UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 31, ~~2023~~2024


☐			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)


Indiana						82-3784946
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)


19100 Ridgewood Parkway	Suite 1200
San Antonio,	Texas	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 class	Trading Symbols	Name of each exchange on which registered
Class A Common Stock, no par value	BH.A	New York Stock Exchange
Class B Common Stock, no par value	BH	New 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. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x No ¨

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

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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Number of shares of common stock outstanding as of May ~~3, 2023:~~8, 2024:


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

Table of Contents

BIGLARI HOLDINGS INC.

INDEX


		Page No.
Part I – Financial Information

Item 1.	Financial Statements	1
	Consolidated Balance Sheets — March 31, 202 34 and December 31, 20 2 223	1
	Consolidated Statements of Earnings — First Quarter 202 34 and 202 23	2
	Consolidated Statements of Comprehensive Income — First Quarter 202 34 and 20 2 223	3
	Consolidated Statements of Changes in Shareholders’ Equity — First Quarter ~~2023~~202 4 and ~~2022~~20 23	3
	Consolidated Statements of Cash Flows — First Quarter 202 34 and 20 2 223	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4.	Controls and Procedures	28

Part II – Other Information

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	2930
Signatures		3031

Table of Contents

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIGLARI HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)


		March 31, 2023		December 31, 2022
		(Unaudited)
	March 31, 2024					March 31, 2024	December 31, 2023
	(Unaudited)
Assets
Assets
Assets	Assets
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	39,363	$	37,467
Investments	Investments	79,652		69,466
Receivables	Receivables	27,044		29,375
Inventories	Inventories	3,755		3,851
Other current assets	Other current assets	13,542		10,495
Total current assets	Total current assets	163,356		150,654
Property and equipment	Property and equipment	392,904		400,725
Operating lease assets	Operating lease assets	33,532		34,739
Goodwill and other intangible assets	Goodwill and other intangible assets	76,672		76,550
Investment partnerships	Investment partnerships	230,843		155,794
Other assets	Other assets	9,911		10,012
Total assets	Total assets	$	907,218	$	828,474
Liabilities and shareholders’ equity	Liabilities and shareholders’ equity
Liabilities	Liabilities
Liabilities
Liabilities
Current liabilities:
Current liabilities:
Current liabilities:	Current liabilities:
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	79,244	$	78,616
Unpaid losses and loss adjustment expenses		15,514		16,805
Accounts payable and accrued expenses
Accounts payable and accrued expenses
Loss and loss adjustment expenses
Unearned premiums	Unearned premiums	13,445		12,495
Current portion of lease obligations	Current portion of lease obligations	16,109		16,981
Line of credit		6,500		10,000
Total current liabilities	Total current liabilities	130,812		134,897
Lease obligations	Lease obligations	90,135		91,844
Deferred taxes	Deferred taxes	49,809		31,343
Asset retirement obligations	Asset retirement obligations	14,240		14,068
Other liabilities	Other liabilities	1,024		754
Total liabilities	Total liabilities	286,020		272,906
Shareholders’ equity	Shareholders’ equity
Common stock	Common stock	1,138		1,138
Common stock
Common stock
Additional paid-in capital	Additional paid-in capital	381,788		381,788
Retained earnings	Retained earnings	641,396		576,510
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(2,458)		(2,790)
Treasury stock, at cost	Treasury stock, at cost	(409,919)		(409,680)
Biglari Holdings Inc. shareholders’ equity	Biglari Holdings Inc. shareholders’ equity	611,945		546,966
Noncontrolling interests		9,253		8,602
Total shareholders’ equity		621,198		555,568
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	907,218	$	828,474

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(dollars in thousands except per share amounts)


		First Quarter
		2023		2022
		(Unaudited)
	First Quarter							First Quarter
	2024						2024		2023
	(Unaudited)							(Unaudited)
Revenues	Revenues					Revenues
Restaurant operations	Restaurant operations	$	61,129	$	59,847
Insurance premiums and other	Insurance premiums and other	16,229		15,079
Oil and gas	Oil and gas	12,223		9,812
Licensing and media	Licensing and media	595		634
Total revenues	Total revenues	90,176		85,372
Costs and expenses	Costs and expenses
Restaurant cost of sales	Restaurant cost of sales	32,738		35,352
Restaurant cost of sales
Restaurant cost of sales
Insurance losses and underwriting expenses	Insurance losses and underwriting expenses	13,013		13,774
Oil and gas production costs	Oil and gas production costs	5,471		3,819
Licensing and media costs	Licensing and media costs	452		953
Selling, general and administrative	Selling, general and administrative	17,263		16,224
Gain on sale of oil and gas properties
Impairments	Impairments	776		—
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	9,940		7,871
Interest expense on leases	Interest expense on leases	1,307		1,412
Interest expense on borrowings		167		—
Interest expense on debt
Total costs and expenses	Total costs and expenses	81,127		79,405
Other income	Other income
Investment gains	Investment gains	3,638		225
Investment partnership gains (losses)		72,588		(6,661)
Total other income (expenses)		76,226		(6,436)
Earnings (loss) before income taxes		85,275		(469)
Income tax expense (benefit)		19,738		(171)
Net earnings (loss)		65,537		(298)
Investment gains
Investment gains
Investment partnership gains
Total other income
Earnings before income taxes
Income tax expense
Net earnings
Earnings attributable to noncontrolling interest	Earnings attributable to noncontrolling interest	651		—
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders		$	64,886	$	(298)
Net earnings attributable to Biglari Holdings Inc. shareholders

Net earnings (loss) per average equivalent Class A share*		$	222.28	$	(0.98)
Net earnings per average equivalent Class A share*
Net earnings per average equivalent Class A share*
Net earnings per average equivalent Class A share*

*Net earnings ~~(loss)~~ per average equivalent Class B share outstanding are one-fifth of the average equivalent Class A share or $15.91 for the first quarter of 2024 and $44.46 for the first quarter of ~~2023 and $(0.20) for the first quarter of 2022.~~2023.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

First Quarter
2023 2022
(Unaudited)
Net earnings (loss) $ 65,537 $ (298)
Foreign currency translation 332 (231)
Comprehensive income (loss) 65,869 (529)
Comprehensive income attributable to noncontrolling interest 651 —
Total comprehensive income (loss) attributable to Biglari Holdings Inc. shareholders $ 65,218 $ (529)


	First Quarter
	2024		2023
	(Unaudited)
Net earnings	$	22,579	$	65,537
Foreign currency translation	(31)		332
Comprehensive income	22,548		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 Interests Total
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 earnings (loss) 64,886 651 65,537
Other comprehensive income 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


	Biglari Holdings Inc. Shareholders’ Equity
	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non-controlling Interests		Total
For the first quarter of 2024
Balance at December 31, 2023	$	1,138	$	385,594	$	631,458	$	(2,518)	$	(416,342)	$	—	$	599,330
Net earnings					22,579								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 2022
Balance at December 31, 2021 $ 1,138 $ 381,788 $ 608,528 $ (1,907) $ (401,851) $ — $ 587,696
Net earnings (loss) (298) (298)
Other comprehensive loss (231) (231)
Adjustment for holdings in investment partnerships 130 130
Balance at March 31, 2022 $ 1,138 $ 381,788 $ 608,230 $ (2,138) $ (401,721) $ — $ 587,297


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 earnings					64,886						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.

Table of Contents

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)


		First Quarter
		2023		2022
		(Unaudited)
	First Quarter							First Quarter
	2024						2024		2023
	(Unaudited)							(Unaudited)
Operating activities	Operating activities					Operating activities
Net earnings (loss)		$	65,537	$	(298)
Adjustments to reconcile net earnings (loss) to operating cash flows:
Depreciation, depletion, and amortization		9,940		7,871
Net earnings
Adjustments to reconcile net earnings to operating cash flows:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization
Provision for deferred income taxes	Provision for deferred income taxes	18,450		(4,750)
Asset impairments	Asset impairments	776		—
Gains on sale of assets	Gains on sale of assets	(1,590)		(133)
Investment and investment partnerships (gains) losses		(76,226)		6,436
Investment and investment partnerships gains
Distributions from investment partnerships	Distributions from investment partnerships	—		4,500
Changes in receivables, inventories and other assets		2,006		4,633
Changes in receivables and inventories
Changes in accounts payable and accrued expenses	Changes in accounts payable and accrued expenses	1,030		2,833
Net cash provided by operating activities	Net cash provided by operating activities	19,923		21,092
Investing activities	Investing activities
Capital expenditures
Capital expenditures
Capital expenditures	Capital expenditures	(5,929)		(9,293)
Proceeds from property and equipment disposals	Proceeds from property and equipment disposals	2,140		109
Purchases of interests in limited partnerships	Purchases of interests in limited partnerships	(2,700)		(3,000)
Purchases of investments	Purchases of investments	(27,255)		(50,086)
Sales of investments and redemptions of fixed maturity securities	Sales of investments and redemptions of fixed maturity securities	21,009		46,193
Net cash used in investing activities	Net cash used in investing activities	(12,735)		(16,077)
Financing activities	Financing activities
Repayments of borrowings	Repayments of borrowings	(3,500)		—
Repayments of borrowings
Repayments of borrowings
Principal payments on direct financing lease obligations	Principal payments on direct financing lease obligations	(1,550)		(1,564)
Net cash used in financing activities	Net cash used in financing activities	(5,050)		(1,564)
Effects of foreign currency exchange rate changes	Effects of foreign currency exchange rate changes	8		(23)
Increase in cash, cash equivalents and restricted cash	Increase in cash, cash equivalents and restricted cash	2,146		3,428
Cash, cash equivalents and restricted cash at beginning of year	Cash, cash equivalents and restricted cash at beginning of year	38,805		43,687
Cash, cash equivalents and restricted cash at end of first quarter	Cash, cash equivalents and restricted cash at end of first quarter	$	40,951	$	47,115


		First Quarter
		2023		2022
		(Unaudited)
	First Quarter						First Quarter
	2024					2024		2023
	(Unaudited)						(Unaudited)
Cash and cash equivalents	Cash and cash equivalents	$	39,363	$	45,777
Restricted cash in other long-term assets	Restricted cash in other long-term assets	1,588		1,338
Cash, cash equivalents and restricted cash at end of first quarter	Cash, cash equivalents and restricted cash at end of first quarter	$	40,951	$	47,115

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

BIGLARI HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2023~~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. 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 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, ~~2022.~~2023.

Biglari Holdings Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities, including property and casualty insurance, licensing and 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.

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 investment and capital allocation decisions are made for the Company and its subsidiaries by Mr. Biglari.

As of March 31, ~~2023,~~2024, Mr. Biglari beneficially owns shares of the Company that represent approximately ~~66.3% of the economic interest and approximately 70.4%~~71.5% of the voting interest.

~~Business Acquisition~~

On September 14, 2022, the Company purchased Series A Preferred Stock (the “Preferred Shares”) of Abraxas Petroleum Corporation for a purchase price of $80 million. On October 26, 2022, the Company exchanged the Preferred Shares for 90% of the outstanding common stock of Abraxas Petroleum.

Principles of Consolidation

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

Note 2. Earnings Per Share

Earnings per share of common stock is based on the weighted-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-average common shares outstanding. However, these shares are legally outstanding.

The following table presents shares authorized, issued, and outstanding on March 31, ~~2023~~2024 and December 31, ~~2022.~~2023.

March 31, 2023

December 31, 2022

March 31, 2024

December 31, 2023

Class A

Class B

Class A

Class B

Class A

Class B

Class A

Class B

Common stock authorized

500,000

10,000,000

500,000

10,000,000

Common stock issued and outstanding

206,864

2,068,640

206,864

2,068,640

Table of Contents

Note 2. Earnings Per Share (continued)

The Company has applied the “two-class method” of computing earnings per share as prescribed in Accounting Standards Codification (“ASC”) 260, “Earnings Per Share”. (Class B shares are economically equivalent to one-fifth of a Class A share.) The equivalent Class A common stock applied for computing earnings per share excludes the proportional shares of Biglari Holdings’ stock held by the investment partnerships. In the tabulation below is the weighted-average equivalent Class A common stock for earnings per share.

March 31, 2023

March 31, 2022

March 31, 2024

March 31, 2023

Equivalent Class A common stock outstanding

620,592

Proportional ownership of Company stock held by investment partnerships

328,681

316,020

Equivalent Class A common stock for earnings per share

291,911

304,572

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 ~~result.~~results. However, we consider investment gains and losses, whether realized or unrealized, as non-operating.

Investment gains for the first quarter of 2024 and 2023 were $1,713 and ~~2022 were~~ $3,638, ~~and $225,~~ respectively.

Note 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 these 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 are presented below.

Fair Value Company
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
Contributions 2,700 2,700
Changes in proportionate share of Company stock held 239 (239)
Partnership interest at March 31, 2023 $ 507,499 $ 276,656 $ 230,843


	Fair Value		Company 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 held			3,306		(3,306)
Partnership interest at March 31, 2024	$	544,909	$	324,152	$	220,757

Fair Value Company
Common Stock Carrying Value
Partnership interest at December 31, 2021 $ 474,201 $ 223,802 $ 250,399
Investment partnership gains (losses) (909) 5,752 (6,661)
Distributions (net of contributions) (1,500) (1,500)
Changes in proportionate share of Company stock held (130) 130
Partnership interest at March 31, 2022 $ 471,792 $ 229,424 $ 242,368


	Fair Value		Company 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
Contributions	2,700				2,700
Changes in proportionate share of Company stock held			239		(239)
Partnership interest at March 31, 2023	$	507,499	$	276,656	$	230,843

Table of Contents

Note 4. Investment Partnerships (continued)

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


		March 31, 2023		December 31, 2022		March 31, 2024	December 31, 2023
Carrying value of investment partnerships	Carrying value of investment partnerships	$	230,843	$	155,794
Deferred tax liability related to investment partnerships	Deferred tax liability related to investment partnerships	(40,410)		(23,643)
Carrying value of investment partnerships net of deferred taxes	Carrying value of investment partnerships net of deferred taxes	$	190,433	$	132,151

~~Because of a transaction that occurred between The Lion Fund, L.P., and The Lion Fund II, L.P., in 2022, we~~We expect that a majority of the ~~$40,410~~$31,314 and $27,896 deferred tax ~~liability~~liabilities enumerated above will not become due until the dissolution of ~~the investment partnerships. In effect, the tax-basis cost increased for the common stock of certain unaffiliated securities held by~~ the investment partnerships.

The Company’s proportionate share of Company stock held by investment partnerships at cost was ~~$409,919~~$419,648 and ~~$409,680~~$416,342 as of March 31, ~~2023~~2024, and December 31, ~~2022,~~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. Unrealized gains and losses on marketable securities held by the 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
2023 2022
Gains (losses) from investment partnerships $ 72,588 $ (6,661)
Tax expense (benefit) 16,559 (1,860)
Contribution to net earnings $ 56,029 $ (4,801)


	First Quarter
	2024		2023
Gains from investment partnerships	$	21,985	$	72,588
Tax expense	4,837		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., will earn an incentive reallocation fee for the Company’s investments equal to 25% of the net profits above an annual hurdle rate of 6% over the previous high-water mark. Our policy is to accrue an estimated incentive fee throughout the year. The total incentive reallocation 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 quarters of ~~2023~~2024 and ~~2022.~~2023.

Table of Contents

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, 2023 $ 348,606 $ 415,057
Total liabilities as of March 31, 2023 $ 10,373 $ 173,731
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, 2023 88.6 % 86.1 %
Total assets as of December 31, 2022 $ 285,071 $ 330,832
Total liabilities as of December 31, 2022 $ 10,517 $ 167,847
Revenue for the first quarter of 2022 $ 969�� $ (1,249)
Earnings for the first quarter of 2022 $ 926 $ (1,581)
Biglari Holdings’ ownership interest as of March 31, 2022 62.5 % 93.9 %


	Equity in Investment Partnerships
	Lion Fund			Lion 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, 2024	89.9		%	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, 2023	88.6		%	86.1		%

Revenue in the financial information of the investment partnerships, summarized above, includes investment income and unrealized gains and losses on investments.

Note 5. Property and Equipment

Property and equipment is composed of the following.


		March 31, 2023		December 31, 2022		March 31, 2024	December 31, 2023
Land	Land	$	139,705	$	143,313
Buildings	Buildings	149,081		151,627
Land and leasehold improvements	Land and leasehold improvements	154,641		151,496
Equipment	Equipment	215,715		222,661
Oil and gas properties	Oil and gas properties	144,692		144,888
Construction in progress	Construction in progress	900		2,238
		804,734		816,223
Less accumulated depreciation, depletion, and amortization	Less accumulated depreciation, depletion, and amortization	(411,830)		(415,498)
Property and equipment, net	Property and equipment, net	$	392,904	$	400,725

Depletion expense related to oil and gas properties was ~~$2,648~~$2,568 and ~~$1,380~~$2,648 during the first quarter of ~~2023~~2024 and ~~2022,~~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. ~~There were no impairments in the first quarter of 2022.~~

Property and equipment held for sale of ~~$8,012~~$1,149 and ~~$4,700~~$773 are recorded in other current assets as of March 31, ~~2023~~2024, and December 31, ~~2022,~~2023, respectively. The assets classified as held for sale include ~~seven~~ properties owned by Steak n Shake, which were previously ~~operated restaurants, and Abraxas Petroleum’s office building.~~company-operated restaurants.

During the first quarter of 2024 and 2023, ~~Steak n Shake~~the Company sold ~~the property of a~~ former company-operated ~~restaurant~~restaurants for a gain of ~~$1,431.~~$767 and $1,431, respectively.

Table of Contents

Note 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.


	Goodwill
Goodwill at December 31, ~~2022~~2023
Goodwill	$	~~53,813~~53,830
Accumulated impairment losses	(300)
	$	~~53,513~~53,530
Change in foreign exchange rates during the first quarter of ~~2023~~2024	9 (9)
Goodwill at March 31, ~~2023~~2024	$	~~53,522~~53,521

Goodwill and indefinite-lived intangible asset impairment reviews 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 include forecasting revenues and expenses, cash flows and capital expenditures, as well as an appropriate discount rate and other inputs. Significant judgment by management is required 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 charged to earnings as an impairment loss. If the carrying value of a reporting unit exceeds the estimated fair value of the reporting unit, then the excess, limited to the carrying amount of goodwill, will be charged to earnings as an impairment loss. There was no impairment recorded for goodwill during the first quarters of ~~2023~~2024 or ~~2022.~~2023.

Other Intangible Assets

Intangible assets with indefinite lives are composed of the following.

Trade Names Lease Rights Total
Balance at December 31, 2022
Intangibles $ 15,876 $ 10,889 $ 26,765
Accumulated impairment losses — (3,728) (3,728)
$ 15,876 $ 7,161 $ 23,037
Change in foreign exchange rates during the first quarter of 2023 — 113 113
Balance at March 31, 2023 $ 15,876 $ 7,274 $ 23,150


	Trade Names		Lease Rights		Total
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 7. Restaurant Operations Revenues

Restaurant operations revenues were as follows.






		First Quarter
		2023		2022
Net sales	Net sales	$	36,894	$	38,216
Net sales
Net sales
Franchise partner fees
Franchise partner fees
Franchise partner fees	Franchise partner fees	17,912		15,624
Franchise royalties and fees	Franchise royalties and fees	4,258		5,146
Franchise royalties and fees
Franchise royalties and fees
Other
Other
Other	Other	2,065		861
		$	61,129	$	59,847

Net Sales

Net sales are composed of retail sales of food through company-operated stores. Company-operated store revenues are recognized, net of discounts and sales taxes, when our obligation to perform 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 earnings as revenue.

Table of Contents

Note 7. Restaurant Operations Revenues (continued)

Franchise Partner Fees

Franchise partner fees are composed 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 ~~2023~~2024 and ~~2022,~~2023, restaurant operations recognized ~~$5,575~~$5,705 and ~~$4,774,~~$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 are based upon a percentage of sales of the franchise restaurant and are recognized as earned. Franchise royalties are billed on a monthly basis. Initial franchise fees when a new restaurant opens or at the start of a new franchise term are recorded as deferred revenue when received and recognized as revenue over the term of the franchise agreement.

Other Revenue

Restaurant operations ~~sells~~sell 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 ~~estimates~~estimate 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.

Note 8. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses include the following.


		March 31, 2023		December 31, 2022		March 31, 2024	December 31, 2023
Accounts payable	Accounts payable	$	30,932	$	28,431
Gift card and other marketing		10,640		12,028
Gift cards and other marketing
Insurance accruals	Insurance accruals	2,479		6,012
Salaries and wages		6,602		4,400
Compensation
Deferred revenue	Deferred revenue	5,835		4,445
Taxes payable	Taxes payable	15,500		14,896
Oil and gas payable	Oil and gas payable	4,641		3,877
Other	Other	2,615		4,527
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	79,244	$	78,616

Note 9. Line of Credit and Note Payable

Biglari Holdings’ Line of Credit

~~On September 13, 2022,~~ Biglari ~~Holdings entered into a~~Holdings’ available line of credit ~~in an aggregate principal amount of up to~~is $30,000. The line of credit ~~will be available~~matures on ~~a revolving basis until~~ September 12, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants. ~~The~~There was no balance ofon the line of credit ~~was $6,500 and $10,000~~ on March 31, ~~2023 and~~2024, or December 31, ~~2022, respectively. Our interest rate was 7.3% on March 31, 2023. The line of credit was paid in full in April~~ 2023.

Western Sizzlin Revolver

Western Sizzlin’s available line of credit is $500. As of March 31, ~~2023~~2024, and December 31, ~~2022,~~2023, Western Sizzlin had no debt outstanding under its revolver.

Table of Contents

Note 10. Unpaid ~~losses~~Loss and ~~loss adjustment expenses~~Loss 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 ~~ending~~ended March 31, ~~2023~~2024 and ~~2022~~2023 follows.


		2023		2022
	March 31,						March 31,
	2024					2024		2023
Balances at beginning of year:	Balances at beginning of year:
Gross liabilities
Gross liabilities
Gross liabilities	Gross liabilities	$	17,520	$	14,993
Reinsurance recoverable on unpaid losses	Reinsurance recoverable on unpaid losses	(715)		(1,892)
Net liabilities	Net liabilities	16,805		13,101
Incurred losses and loss adjustment expenses:	Incurred losses and loss adjustment expenses:
Current accident year	Current accident year	10,247		9,721
Current accident year
Current accident year
Prior accident years	Prior accident years	(1,651)		(133)
Total	Total	8,596		9,588
Paid losses and loss adjustment expenses:	Paid losses and loss adjustment expenses:
Current accident year
Current accident year
Current accident year	Current accident year	4,433		5,577
Prior accident years	Prior accident years	5,454		3,977
Total	Total	9,887		9,554
Balances at March 31:	Balances at March 31:
Net liabilities	Net liabilities	15,514		13,135
Net liabilities
Net liabilities
Reinsurance recoverable on unpaid losses	Reinsurance recoverable on unpaid losses	2,207		890
Gross liabilities	Gross liabilities	$	17,721	$	14,025

Incurred loss and loss adjustment expenses of $8,596 and $9,588 in the first quarter of 2023 and 2022, respectively, were recorded in earnings and related to insured events occurring in the current period and events occurring in all prior periods. Incurred and paid loss and loss adjustment expenses are net of reinsurance recoveries. We recorded net reductions of estimated ultimate liabilities for prior accident years of ~~$1,651~~$3,319 and ~~$133~~$1,651 in the first quarter of ~~2023~~2024 and ~~2022,~~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 and 1.0% in 2022.~~2023.

Note 11. Lease Assets and Obligations

Lease obligations include the following.


Current portion of lease obligations	Current portion of lease obligations	March 31, 2023		December 31, 2022		Current portion of lease obligations	March 31, 2024	December 31, 2023
Finance lease liabilities	Finance lease liabilities	$	1,242	$	1,237
Finance obligations	Finance obligations	5,139		5,161
Operating lease liabilities	Operating lease liabilities	9,728		10,583
Total current portion of lease obligations	Total current portion of lease obligations	$	16,109	$	16,981

Long-term lease obligations	Long-term lease obligations
Long-term lease obligations
Long-term lease obligations
Finance lease liabilities
Finance lease liabilities
Finance lease liabilities	Finance lease liabilities	$	3,779	$	4,129
Finance obligations	Finance obligations	58,428		58,868
Operating lease liabilities	Operating lease liabilities	27,928		28,847
Total long-term lease obligations	Total long-term lease obligations	$	90,135	$	91,844

Table of Contents

Note 11. Lease Assets and Obligations (continued)

Nature of Leases

Steak n Shake and Western 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 straight-line basis over the lease term. For finance leases, we recognize amortization expense on the right-of-use asset and interest expense on the lease liability over the lease term.

Total lease cost consists of the following.


		First Quarter
		2023		2022
		First Quarter
		First Quarter
		First Quarter
		2024
		2024
		2024
Finance lease costs:
Finance lease costs:
Finance lease costs:	Finance lease costs:
Amortization of right-of-use assets	Amortization of right-of-use assets	$	242	$	363
Amortization of right-of-use assets
Amortization of right-of-use assets
Interest on lease liabilities
Interest on lease liabilities
Interest on lease liabilities	Interest on lease liabilities	91		115
Operating and variable lease costs	Operating and variable lease costs	3,167		3,612
Operating and variable lease costs
Operating and variable lease costs
Sublease income
Sublease income
Sublease income	Sublease income	(3,091)		(4,069)
Total lease costs	Total lease costs	$	409	$	21
Total lease costs
Total lease costs

Supplemental cash flow information related to leases is as follows.


		First Quarter					First Quarter
		2023		2022			2024	2023
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases	Financing cash flows from finance leases	$	344	$	421
Operating cash flows from finance leases	Operating cash flows from finance leases	$	91	$	115
Operating cash flows from operating leases	Operating cash flows from operating leases	$	3,355	$	3,067

Supplemental balance sheet information related to leases is as follows.

March 31,
2023

December 31,
2022

March 31,
2024

December 31,
2023

Finance leases:

Property and equipment, net

3,656

4,352

Property and equipment, net

Weighted-average lease terms and discount rates are as follows.


	March 31, ~~2023~~2024
Weighted-average remaining lease terms:
Finance leases	~~4.11~~4.79 years
Operating leases	~~4.68~~5.82 years

Weighted-average discount rates:
Finance leases	7.0	%
Operating leases	7.0	%

Table of Contents

Note 11. Lease Assets and Obligations (continued)

Maturities of lease liabilities as of March 31, ~~2023~~2024 are as follows.


Year	Year	Operating Leases		Finance Leases		Year	Operating Leases	Finance Leases
Remainder of 2023		$	9,210	$	1,134
2024		10,228		1,534
Remainder of 2024
2025	2025	8,437		1,298
2026	2026	5,868		959
2027	2027	3,503		623
After 2027		7,028		232
2028
After 2028
Total lease payments	Total lease payments	44,274		5,780
Less interest	Less interest	6,618		759
Total lease liabilities	Total lease liabilities	$	37,656	$	5,021

Lease Income

The components of lease income are as follows.


		First Quarter
		2023		2022
		First Quarter
		First Quarter
		First Quarter
		2024
		2024
		2024
Operating lease income
Operating lease income
Operating lease income	Operating lease income	$	4,085	$	4,724
Variable lease income	Variable lease income	1,784		313
Variable lease income
Variable lease income
Total lease income	Total lease income	$	5,869	$	5,037
Total lease income
Total lease income

The following table displays the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, ~~2023.~~2024. Franchise partner leases and subleases are short-term leases and have been excluded from the table.


			Operating Leases
		Operating Leases								Operating Leases
Year	Year		Subleases		Owned Properties		Year	Subleases	Owned Properties
Remainder of 2023			$	520	$	119
2024			503		265
Remainder of 2024
2025	2025		454		265
2026	2026		134		275
2027	2027		116		275
After 2027			125		2,315
2028
After 2028
Total future minimum receipts	Total future minimum receipts		$	1,852	$	3,514

Note 12. Income Taxes

In determining the quarterly provision for income taxes, the Company used an estimated annual effective tax rate for the first quarter of ~~2023~~2024 and ~~2022.~~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 the various taxing jurisdictions.

Income tax expense for the first quarter of ~~2023~~2024 was ~~$19,738~~$6,816 compared to ~~an income tax benefit of $171~~$19,738 for the first quarter of ~~2022.~~2023. The variance in income taxes between ~~2023~~2024 and ~~2022~~2023 is primarily attributable to taxes on income generated by the investment partnerships. Investment partnership pre-tax gains were $21,985 during the first quarter of 2024 compared to pre-tax gains of $72,588 during the first quarter of ~~2023 compared to pre-tax losses of $6,661 during the first quarter of 2022.~~2023.

Table of Contents

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 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 sheets:

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

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

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

~~Non-qualified deferred compensation plan investments:~~ ~~The assets of the non-qualified plan are set up in a rabbi trust. They represent mutual funds and publicly traded securities, each of which are classified as Level 1 of the fair value hierarchy.~~

Table of Contents

Note 14. Fair Value of Financial Assets (continued)

As of March 31, ~~2023~~2024, and December 31, ~~2022,~~2023, the fair values of financial assets were as follows.


		March 31, 2023								December 31, 2022
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	March 31, 2024																			March 31, 2024			December 31, 2023
	Level 1																	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Assets	Assets
Cash equivalents	Cash equivalents	$	25,209	$	—	$	—	$	25,209	$	17,608	$	—	$	—	$	17,608
Cash equivalents
Cash equivalents
Equity securities	Equity securities
Consumer goods
Consumer goods
Consumer goods	Consumer goods	22,337		—		—		22,337		17,274		—		—		17,274
Other	Other	2,555		—		—		2,555		2,031		—		—		2,031
Bonds	Bonds
Government	Government	53,663		—		—		53,663		48,456		—		—		48,456
Government
Government
Corporate	Corporate	1,603		—		—		1,603		2,199		—		—		2,199
Non-qualified deferred compensation plan investments		684		—		—		684		699		—		—		699
Total assets at fair value	Total assets at fair value	$	106,051	$	—	$	—	$	106,051	$	88,267	$	—	$	—	$	88,267

There were no changes in our valuation techniques used to measure fair values on a recurring basis.

Note 15. Related Party Transactions

Service Agreement

The Company is party to a service agreement with Biglari Enterprises LLC (“Biglari Enterprises”), under which Biglari Enterprises provides business and administrative related services to the Company. Biglari Enterprises is owned by Mr. Biglari.

The Company paid Biglari Enterprises $2,400 and $2,100 in service fees during the first ~~quarters~~quarter of 2024 and 2023, ~~and 2022.~~respectively. The service agreement does not alter the hurdle rate connected with the incentive reallocation paid to Biglari Capital Corp.

Incentive Agreement

The Incentive Agreement establishes a performance-based annual incentive payment for Mr. Biglari contingent upon the growth in adjusted equity in each year attributable to our operating businesses. In order for 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 previous highest level (the “high-water mark”). Mr. Biglari will receive 25% of any incremental book value created above the high-water mark plus the hurdle rate.

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 include Steak n Shake and 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 Maxim. ~~Other business activities not specifically identified with reportable business segments are presented in corporate.~~ 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.

Table of Contents

Note 16. Business Segment Reporting (continued)

A disaggregation of our consolidated data for the first quarters of ~~2023~~2024 and ~~2022~~2023 is presented in the tables which follow.

Revenues

First Quarter

2023

2022

Revenues

First Quarter

2024

Operating Businesses:

Restaurant Operations:

Steak n Shake

58,487

57,753

Western Sizzlin

2,642

2,094

Western Sizzlin

Total Restaurant Operations

61,129

59,847

Insurance Operations:

Underwriting:

First Guard

8,899

8,731

First Guard

Southern Pioneer

5,865

5,438

Investment income and other

1,465

910

Investment income and other

Total Insurance Operations

16,229

15,079

Oil and Gas Operations:

Abraxas Petroleum

7,252

—

Southern Oil

4,971

9,812

Southern Oil

Total Oil and Gas Operations

12,223

9,812

Maxim

595

634

90,176

85,372

Maxim

Table of Contents

Note 16. Business Segment Reporting (continued)

Earnings (Loss) Before Income Taxes

Earnings (Losses) Before Income Taxes

First Quarter

2023

2022

Operating Businesses:

Restaurant Operations:

Steak n Shake

7,325

4,198

Steak n Shake

Western Sizzlin

472

232

Western Sizzlin

Total Restaurant Operations

7,797

4,430

Insurance Operations:

Underwriting:

First Guard

1,862

732

First Guard

Southern Pioneer

(111)

(337)

Investment income and other

1,036

969

Investment income and other

Total Insurance Operations

2,787

1,364

Oil and Gas Operations:

Abraxas Petroleum

1,209

—

Southern Oil

894

3,921

Southern Oil

Total Oil and Gas Operations

2,103

3,921

Maxim

122

(336)

Maxim

Interest expense not allocated to segments

(167)

—

Interest expense not allocated to segments

Total Operating Businesses

12,642

9,379

Corporate and other

(3,593)

(3,412)

Corporate and other

Investment gains

3,638

225

Investment partnership gains (losses)

72,588

(6,661)

Investment gains

Investment partnership gains

85,275

(469)

Table of Contents

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. is a holding company owning subsidiaries engaged in a number of diverse business activities, including property and casualty insurance, licensing and media, restaurants, and oil and gas. Biglari Holdings is founded and led by Sardar Biglari, Chairman and Chief Executive Officer of the Company.

As of March 31, ~~2023,~~2024, Mr. Biglari beneficially owns shares of the Company that represent approximately ~~66.3% of the economic interest and 70.4%~~71.5% of the voting 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

2023

2022

Operating businesses:

Restaurant

5,840

3,262

Insurance

2,169

1,044

Insurance

Oil and gas

1,670

2,924

Brand licensing

(251)

Brand licensing

Interest expense

(129)

—

Corporate and other

(2,998)

(2,651)

Corporate and other

Total operating businesses

6,643

4,328

Investment partnership gains (losses)

56,029

(4,801)

Total operating businesses

Investment partnership gains

Investment gains

2,865

175

Net earnings (loss)

65,537

(298)

Investment gains

Net earnings

Earnings attributable to noncontrolling interest

651

—

Net earnings (loss) attributable to Biglari Holdings Inc. shareholders

64,886

(298)

Earnings attributable to noncontrolling interest

Net earnings attributable to Biglari Holdings Inc. shareholders

Table of Contents

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

Restaurants

Our restaurant businesses, which include Steak n Shake and Western Sizzlin, comprise ~~532~~485 company-operated and franchise restaurants as of March 31, ~~2023.~~2024.


	Steak n Shake									Steak n Shake				Western Sizzlin
		Steak n Shake			Western Sizzlin			Company- operated	Franchise Partner		Traditional Franchise	Company- operated	Franchise		Total
Total stores as of December 31, 2023
Corporate stores transitioned
Net restaurants opened (closed)
Total stores as of March 31, 2024
		Company- operated	Franchise Partner	Traditional Franchise	Company- operated	Franchise	Total
Total stores as of December 31, 2022
Total stores as of December 31, 2022
Total stores as of December 31, 2022	Total stores as of December 31, 2022	177	175	154	3	36	545
Corporate stores transitioned	Corporate stores transitioned	(3)	3	—	—	—	—
Net restaurants opened (closed)	Net restaurants opened (closed)	(2)	—	(11)	—	—	(13)
Total stores as of March 31, 2023	Total stores as of March 31, 2023	172	178	143	3	36	532

Total stores as of December 31, 2021		199	159	178	3	38	577
Corporate stores transitioned		(12)	12	—	—	—	—
Net restaurants opened (closed)		(3)	—	1	—	—	(2)
Total stores as of March 31, 2022		184	171	179	3	38	575

As of March 31, ~~2023, 36~~2024, 15 of the ~~172~~148 company-operated Steak n Shake stores were closed. Steak n Shake ~~has contracted~~plans to sell ~~seven~~or lease 9 of the ~~36 closed stores. An additional seventeen closed stores are listed with brokers for lease or sale. Steak n Shake plans to~~15 locations and refranchise the ~~remaining closed company-operated restaurants.~~

~~During the first quarter of 2023, Steak n Shake reopened two stores and sold one property; all were closed as of December 31, 2022.~~balance.

Table of Contents

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

Restaurant operations are summarized below.


		First Quarter
		2023				2022
		First Quarter
		First Quarter
		First Quarter
		2024
		2024
		2024
Revenue
Revenue
Revenue	Revenue
Net sales	Net sales	$	36,894			$	38,216
Net sales
Net sales
Franchise partner fees
Franchise partner fees
Franchise partner fees	Franchise partner fees	17,912				15,624
Franchise royalties and fees	Franchise royalties and fees	4,258				5,146
Franchise royalties and fees
Franchise royalties and fees
Other revenue	Other revenue	2,065				861
Other revenue
Other revenue
Total revenue
Total revenue
Total revenue	Total revenue	61,129				59,847

Restaurant cost of sales	Restaurant cost of sales

Restaurant cost of sales

Restaurant cost of sales
Cost of food	Cost of food	10,448		28.3	%	10,960		28.7	%
Restaurant operating costs		18,457		50.0	%	20,032		52.4	%
Occupancy costs		3,833		10.4	%	4,360		11.4	%
Cost of food
Cost of food
Labor costs
Labor costs
Labor costs
Occupancy and other
Occupancy and other
Occupancy and other
Total cost of sales
Total cost of sales
Total cost of sales	Total cost of sales	32,738				35,352

Selling, general and administrative	Selling, general and administrative

Selling, general and administrative

Selling, general and administrative
General and administrative
General and administrative
General and administrative	General and administrative	10,463		17.1	%	8,650		14.5	%
Marketing	Marketing	2,953		4.8	%	3,744		6.3	%
Marketing
Marketing
Other expenses (income)	Other expenses (income)	(1,612)		(2.6)	%	45		0.1	%
Other expenses (income)
Other expenses (income)
Total selling, general and administrative
Total selling, general and administrative
Total selling, general and administrative	Total selling, general and administrative	11,804		19.3	%	12,439		20.8	%

Impairments	Impairments	(776)				—

Impairments

Impairments
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization	(6,707)				(6,214)
Interest on finance leases and obligations	Interest on finance leases and obligations	(1,307)				(1,412)
Interest on finance leases and obligations
Interest on finance leases and obligations

Earnings (loss) before income taxes		7,797				4,430
Earnings before income taxes

Income tax expense (benefit)		1,957				1,168
Earnings before income taxes

Earnings before income taxes

Income tax expense

Income tax expense

Income tax expense

Contribution to net earnings	Contribution to net earnings	$	5,840			$	3,262

Contribution to net earnings

Contribution to net earnings

Cost of food, ~~restaurant operating~~labor costs, and occupancy and other costs are expressed as a percentage of net sales.

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

Net sales for ~~2023~~the first quarter of 2024 were ~~$36,894, representing a decrease of $1,322 or 3.5%~~$38,735 as compared to ~~2022.~~$36,894 during the first quarter of 2023. The ~~decrease~~increase in ~~revenue of company-owned restaurants is~~net sales was primarily due to an increase in Steak n Shake’s same-store sales of 9.9% during the ~~shift~~first quarter of ~~company units to franchise partner units.~~ 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 ~~continue to~~ 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 compared to $15,624 during the first quarter of 2022.~~2023. As of March 31, 2024 and 2023, there were 178 franchise partner ~~units, compared to 171 franchise partner units as of March 31, 2022.~~units. Included in franchise partner fees were ~~$5,575~~$5,705 and ~~$4,774~~$5,575 of rental income during the first quarter of ~~2023~~2024 and ~~2022,~~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.

Table of Contents

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, as compared to $5,146 during the first quarter of 2022.~~2023. The decrease in franchise royalties and fees was primarily ~~because~~due to the closing of ~~reduced marketing by franchisees.~~traditional franchise stores. There were ~~143~~125 Steak n Shake traditional units open on March 31, ~~2023,~~2024, as compared to ~~179~~143 units open on March 31, ~~2022.~~2023.

The cost of food at company-operated units during the first quarter of ~~2023~~2024 was ~~$10,448~~$10,974 or 28.3% of net sales, as compared to ~~$10,960~~$10,448 or ~~28.7%~~28.3% of net sales during the first quarter of ~~2022.~~2023. The cost of food expressed as a percentage of net sales in 2024 remained ~~relatively consistent.~~consistent with 2023.

~~The operating~~Labor costs at company-operated restaurants during the first quarter of ~~2023~~2024 were ~~$18,457~~$12,429 or ~~50.0%~~32.1% of net sales, as compared to ~~$20,032~~$11,603 or ~~52.4%~~31.4% of net sales during the first quarter of ~~2022. The decrease in operating~~2023. Labor costs expressed as a percentage of net sales ~~was mainly attributable to lower labor costs.~~in 2024 remained consistent with 2023.

General and administrative expenses during the first quarter of ~~2023~~2024 were ~~$10,463~~$11,730 or ~~17.1%~~18.9% of total revenue, as compared to ~~$8,650~~$10,463 or ~~14.5%~~17.1% of total revenue during the first quarter of ~~2022. The increase in general~~2023. General and administrative expenses ~~was mainly attributable to~~ increased ~~support for franchise partnerships.~~

~~Marketing expense decreased by $791 during the first quarter of 2023~~in 2024 as compared to ~~the first quarter~~2023 primarily because of ~~2022. The decrease was primarily attributable~~higher salaries and wages. Salaries and wages were higher due to ~~reduced marketing by traditional franchisees.~~

~~During the first quarter of 2023,~~an increase in Steak n ~~Shake sold the property of a former company-operated restaurant for a gain of $1,431.~~

~~The Company recorded impairment charges of $776 in the first quarter of 2023 related to underperforming stores. There were no impairments in the first quarter of 2022.~~

~~Depreciation and amortization expense was $6,707 during 2023 versus $6,214 during 2022. The year-over-year increase is primarily attributable to higher capital expenditures incurred in 2022 and 2021.~~

Shake’s personnel.

Interest on obligations under leases was $1,314 during the first quarter of 2024 versus $1,307 during ~~2023~~the first quarter of 2023.

Other income was $234 during the first quarter of 2024 versus ~~$1,412~~$1,612 during ~~2022.~~ the first quarter of 2023. Western Sizzlin received a settlement of $450 during 2024 and 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
	2024				2023
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 costs	21,765		26.9	%	20,940		26.9	%
Occupancy and other	16,778		20.8	%	15,867		20.4	%
Total cost of sales	$	61,713			$	57,678

The ~~year-over-year decrease~~Company’s consolidated financial statements do not include data in ~~interest expense is primarily attributable to~~ the ~~maturity and retirement of lease obligations.~~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 operations consist of First Guard and Southern Pioneer.

~~Underwriting results of our insurance operations are summarized below.~~

First Quarter
2023 2022
Underwriting gain attributable to:
First Guard $ 1,862 $ 732
Southern Pioneer (111) (337)
Pre-tax underwriting gain 1,751 395
Income tax expense 368 83
Net underwriting gain $ 1,383 $ 312

Table of Contents

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

Underwriting results of our insurance operations are summarized below.


	First Quarter
	2024		2023
Underwriting gain attributable to:
First Guard	$	800	$	1,862
Southern Pioneer	59		(111)
Pre-tax underwriting gain	859		1,751
Income tax expense	180		368
Net underwriting gain	$	679	$	1,383

Earnings of our insurance operations are summarized below.

First Quarter

2023

2022

First Quarter

2024

Premiums earned

14,764

14,169

Insurance losses

8,596

9,588

Insurance losses

Underwriting expenses

4,417

4,186

Pre-tax underwriting gain

1,751

395

Pre-tax underwriting gain

Other income and expenses

Investment income

585

213

Other income (expenses)

451

756

Investment income

Other income and expenses

Total other income

1,036

969

Earnings before income taxes

2,787

1,364

Earnings before income taxes

Income tax expense

618

320

Contribution to net earnings

2,169

1,044

Contribution to net earnings

Insurance premiums and other on the consolidated statement of earnings includes premiums earned, investment income, other income, and commissions.

First Guard

First Guard is a direct underwriter of commercial truck insurance, selling physical damage and nontrucking liability insurance to truckers. 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 insurer. A summary of First Guard’s underwriting results follows.


		First Quarter
		2023				2022
		Amount		%		Amount		%
		First Quarter
		First Quarter
		First Quarter
		2024
		2024
		2024
		Amount
		Amount
		Amount
Premiums earned
Premiums earned
Premiums earned	Premiums earned	$	8,899	100.0	%	$	8,731	100.0	%

Insurance losses	Insurance losses	5,244		58.9	%	6,188		70.9	%

Insurance losses

Insurance losses
Underwriting expenses
Underwriting expenses
Underwriting expenses	Underwriting expenses	1,793		20.1	%	1,811		20.7	%
Total losses and expenses	Total losses and expenses	7,037		79.0	%	7,999		91.6	%
Total losses and expenses
Total losses and expenses
Pretax underwriting gain	Pretax underwriting gain	$	1,862			$	732
Pretax underwriting gain
Pretax underwriting gain

First ~~Guard’s~~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 ~~was 58.9%~~(72.8%) than it had during the first quarter of 2023 as compared to 70.9% during the first quarter of 2022. First Guard’s underwriting results in 2023 were in line with its historical performance despite cost inflation in property and physical damage claims, which began to accelerate in 2022.

(58.9%).

Table of Contents

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
		2023				2022
		Amount		%		Amount		%
		First Quarter
		First Quarter
		First Quarter
		2024
		2024
		2024
		Amount
		Amount
		Amount
Premiums earned
Premiums earned
Premiums earned	Premiums earned	$	5,865	100.0	%	$	5,438	100.0	%

Insurance losses	Insurance losses	3,352		57.2	%	3,400		62.5	%

Insurance losses

Insurance losses
Underwriting expenses
Underwriting expenses
Underwriting expenses	Underwriting expenses	2,624		44.7	%	2,375		43.7	%
Total losses and expenses	Total losses and expenses	5,976		101.9	%	5,775		106.2	%
Total losses and expenses
Total losses and expenses
Pretax underwriting gain (loss)	Pretax underwriting gain (loss)	$	(111)			$	(337)
Pretax underwriting gain (loss)
Pretax underwriting gain (loss)

Southern Pioneer’s ~~ratio of losses and loss adjustment expenses to premiums earned~~underwriting gain was ~~57.2% during the first quarter of 2023 as compared to 62.5% during the first quarter of 2022. Southern Pioneer’s underwriting losses were~~ primarily attributable to a lower expense ratio. The prior year’s higher expense ratio ~~an increase~~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
		2023		2022
	First Quarter						First Quarter
	2024					2024		2023
Interest, dividends and other investment income:	Interest, dividends and other investment income:
First Guard
First Guard
First Guard	First Guard	$	387	$	74
Southern Pioneer	Southern Pioneer	198		139
Pre-tax investment income	Pre-tax investment income	585		213
Income tax expense	Income tax expense	123		45
Net investment income	Net investment income	$	462	$	168

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.

Table of Contents

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

2023

2022

First Quarter

2024

Oil and gas revenues

12,223

9,812

Oil and gas production costs

5,471

3,819

Oil and gas production costs

Depreciation, depletion and accretion

2,850

1,519

Depreciation, depletion and accretion

Gain on sale of properties

General and administrative expenses

1,799

553

Earnings before income taxes

2,103

3,921

Earnings before income taxes

Income tax expense

433

997

Contribution to net earnings

1,670

2,924

Contribution to net earnings

Our oil and gas business is highly dependent on oil and natural gas prices. The ~~average West Texas Intermediate price per barrel for~~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 ~~2023 was approximately $76.11 as compared to approximately $94.82~~2024, Abraxas Petroleum sold additional undeveloped reserves, which resulted in ~~the first quarter~~a gain of ~~2022. It is expected that the prices of~~$481.

Abraxas Petroleum

Abraxas Petroleum operates oil and gas ~~commodities will remain volatile, which will be reflected~~properties in ~~our financial results.~~the Permian Basin of West Texas. Earnings for Abraxas Petroleum are summarized below.


	First Quarter
	2024		2023
Oil and gas revenues	$	5,868	$	7,252

Oil and gas production costs	2,819		3,131
Depreciation, depletion and accretion	1,547		1,666
Gain on sale of properties	(481)		—
General and administrative expenses	596		1,246
Earnings before income taxes	1,387		1,209
Income tax expense	319		278
Contribution to net earnings	$	1,068	$	931

Table of Contents

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
2023 2022
Oil and gas revenues $ 4,971 $ 9,812
Oil and gas production costs 2,340 3,819
Depreciation, depletion and accretion 1,184�� 1,519
General and administrative expenses 553 553
Earnings before income taxes 894 3,921
Income tax expense 155 997
Contribution to net earnings $ 739 $ 2,924

~~Table of Contents~~

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

~~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~~
	~~2023~~
~~Oil and gas revenues~~	$	~~7,252~~

~~Oil and gas production costs~~	~~3,131~~
~~Depreciation, depletion and accretion~~	~~1,666~~
~~General and administrative expenses~~	~~1,246~~
~~Earnings before income taxes~~	~~1,209~~
~~Income tax expense~~	~~278~~
~~Contribution to net earnings~~	$	~~931~~


	First Quarter
	2024		2023
Oil and gas revenues	$	3,642	$	4,971

Oil and gas production costs	1,680		2,340
Depreciation, depletion and accretion	1,245		1,184
General and administrative expenses	638		553
Earnings before income taxes	79		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
		2023		2022
		First Quarter
		First Quarter
		First Quarter
		2024
		2024
		2024
Licensing and media revenues
Licensing and media revenues
Licensing and media revenues	Licensing and media revenues	$	595	$	634

Licensing and media costs	Licensing and media costs	452		953

Licensing and media costs

Licensing and media costs
General and administrative expenses	General and administrative expenses	21		17
Earnings before income taxes		122		(336)
General and administrative expenses
General and administrative expenses
Earnings (loss) before income taxes
Earnings (loss) before income taxes
Earnings (loss) before income taxes
Income tax expense (benefit)
Income tax expense (benefit)
Income tax expense (benefit)	Income tax expense (benefit)	31		(85)
Contribution to net earnings	Contribution to net earnings	$	91	$	(251)
Contribution to net earnings
Contribution to net earnings

Licensing revenue was lower during 2024 as compared to 2023 primarily due to fewer licensing events in the first quarter of 2024.

We acquired Maxim 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.

Investment Gains and Investment Partnership Gains

Investment gains net of tax for the first quarter of 2024 and 2023 were $1,332 and ~~2022 were~~ $2,865, ~~and $175,~~ 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
2023 2022
Investment partnership gains (losses) $ 72,588 $ (6,661)
Tax expense (benefit) 16,559 (1,860)
Contribution to net earnings $ 56,029 $ (4,801)


	First Quarter
	2024		2023
Investment partnership gains	$	21,985	$	72,588
Tax expense	4,837		16,559
Contribution to net earnings	$	17,148	$	56,029

Table of Contents

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

Investment partnership gains include gains/losses from changes in market values of underlying investments and dividends earned by the partnerships. Dividend 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 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 in the Company’s consolidated financial results.

Investment gains and losses in ~~2023~~2024 and ~~2022~~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
		2023		2022
Interest expense on line of credit		$	167	$	—




Interest expense on note payable and other borrowings
Interest expense on note payable and other borrowings
Interest expense on note payable and other borrowings
Tax benefit
Tax benefit
Tax benefit	Tax benefit	38		—
Interest expense net of tax	Interest expense net of tax	$	129	$	—
Interest expense net of tax
Interest expense net of tax

On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000. ~~The~~There was no balance ofon the line of credit ~~was $6,500 and $10,000~~ on March 31, ~~2023 and~~2024, or December ~~31, 2022, respectively. Our interest rate was 7.3% on March~~ 31, 2023.

Corporate and Other

Corporate expenses exclude the activities of the restaurant, insurance, brand licensing, and oil and gas businesses. Corporate and other net losses during the first quarter of ~~2023~~2024 were relatively consistent to the same period during ~~2022.~~2023.

Income Taxes

Income tax expense for the first quarter of ~~2023~~2024 was ~~$19,738~~$6,816 compared to an income tax ~~benefit~~expense of ~~$171~~$19,738 for the first quarter of ~~2022.~~2023. The variance in income taxes between ~~2023~~2024 and ~~2022~~2023 is attributable to taxes on income generated by the investment partnerships. Investment partnership pretax gains were $21,985 during the first quarter of 2024 compared to pretax gains of $72,588 during the first quarter of ~~2023 compared to pretax losses of $6,661 during the first quarter of 2022.~~2023.

Financial Condition

Consolidated cash and investments are summarized below.


		March 31, 2023		December 31, 2022		March 31, 2024	December 31, 2023
Cash and cash equivalents	Cash and cash equivalents	$	39,363	$	37,467
Investments	Investments	79,652		69,466
Fair value of interest in investment partnerships	Fair value of interest in investment partnerships	507,499		383,004
Total cash and investments	Total cash and investments	626,514		489,937
Less: portion of Company stock held by investment partnerships	Less: portion of Company stock held by investment partnerships	(276,656)		(227,210)
Carrying value of cash and investments on balance sheet	Carrying value of cash and investments on balance sheet	$	349,858	$	262,727

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

Table of Contents

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				First Quarter
		2023		2022		2024	2023
Net cash provided by operating activities	Net cash provided by operating activities	$	19,923	$	21,092
Net cash used in investing activities	Net cash used in investing activities	(12,735)		(16,077)
Net cash used in financing activities	Net cash used in financing activities	(5,050)		(1,564)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	8		(23)
Increase in cash, cash equivalents and restricted cash	Increase in cash, cash equivalents and restricted cash	$	2,146	$	3,428

The increase in cash during ~~2023~~2024 was ~~$2,146~~$6,470 compared to ~~$3,428~~$2,146 during ~~2022. We intend~~2023. The increase is primarily due to ~~meet~~a decrease in cash used in investing activities and financing activities. Cash from operating activities in the ~~working capital needs~~first quarter of ~~our operating subsidiaries principally through anticipated cash flows generated~~2024 remained consistent with the first quarter of 2023.

Cash used in investing activities was $1,493 lower during the first quarter of 2024 as compared to 2023. The decrease is primarily due to lower investment activity during 2024. Purchases of investments, net of proceeds from ~~operations and cash~~redemptions of fixed maturity securities, decreased by $2,655 in 2024 compared to 2023.

Cash used by financing activities was $3,647 lower during the first quarter of 2024 as compared to 2023 primarily due to principal payments on ~~hand. We continually review available financing alternatives.~~

~~Biglari Holdings Line of Credit~~

~~On September 13, 2022, Biglari Holdings entered into a~~the Company’s line of credit in ~~an aggregate principal amount~~2023.

Biglari Holdings’ Line of ~~up to~~Credit

Biglari Holdings’ available line of credit is $30,000. The line of credit ~~will be available~~matures on ~~a revolving basis until~~ September 12, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants. ~~The~~As of March 31, 2024, we were in compliance with all covenants. There was no balance on the line of credit on March 31, ~~2023 was $6,500. The line of credit was paid in full in April~~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 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, ~~2022.~~2023.

Recently Issued Accounting Pronouncements

No recently issued accounting pronouncements were applicable for this Quarterly Report on Form 10-Q.

Table of Contents

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 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

Not applicable.

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, ~~2023.~~2024.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, ~~2023~~2024, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II 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

There have been no material changes from the risk factors as previously disclosed in Item 1A to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None~~From March 4 through March 15, 2024, The Lion Fund, L.P., 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 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended. The purchases were made through open market transactions.


	Total Number of Class A Shares Purchased	Average Price Paid per Class A Share		Total Number of Class B Shares Purchased	Average Price Paid per Class B Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum 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, 2024	1,021	$	953.21	11,405	$	188.27	—	—
Total	1,021			11,405			—

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


Exhibit Number						Description

~~31.01~~31.01*						Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~31.02~~31.02*						Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.01*						Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101						Interactive Data Files.

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

_________________


*			Furnished herewith.

2930

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 ~~5, 2023~~10, 2024	By:	/s/ BRUCE LEWIS
		Bruce Lewis
		Controller

3031


For the first quarter of 2022
Balance at December 31, 2021	$	1,138	$	381,788	$	608,528	$	(1,907)	$	(401,851)	$	—	$	587,696
Net earnings (loss)					(298)								(298)
Other comprehensive loss							(231)						(231)
Adjustment for holdings in investment partnerships									130				130
Balance at March 31, 2022	$	1,138	$	381,788	$	608,230	$	(2,138)	$	(401,721)	$	—	$	587,297