broker dealer will make periodicThe purchases of up to an aggregate of 110,000 shares of the Company’s common stock on behalf of The Lion Fund II, L.P. at prevailingwere made through open market prices, subject to the terms of the Purchase Plan. The trading plan was terminated upon the issuance of dual class stock.

  (a)
Total Number
of Shares
Purchased		 (b)
Average
Price Paid
per Share		 (c)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs		 (d)
Maximum Number
of Shares That May
Yet Be Purchased
Under Plans or
Programs
         
 January 1, 2018 – January 31, 2018    20,385  $416.34   20,385   62,936 
 February 1, 2018 – February 28, 2018    21,439  $405.98   21,439   41,497 
 March 1, 2018 – March 31, 2018    3,478  $419.09   3,478   38,019 
 Total    45,302       45,302     

transactions.
Total Number of Class A Shares PurchasedAverage Price Paid per Class A ShareTotal Number of Class B Shares PurchasedAverage Price Paid per Class B ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number of Shares That May Yet Be Purchased Under Plans or Programs
January 1, 2024 - January 31, 2024— $— — $— — — 
February 1, 2024 - February 29, 2024— $— — $— — — 
March 1, 2024 - March 31, 20241,021 $953.21 11,405 $188.27 — — 
Total1,021 11,405 — 
Item 3.Defaults Upon Senior Securities

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

Item 4.Mine Safety Disclosures

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

Item 5.Other Information

None.

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ITEM 5. OTHER INFORMATION

Index

None.

29

ITEM 6. EXHIBITS
Item 6.Exhibits

Exhibit NumberDescription
101Interactive Data Files.

_________________

*
104Furnished herewith.

29Cover page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

Index

_________________

*Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Biglari Holdings Inc.
Date: May 4, 201810, 2024By:
/s/ BRUCE LEWIS
Bruce Lewis
ControllerBiglari Holdings inc.
By:/s/Bruce Lewis
Bruce Lewis
Controller

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