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 ~~September 30, 2022~~March 31, 2023


☐			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,	TXTexas	78259
(Address of principal executive offices)		(Zip Code)

(210) 344-3400

Registrant’s telephone number, including area code

~~17802 IH 10 West, Suite 400, San Antonio, TX 78257~~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 ~~November 1, 2022:~~May 3, 2023:


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 ~~September~~3 ~~30, 2022~~ and December 31, ~~2021~~ 20 2 2	1
	Consolidated Statements of Earnings — First Quarter 202 ~~Third~~3 ~~Quarter~~ and ~~First~~ 202 ~~Nine~~2 ~~Months 2022 and 2021~~	2
	Consolidated Statements of Comprehensive Income — First Quarter 202 ~~Third~~3 and 20 2 2	3
	Consolidated Statements of Changes in Shareholders’ Equity — First Quarter 2023 and ~~First~~ ~~Nine~~ ~~Months~~ 2022 ~~and 2021~~	3
	Consolidated Statements of Cash Flows — First Quarter 202 ~~Nine~~3 ~~Months 2022~~ and ~~2021~~20 2 2	4
	~~Consolidated Statements of Changes in Shareholders’ Equity — First~~ ~~Nine~~ ~~Months 2022 and 2021~~	5
	Notes to Consolidated Financial Statements	75
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2018
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2928
Item 4.	Controls and Procedures	2928

Part II – Other Information

Item 1.	Legal Proceedings	3029
Item 1A.	Risk Factors	3029
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3029
Item 3.	Defaults Upon Senior Securities	3029
Item 4.	Mine Safety Disclosures	3029
Item 5.	Other Information	3029
Item 6.	Exhibits	3029
Signatures		3130

Table of Contents

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIGLARI HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)
September 30,
2022 December 31,
2021
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 64,842 $ 42,349
Investments 70,032 83,061
Receivables 25,826 28,508
Inventories 3,704 3,803
Other current assets 13,147 7,088
Total current assets 177,551 164,809
Property and equipment 414,497 349,351
Operating lease assets 38,539 42,538
Goodwill and other intangible assets 75,933 77,010
Investment partnerships 144,864 250,399
Other assets 10,761 10,700
Total assets $ 862,145 $ 894,807
Liabilities and shareholders’ equity
Liabilities
Current liabilities:
Accounts payable and accrued expenses $ 101,503 $ 100,467
Loss and loss adjustment expenses 14,613 14,609
Unearned premiums 12,493 11,667
Current portion of lease obligations 17,093 16,898
Total current liabilities 145,702 143,641
Lease obligations 95,980 104,479
Line of credit 30,000 —
Deferred taxes 28,515 46,533
Asset retirement obligations 14,721 10,389
Other liabilities 1,819 2,069
Total liabilities 316,737 307,111
Shareholders’ equity
Common stock 1,138 1,138
Additional paid-in capital 381,788 381,788
Retained earnings 566,455 608,528
Accumulated other comprehensive loss (3,777) (1,907)
Treasury stock, at cost (409,119) (401,851)
Biglari Holdings Inc. shareholders’ equity 536,485 587,696
Noncontrolling interests 8,923 —
Total shareholders' equity 545,408 587,696
Total liabilities and shareholders’ equity $ 862,145 $ 894,807


	March 31, 2023		December 31, 2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	39,363	$	37,467
Investments	79,652		69,466
Receivables	27,044		29,375
Inventories	3,755		3,851
Other current assets	13,542		10,495
Total current assets	163,356		150,654
Property and equipment	392,904		400,725
Operating lease assets	33,532		34,739
Goodwill and other intangible assets	76,672		76,550
Investment partnerships	230,843		155,794
Other assets	9,911		10,012
Total assets	$	907,218	$	828,474
Liabilities and shareholders’ equity
Liabilities
Current liabilities:
Accounts payable and accrued expenses	$	79,244	$	78,616
Unpaid losses and loss adjustment expenses	15,514		16,805
Unearned premiums	13,445		12,495
Current portion of lease obligations	16,109		16,981
Line of credit	6,500		10,000
Total current liabilities	130,812		134,897
Lease obligations	90,135		91,844
Deferred taxes	49,809		31,343
Asset retirement obligations	14,240		14,068
Other liabilities	1,024		754
Total liabilities	286,020		272,906
Shareholders’ equity
Common stock	1,138		1,138
Additional paid-in capital	381,788		381,788
Retained earnings	641,396		576,510
Accumulated other comprehensive loss	(2,458)		(2,790)
Treasury stock, at cost	(409,919)		(409,680)
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	$	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)
Third Quarter First Nine Months
2022 2021 2022 2021
(Unaudited) (Unaudited)
Revenues
Restaurant operations $ 59,437 $ 59,144 $ 179,608 $ 196,424
Insurance premiums and other 16,312 14,723 47,745 43,729
Oil and gas 14,380 7,353 38,632 24,310
Licensing and media 1,905 863 3,788 2,695
92,034 82,083 269,773 267,158
Cost and expenses
Restaurant cost of sales 36,162 41,694 107,469 129,297
Insurance losses and underwriting expenses 13,245 10,672 40,812 31,733
Oil and gas production costs 4,090 2,050 11,752 6,957
Licensing and media costs 345 880 1,975 1,749
Selling, general and administrative 15,469 16,889 48,275 50,848
Impairments — — 20 559
Depreciation, depletion, and amortization 8,456 7,682 24,127 22,239
Interest expense on leases 1,372 1,462 4,169 4,619
Interest expense on borrowings 67 — 67 1,121
79,206 81,329 238,666 249,122
Other income
Investment gains (losses) (849) 4,534 (4,184) 6,465
Investment partnership gains (losses) 29,658 (20,231) (82,244) 27,344
Total other income (expenses) 28,809 (15,697) (86,428) 33,809
Earnings (loss) before income taxes 41,637 (14,943) (55,321) 51,845
Income tax expense (benefit) 9,598 (4,274) (13,282) 11,544
Net earnings (loss) 32,039 (10,669) (42,039) 40,301
Earnings attributable to noncontrolling interest 34 — 34 —
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders $ 32,005 $ (10,669) $ (42,073) $ 40,301
Net earnings (loss) per equivalent Class A share * $ 109.13 $ (33.74) $ (140.30) $ 125.79


	First Quarter
	2023		2022
	(Unaudited)
Revenues
Restaurant operations	$	61,129	$	59,847
Insurance premiums and other	16,229		15,079
Oil and gas	12,223		9,812
Licensing and media	595		634
Total revenues	90,176		85,372
Costs and expenses
Restaurant cost of sales	32,738		35,352
Insurance losses and underwriting expenses	13,013		13,774
Oil and gas production costs	5,471		3,819
Licensing and media costs	452		953
Selling, general and administrative	17,263		16,224
Impairments	776		—
Depreciation, depletion, and amortization	9,940		7,871
Interest expense on leases	1,307		1,412
Interest expense on borrowings	167		—
Total costs and expenses	81,127		79,405
Other income
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)
Earnings attributable to noncontrolling interest	651		—
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders	$	64,886	$	(298)

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

*Net earnings (loss) per average equivalent Class B share outstanding are one-fifth of the average equivalent Class A share or ~~$21.83 and $(28.06)~~$44.46 for the ~~third~~first quarter of 2023 and ~~first nine months of 2022, respectively, and $(6.75) and $25.16~~$(0.20) for the ~~third~~first quarter ~~and first nine months~~ of ~~2021, respectively.~~2022.

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)

Third Quarter First Nine Months
2022 2021 2022 2021
(Unaudited) (Unaudited)
Net earnings (loss) $ 32,039 $ (10,669) $ (42,039) $ 40,301
Foreign currency translation (618) (49) (1,870) (378)
Comprehensive income (loss) 31,421 (10,718) (43,909) 39,923
Comprehensive income attributable to noncontrolling interests 34 — 34 —
Total comprehensive income (loss) attributable to Biglari Holdings Inc. shareholders $ 31,387 $ (10,718) $ (43,943) $ 39,923

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


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

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

BIGLARI HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)


		First Nine Months					First Quarter
		2022		2021			2023		2022
		(Unaudited)					(Unaudited)
Operating activities	Operating activities					Operating activities
Net earnings (loss)	Net earnings (loss)	$	(42,039)	$	40,301	Net earnings (loss)	$	65,537	$	(298)
Adjustments to reconcile net earnings (loss) to operating cash flows:	Adjustments to reconcile net earnings (loss) to operating cash flows:					Adjustments to reconcile net earnings (loss) to operating cash flows:
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	24,127		22,239		Depreciation, depletion, and amortization	9,940		7,871
Provision for deferred income taxes	Provision for deferred income taxes	(22,289)		16,625		Provision for deferred income taxes	18,450		(4,750)
Asset impairments and other non-cash expenses		20		696
Gains on disposal of assets		(905)		(306)
Investment and investment partnership (gains) losses		86,428		(34,461)
Asset impairments						Asset impairments	776		—
Gains on sale of assets						Gains on sale of assets	(1,590)		(133)
Investment and investment partnerships (gains) losses						Investment and investment partnerships (gains) losses	(76,226)		6,436
Distributions from investment partnerships	Distributions from investment partnerships	51,200		172,420		Distributions from investment partnerships	—		4,500
Changes in receivables, inventories and other assets	Changes in receivables, inventories and other assets	7,240		3,608		Changes in receivables, inventories and other assets	2,006		4,633
Changes in accounts payable and accrued expenses	Changes in accounts payable and accrued expenses	(4,028)		(9,877)		Changes in accounts payable and accrued expenses	1,030		2,833
Net cash provided by operating activities	Net cash provided by operating activities	99,754		211,245		Net cash provided by operating activities	19,923		21,092
Investing activities	Investing activities					Investing activities
Capital expenditures	Capital expenditures	(23,437)		(46,486)		Capital expenditures	(5,929)		(9,293)
Proceeds from property and equipment disposals	Proceeds from property and equipment disposals	2,201		2,749		Proceeds from property and equipment disposals	2,140		109
Acquisition of a business, net of cash acquired		(54,899)		—
Purchases of limited partner interests		(23,886)		(4,800)
Purchases of interests in limited partnerships						Purchases of interests in limited partnerships	(2,700)		(3,000)
Purchases of investments	Purchases of investments	(110,837)		(81,923)		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	108,394		74,678		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	(102,464)		(55,782)		Net cash used in investing activities	(12,735)		(16,077)
Financing activities	Financing activities					Financing activities
Proceeds from revolving credit facility		30,000		—
Principal payments on long-term debt		—		(149,952)
Repayments of borrowings						Repayments of borrowings	(3,500)		—
Principal payments on direct financing lease obligations	Principal payments on direct financing lease obligations	(4,647)		(4,634)		Principal payments on direct financing lease obligations	(1,550)		(1,564)
Net cash provided by (used in) financing activities		25,353		(154,586)
Effect of exchange rate changes on cash		(150)		(85)
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	22,493		792		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	43,687		29,666		Cash, cash equivalents and restricted cash at beginning of year	38,805		43,687
Cash, cash equivalents and restricted cash at end of third quarter		$	66,180	$	30,458
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 Nine Months					First Quarter
		2022		2021			2023		2022
		(Unaudited)					(Unaudited)
Cash and cash equivalents	Cash and cash equivalents	$	64,842	$	27,795	Cash and cash equivalents	$	39,363	$	45,777
Restricted cash in other long-term assets	Restricted cash in other long-term assets	1,338		2,663		Restricted cash in other long-term assets	1,588		1,338
Cash, cash equivalents and restricted cash at end of third quarter		$	66,180	$	30,458
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.

~~CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY~~

~~(Unaudited)~~

~~(dollars in thousands)~~

Biglari Holdings Inc. Shareholders’ Equity
Common
Stock Additional Paid-In
Capital Retained
Earnings Accumulated Other Comprehensive Income (Loss) Treasury
Stock Non-controlling Interests Total
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 to treasury stock for holdings in investment partnerships 130 130
Balance at March 31, 2022 $ 1,138 $ 381,788 $ 608,230 $ (2,138) $ (401,721) $ — $ 587,297
Net earnings (loss) (73,780) (73,780)
Other comprehensive loss (1,021) (1,021)
Adjustment to treasury stock for holdings in investment partnerships (6,760) (6,760)
Balance at June 30, 2022 $ 1,138 $ 381,788 $ 534,450 $ (3,159) $ (408,481) $ — $ 505,736
Net earnings 32,005 34 32,039
Other comprehensive loss (618) (618)
Adjustment to treasury stock for holdings in investment partnerships (638) (638)
Transactions with noncontrolling interests 8,889 8,889
Balance at September 30, 2022 $ 1,138 $ 381,788 $ 566,455 $ (3,777) $ (409,119) $ 8,923 $ 545,408

~~Table of Contents~~

Biglari Holdings Inc. Shareholders’ Equity
Common
Stock Additional Paid-In Capital Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Treasury
Stock Non-controlling interests Total
Balance at December 31, 2020 $ 1,138 $ 381,788 $ 573,050 $ (1,531) $ (389,617) $ — $ 564,828
Net earnings 71,707 71,707
Other comprehensive loss (444) (444)
Adjustment to treasury stock for holdings in investment partnerships 3,049 3,049
Balance at March 31, 2021 $ 1,138 $ 381,788 $ 644,757 $ (1,975) $ (386,568) $ — $ 639,140
Net earnings (loss) (20,737) (20,737)
Other comprehensive income 115 115
Adjustment to treasury stock for holdings in investment partnerships (5,026) (5,026)
Balance at June 30, 2021 $ 1,138 $ 381,788 $ 624,020 $ (1,860) $ (391,594) $ — $ 613,492
Net earnings (loss) (10,669) (10,669)
Other comprehensive loss (49) (49)
Adjustment to treasury stock for holdings in investment partnerships (4,208) (4,208)
Balance at September 30, 2021 $ 1,138 $ 381,788 $ 613,351 $ (1,909) $ (395,802) $ — $ 598,566

~~See accompanying Notes to Consolidated Financial Statements.~~

~~Table of Contents~~

~~BIGLARI HOLDINGS INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2022~~March 31, 2023

(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 ~~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, ~~2021.~~2022.

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 ~~finance~~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 ~~September 30, 2022,~~March 31, 2023, Mr. Biglari beneficially owns shares of the Company that represent approximately 66.3% of the economic interest and approximately 70.4% of the voting interest.

Business Acquisition

On September 14, 2022, the Company ~~completed the purchase of 685,505 shares of~~purchased Series A Preferred Stock (the ~~"Preferred Shares"~~“Preferred Shares”) of Abraxas Petroleum Corporation ~~("Abraxas Petroleum")~~ for a purchase price of ~~$80,000.~~$80 million. On October 26, 2022, the Company ~~converted~~exchanged the ~~preferred stock to~~Preferred Shares for 90% of the outstanding common stock of Abraxas Petroleum. We have concluded that Abraxas Petroleum is a consolidated entity and have recorded noncontrolling interests attributable to the interest held by other shareholders. The Company used working capital including its line of credit to fund the purchase of the Preferred Shares. Abraxas Petroleum operates oil and natural gas properties in the Permian Basin. The Company’s financial results include the results of Abraxas Petroleum from the acquisition date to the end of the third quarter. The revenues and operating results for Abraxas Petroleum were not significant to the Company for the third quarter.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned ~~and majority-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.~~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~~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~~weighted-average common shares outstanding. However, these shares are legally outstanding.

~~On June 8, 2022,~~ The ~~Lion Fund II, L.P. transferred 83,465~~following table presents shares ~~of Biglari Holdings’ Class A common stock~~authorized, issued and ~~890,272 shares of Biglari Holdings’ Class B common stock to The Lion Fund, L.P.~~outstanding on March 31, 2023 and December 31, 2022.


	March 31, 2023		December 31, 2022
	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 following table presents shares authorized, issued and outstanding on September 30, 2022 and December 31, 2021.~~

September 30, 2022 December 31, 2021
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

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~~weighted-average equivalent Class A common stock for earnings per share. ~~There are no dilutive securities outstanding.~~


		Third Quarter		First Nine Months
		2022	2021	2022	2021		March 31, 2023	March 31, 2022
Equivalent Class A common stock outstanding	Equivalent Class A common stock outstanding	620,592	620,592	620,592	620,592	Equivalent Class A common stock outstanding	620,592	620,592
Proportional ownership of Company stock held by investment partnerships	Proportional ownership of Company stock held by investment partnerships	327,317	304,356	320,711	300,215	Proportional ownership of Company stock held by investment partnerships	328,681	316,020
Equivalent Class A common stock for earnings per share	Equivalent Class A common stock for earnings per share	293,275	316,236	299,881	320,377	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 either available-for-sale or held-to-maturity and re-evaluate the classification at each balance sheet date. Securities classified as held-to-maturity are carried at amortized cost, reflecting the ability and intent to hold the securities to maturity.available-for-sale. Realized gains and losses on disposals of investments are determined on a specific identification basis. Dividends 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. However, we consider investment gains and losses, whether realized or unrealized, as non-operating.

Investment ~~losses~~gains for the ~~third~~first quarter of 2023 and ~~first nine months of~~ 2022 were ~~$849~~$3,638 and ~~$4,184, respectively. Investment gains in the third quarter and first nine months of 2021 were $4,534 and $6,465,~~$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 and~~partnerships. Biglari Capital Corp. is ~~an entity~~ solely owned by Mr. Biglari.

~~Table of Contents~~

~~Note 4. Investment Partnerships(continued)~~

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, 2021 $ 474,201 $ 223,802 $ 250,399
Investment partnership gains (losses) (119,864) (37,620) (82,244)
Distributions (net of contributions) (16,023) (16,023)
Changes in proportionate share of Company stock held 7,268 (7,268)
Partnership interest at September 30, 2022 $ 338,314 $ 193,450 $ 144,864


	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			Fair Value		Company Common Stock		Carrying Value
Partnership interest at December 31, 2020		$	590,926	$	171,376	$	419,550
Partnership interest at December 31, 2021								Partnership interest at December 31, 2021	$	474,201	$	223,802	$	250,399
Investment partnership gains (losses)	Investment partnership gains (losses)	110,690		83,346		27,344		Investment partnership gains (losses)	(909)		5,752		(6,661)
Distributions (net of contributions)	Distributions (net of contributions)	(167,620)				(167,620)		Distributions (net of contributions)	(1,500)				(1,500)
Changes in proportionate share of Company stock held	Changes in proportionate share of Company stock held			6,185		(6,185)		Changes in proportionate share of Company stock held			(130)		130
Partnership interest at September 30, 2021		$	533,996	$	260,907	$	273,089
Partnership interest at March 31, 2022								Partnership interest at March 31, 2022	$	471,792	$	229,424	$	242,368

Table of Contents

Note 4. Investment Partnerships(continued)

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


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Carrying value of investment partnerships	Carrying value of investment partnerships	$	144,864	$	250,399	Carrying value of investment partnerships	$	230,843	$	155,794
Deferred tax liability related to investment partnerships	Deferred tax liability related to investment partnerships	(22,176)		(44,532)		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	$	122,688	$	205,867	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 expect that a majority of the $40,410 deferred tax liability 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 ~~$409,119~~$409,919 and ~~$401,851 at September 30, 2022~~$409,680 as of March 31, 2023 and December 31, ~~2021, respectively, and was recorded as treasury stock.~~2022, 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.


		Third Quarter				First Nine Months				First Quarter
		2022		2021		2022		2021				2023		2022
Gains (losses) from investment partnerships	Gains (losses) from investment partnerships	$	29,658	$	(20,231)	$	(82,244)	$	27,344		Gains (losses) from investment partnerships	$	72,588	$	(6,661)
Tax expense (benefit)	Tax expense (benefit)	6,601		(4,946)		(20,153)		6,175			Tax expense (benefit)	16,559		(1,860)
Contribution to net earnings (loss)		$	23,057	$	(15,285)	$	(62,091)	$	21,169
Contribution to net earnings											Contribution to net earnings	$	56,029	$	(4,801)

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 ~~from Biglari Holdings to Biglari Capital Corp.~~accrued during the first ~~nine months~~quarters of ~~2022~~2023 and ~~2021.~~2022.

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 September 30, 2022 $ 247,357 $ 307,446
Total liabilities as of September 30, 2022 $ 9,973 $ 162,520
Revenue for the first nine months of 2022 $ (46,341) $ (88,378)
Earnings for the first nine months of 2022 $ (46,544) $ (89,771)
Biglari Holdings’ ownership interest as of September 30, 2022 88.2 % 87.7 %
Total assets as of December 31, 2021 $ 114,749 $ 564,022
Total liabilities as of December 31, 2021 $ 7,763 $ 130,417
Revenue for the first nine months of 2021 $ 35,639 $ 94,078
Earnings for the first nine months of 2021 $ 35,584 $ 93,548
Biglari Holdings’ ownership interest as of September 30, 2021 62.4 % 93.9 %


	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		%

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.


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Land	Land	$	142,813	$	144,605	Land	$	139,705	$	143,313
Buildings	Buildings	151,138		148,605		Buildings	149,081		151,627
Land and leasehold improvements	Land and leasehold improvements	147,765		147,349		Land and leasehold improvements	154,641		151,496
Equipment	Equipment	230,712		224,581		Equipment	215,715		222,661
Oil and gas properties	Oil and gas properties	140,916		74,147		Oil and gas properties	144,692		144,888
Construction in progress	Construction in progress	5,744		2,815		Construction in progress	900		2,238
		819,088		742,102			804,734		816,223
Less accumulated depreciation, depletion, and amortization	Less accumulated depreciation, depletion, and amortization	(404,591)		(392,751)		Less accumulated depreciation, depletion, and amortization	(411,830)		(415,498)
Property and equipment, net	Property and equipment, net	$	414,497	$	349,351	Property and equipment, net	$	392,904	$	400,725

Depletion expense related to oil and gas properties was ~~$4,345~~$2,648 and ~~$5,875~~$1,380 during the first ~~nine months~~quarter of ~~2022~~2023 and ~~2021,~~2022, respectively.

The Company recorded an impairment to restaurant long-lived assets of ~~$559~~$776 in the first ~~nine months~~quarter of ~~2021~~2023 related to underperforming stores. ~~The fair value of the long-lived assets was determined based on Level 3 inputs using a discounted cash flow model and quoted prices for the properties.~~ There were no impairments in the first quarter of ~~property~~2022.

Property and equipment held for sale of $8,012 and $4,700 are recorded in ~~2022.~~

Asother current assets as of ~~September 30,~~March 31, 2023 and December 31, 2022, ~~$5,002 of property and equipment is recorded~~respectively. The assets classified as held for sale ~~within other current assets.~~include seven properties owned by Steak n Shake, which were previously operated restaurants, and Abraxas Petroleum’s office building.

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

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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, ~~2021~~2022
Goodwill	$	~~53,547~~53,813
Accumulated impairment losses	(300)
	$	53,513
Change in foreign exchange rates during the first ~~nine months~~quarter of ~~2022~~2023	~~(83)~~9
Goodwill at ~~September 30, 2022~~March 31, 2023	$	~~53,464~~53,522

~~We evaluate goodwill~~Goodwill and ~~any~~ indefinite-lived intangible ~~assets for~~asset impairment ~~annually, or more frequently if circumstances indicate impairment may have occurred. Goodwill impairment occurs when~~reviews include determining the estimated fair ~~value~~values of ~~goodwill~~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 ~~less than its carrying value. GAAP allows entities testing for impairment the option of performing a qualitative assessment before calculating~~required in estimating the fair value of a reporting unit ~~for~~and in performing impairment reviews. Due to the ~~goodwill impairment test. We use both qualitative~~inherent subjectivity and ~~quantitative assessments. The valuation methodology~~uncertainty in forecasting future cash flows and ~~underlying financial information included in our quantitative determination~~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, ~~require significant management judgments. We use both market and income approaches~~the excess is charged to ~~derive~~earnings as an impairment loss. If the carrying value of a reporting unit exceeds the estimated fair value of the reporting ~~units utilizing a quantitative assessment. The judgments in these two approaches include, but are not~~unit, then the excess, limited to ~~comparable market multiples, long-term projections~~the carrying amount of ~~future financial performance, and the selection of appropriate discount rates used~~goodwill, will be charged 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 loss. There was no impairment recorded infor goodwill during the first ~~nine months~~quarters of ~~2022~~2023 or ~~2021. Western Sizzlin has experienced a decline in its franchised units for several years. If Western Sizzlin’s franchised units continue to decline, an impairment of its goodwill may be necessary.~~2022.

Other Intangible Assets

Intangible assets with indefinite lives are composed of the following.

Trade Names Lease Rights Total
Balance at December 31, 2021 $ 15,876 $ 7,587 $ 23,463
Impairment to lease rights — (20) (20)
Change in foreign exchange rates during the first nine months of 2022 — (974) (974)
Balance at September 30, 2022 $ 15,876 $ 6,593 $ 22,469

~~Intangible assets with indefinite lives consist of trade names and lease rights. Fair values were determined using Level 3 inputs and available market data.~~


	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

Note 7. Restaurant Operations Revenues

Restaurant operations revenues were as follows.


		Third Quarter				First Nine Months				First Quarter
		2022		2021		2022		2021				2023		2022
Net sales	Net sales	$	37,448	$	41,916	$	113,345	$	146,269		Net sales	$	36,894	$	38,216
Franchise partner fees	Franchise partner fees	15,880		11,508		47,929		31,744			Franchise partner fees	17,912		15,624
Franchise royalties and fees	Franchise royalties and fees	5,089		4,865		15,472		14,594			Franchise royalties and fees	4,258		5,146
Other	Other	1,020		855		2,862		3,817			Other	2,065		861
		$	59,437	$	59,144	$	179,608	$	196,424			$	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.

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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 ~~during the year~~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 ~~third~~first quarter of ~~2022~~2023 and ~~2021,~~2022, restaurant operations recognized ~~$5,362~~$5,575 and $4,277, respectively, in franchise partner fees related to rental income. During the first nine months ended September 30, 2022 and September 30, 2021, restaurant operations recognized $15,193 and $10,910,$4,774, 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 gift cards to customers which can be redeemed for retail food sales within our stores. Gift cards are recorded as ~~a liability~~deferred revenue when issued and are subsequently recorded as net sales upon redemption. Restaurant operations estimates 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.


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Accounts payable	Accounts payable	$	34,288	$	36,684	Accounts payable	$	30,932	$	28,431
Gift card and other marketing	Gift card and other marketing	15,985		19,244		Gift card and other marketing	10,640		12,028
Insurance accruals	Insurance accruals	5,971		6,428		Insurance accruals	2,479		6,012
Salaries, wages and vacation		6,902		5,905
Salaries and wages						Salaries and wages	6,602		4,400
Deferred revenue	Deferred revenue	4,831		6,683		Deferred revenue	5,835		4,445
Taxes payable	Taxes payable	21,583		11,392		Taxes payable	15,500		14,896
Professional fees		1,998		11,731
Oil and gas payable	Oil and gas payable	5,586		1,936		Oil and gas payable	4,641		3,877
Other	Other	4,359		464		Other	2,615		4,527
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	101,503	$	100,467	Accounts payable and accrued expenses	$	79,244	$	78,616

Note 9. Line of Credit and Note Payable

~~Bigari~~Biglari Holdings Line of Credit

On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000. The line of credit will be available on a revolving basis until September 12, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants. The balance of the line of credit ~~on September 30, 2022~~ was ~~$30,000.~~

~~Steak n Shake Credit Facility~~

~~On March 19, 2014, Steak n Shake~~$6,500 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. The term loan was scheduled to mature~~$10,000 on March ~~19, 2021.~~31, 2023 and December 31, 2022, respectively. Our interest rate was 7.3% on March 31, 2023. The ~~Company repaid the balance~~line of ~~Steak n Shake’s term facility on February 19, 2021.~~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 and December 31, 2022, Western Sizzlin had no debt outstanding under its revolver.

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Table of Contents

Note 10. Unpaid losses and 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 March 31, 2023 and 2022 follows.


	2023		2022
Balances at beginning of year:
Gross liabilities	$	17,520	$	14,993
Reinsurance recoverable on unpaid losses	(715)		(1,892)
Net liabilities	16,805		13,101
Incurred losses and loss adjustment expenses:
Current accident year	10,247		9,721
Prior accident years	(1,651)		(133)
Total	8,596		9,588
Paid losses and loss adjustment expenses:
Current accident year	4,433		5,577
Prior accident years	5,454		3,977
Total	9,887		9,554
Balances at March 31:
Net liabilities	15,514		13,135
Reinsurance recoverable on unpaid losses	2,207		890
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 and $133 in the first quarter of 2023 and 2022, 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 9.8% in 2023 and 1.0% in 2022.

Note ~~10.~~11. Lease Assets and Obligations

Lease obligations include the following.


Current portion of lease obligations	Current portion of lease obligations	September 30, 2022		December 31, 2021		Current portion of lease obligations	March 31, 2023		December 31, 2022
Finance lease liabilities	Finance lease liabilities	$	1,214	$	1,414	Finance lease liabilities	$	1,242	$	1,237
Finance obligations	Finance obligations	5,119		4,944		Finance obligations	5,139		5,161
Operating lease liabilities	Operating lease liabilities	10,760		10,540		Operating lease liabilities	9,728		10,583
Total current portion of lease obligations	Total current portion of lease obligations	$	17,093	$	16,898	Total current portion of lease obligations	$	16,109	$	16,981

Long-term lease obligations	Long-term lease obligations					Long-term lease obligations
Finance lease liabilities	Finance lease liabilities	$	4,431	$	5,347	Finance lease liabilities	$	3,779	$	4,129
Finance obligations	Finance obligations	60,009		63,119		Finance obligations	58,428		58,868
Operating lease liabilities	Operating lease liabilities	31,540		36,013		Operating lease liabilities	27,928		28,847
Total long-term lease obligations	Total long-term lease obligations	$	95,980	$	104,479	Total long-term lease obligations	$	90,135	$	91,844

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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 ~~franchise partners and~~ 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.


		Third Quarter				First Nine Months				First Quarter
		2022		2021		2022		2021				2023		2022
Finance lease costs:	Finance lease costs:										Finance lease costs:
Amortization of right-of-use assets	Amortization of right-of-use assets	$	309	$	404	$	1,023	$	1,205		Amortization of right-of-use assets	$	242	$	363
Interest on lease liabilities	Interest on lease liabilities	102		126		325		399			Interest on lease liabilities	91		115
Operating and variable lease costs	Operating and variable lease costs	3,577		4,011		10,782		11,189			Operating and variable lease costs	3,167		3,612
Sublease income	Sublease income	(2,895)		(3,771)		(8,487)		(9,786)			Sublease income	(3,091)		(4,069)
Total lease costs	Total lease costs	$	1,093	$	770	$	3,643	$	3,007		Total lease costs	$	409	$	21

Supplemental cash flow information related to leases is as follows.


		First Nine Months					First Quarter
		2022		2021			2023		2022
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	$	1,116	$	1,226	Financing cash flows from finance leases	$	344	$	421
Operating cash flows from finance leases	Operating cash flows from finance leases	$	324	$	384	Operating cash flows from finance leases	$	91	$	115
Operating cash flows from operating leases	Operating cash flows from operating leases	$	9,347	$	9,806	Operating cash flows from operating leases	$	3,355	$	3,067

~~Table of Contents~~

~~Note 10. Lease Assets and Obligations~~ ~~(continued)~~

Supplemental balance sheet information related to leases is as follows.


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Finance leases:	Finance leases:					Finance leases:
Property and equipment, net	Property and equipment, net	$	4,619	$	5,634	Property and equipment, net	$	3,656	$	4,352

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


	~~September 30,~~March 31, ~~2022~~2023
Weighted-average remaining lease terms:
Finance leases	~~4.56~~4.11 years
Operating leases	~~4.90~~4.68 years

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

~~Maturities of lease liabilities as of September 30, 2022 are as follows.~~

Year Operating
Leases Finance
Leases
2022 $ 4,215 $ 394
2023 11,781 1,551
2024 9,985 1,534
2025 8,290 1,298
2026 5,671 959
After 2026 9,967 855
Total lease payments 49,909 6,591
Less interest 7,609 946
Total lease liabilities $ 42,300 $ 5,645

~~Lease Income~~

~~The components of lease income recorded in restaurant operations are as follows.~~

Third Quarter First Nine Months
2022 2021 2022 2021
Operating lease income $ 4,085 $ 3,211 $ 11,737 $ 8,471
Variable lease income 1,556 1,370 4,312 3,375
Total lease income $ 5,641 $ 4,581 $ 16,049 $ 11,846

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Note ~~10.~~11. Lease Assets and Obligations (continued)

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


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

Lease Income

The components of lease income are as follows.


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

The following table displays the Company’s future minimum rental receipts for non-cancelable leases and subleases as of ~~September 30, 2022.~~March 31, 2023. Franchise partner leases and subleases are short-term leases and have been excluded from the table.

Operating Leases
Year Subleases Owned Properties
2022 $ 228 $ 62
2023 767 247
2024 503 247
2025 454 250
2026 134 247
After 2026 241 805
Total future minimum receipts $ 2,327 $ 1,858

~~Note 11. Accumulated Other Comprehensive Income~~

Accumulated other comprehensive income decreased by $618 and $49 during the third quarters of 2022 and 2021, respectively. During the first nine months of 2022, accumulated other comprehensive income decreased by $1,870 and $378 in the first nine months of 2021. There were no reclassifications from accumulated other comprehensive loss to earnings during the first nine months of 2022 and 2021. All changes in accumulated other comprehensive loss were due to foreign currency translation adjustments.


	Operating Leases
Year	Subleases		Owned Properties
Remainder of 2023	$	520	$	119
2024	503		265
2025	454		265
2026	134		275
2027	116		275
After 2027	125		2,315
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 ~~nine months~~quarter of ~~2022~~2023 and ~~a discrete effective tax rate method based on statutory tax rates for the first nine months of 2021.~~2022. 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 ~~third~~first quarter of ~~2022~~2023 was ~~$9,598~~$19,738 compared to an income tax benefit of ~~$4,274 for the third quarter of 2021. Income tax benefit~~$171 for the first ~~nine months~~quarter of ~~2022 was $13,282 compared to an income tax expense of $11,544 for the first nine months of 2021.~~2022. The variance in income taxes between 2023 and 2022 ~~and 2021~~ is primarily attributable to taxes on income generated by the investment partnerships. Investment partnership pre-tax gains were ~~$29,658~~$72,588 during the ~~third~~first quarter of ~~2022~~2023 compared to pre-tax losses of ~~$20,231 during the third quarter of 2021. Investment partnership pre-tax losses were $82,244~~$6,661 during the first ~~nine months~~quarter of ~~2022 compared to pre-tax gains~~2022.

Table of ~~$27,344 during the first nine months of 2021.~~ 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.

~~Table of Contents~~

~~Note 14. Fair Value of Financial Assets~~ ~~(continued)~~

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 ~~Levels~~Level 1 ~~and 2~~ 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 ~~or Level 2~~ 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.

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

1614

Table of Contents

Note 14. Fair Value of Financial Assets (continued)

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the fair values of financial assets were as follows.


		September 30, 2022								December 31, 2021									March 31, 2023								December 31, 2022
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets	Assets																	Assets
Cash equivalents	Cash equivalents	$	16,389	$	—	$	—	$	16,389	$	18,447	$	—	$	—	$	18,447	Cash equivalents	$	25,209	$	—	$	—	$	25,209	$	17,608	$	—	$	—	$	17,608
Equity securities	Equity securities																	Equity securities
Consumer goods	Consumer goods	16,266		932		—		17,198		10,775		2,368		—		13,143		Consumer goods	22,337		—		—		22,337		17,274		—		—		17,274
Insurance		49		—		—		49		6,513		—		—		6,513
Technology		1,832		—		—		1,832		2,887		—		—		2,887
Other																		Other	2,555		—		—		2,555		2,031		—		—		2,031
Bonds	Bonds																	Bonds
Government	Government	44,914		—		—		44,914		54,584		—		—		54,584		Government	53,663		—		—		53,663		48,456		—		—		48,456
Corporate	Corporate	3,003		—		—		3,003		4,512		—		—		4,512		Corporate	1,603		—		—		1,603		2,199		—		—		2,199
Options on equity securities		—		3,531		—		3,531		—		2,095		—		2,095
Non-qualified deferred compensation plan investments	Non-qualified deferred compensation plan investments	1,299		—		—		1,299		1,607		—		—		1,607		Non-qualified deferred compensation plan investments	684		—		—		684		699		—		—		699
Total assets at fair value	Total assets at fair value	$	83,752	$	4,463	$	—	$	88,215	$	99,325	$	4,463	$	—	$	103,788	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 ~~and~~ (“Biglari ~~Capital Corp. (collectively, the “Biglari Entities”~~Enterprises”) under which ~~the~~ Biglari ~~Entities provide~~Enterprises provides business and administrative related services to the Company. ~~The~~ Biglari ~~Entities are~~Enterprises is owned by Mr. Biglari.

The Company paid Biglari Enterprises ~~$6,300~~$2,100 in service fees during the first ~~nine months~~quarters of ~~2022~~2023 and ~~2021.~~2022. 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”~~“hurdle rate”) above the previous highest level (the ~~“High Water Mark”~~“high-water mark”). Mr. Biglari will receive 25% of any incremental book value created above the ~~High Water Mark~~high-water mark plus the Hurdle Rate. In any year in which book value declines, our operating businesses must completely recover their deficit from the previous High Water Mark, along with attaining the Hurdle Rate, before Mr. Biglari becomes eligible to receive any further incentive payment.hurdle rate.

~~Table of Contents~~

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.

~~A disaggregation of our consolidated data for the third quarters and first nine months of 2022 and 2021 is presented in the tables which follow.~~

Revenue
Third Quarter First Nine Months
2022 2021 2022 2021
Operating Businesses:
Restaurant Operations:
Steak n Shake $ 56,949 $ 56,993 $ 172,444 $ 190,517
Western Sizzlin 2,488 2,151 7,164 5,907
Total Restaurant Operations 59,437 59,144 179,608 196,424
Insurance Operations:
Underwriting
First Guard 9,112 8,458 26,858 24,760
Southern Pioneer 6,004 5,443 17,653 16,406
Investment income and other 1,196 822 3,234 2,563
Total Insurance Operations 16,312 14,723 47,745 43,729
Oil and Gas Operations:
Southern Oil 12,688 7,353 36,940 24,310
Abraxas Petroleum 1,692 — 1,692 —
Total Oil and Gas Operations 14,380 7,353 38,632 24,310
Maxim 1,905 863 3,788 2,695
$ 92,034 $ 82,083 $ 269,773 $ 267,158

1815

Table of Contents

Note 16. Business Segment Reporting (continued)

Earnings (Losses) Before Income Taxes
Third Quarter First Nine Months
2022 2021 2022 2021
Operating Businesses:
Restaurant Operations:
Steak n Shake $ 3,964 $ (2,959) $ 11,777 $ 5,733
Western Sizzlin 369 247 997 707
Total Restaurant Operations 4,333 (2,712) 12,774 6,440
Insurance Operations:
Underwriting:
First Guard 2,354 2,832 4,800 7,922
Southern Pioneer (483) 397 (1,101) 1,511
Investment income and other 1,221 613 3,188 1,965
Total Insurance Operations 3,092 3,842 6,887 11,398
Oil and Gas Operations:
Southern Oil 6,795 2,982 19,137 9,047
Abraxas Petroleum 446 — 446 —
Total Oil and Gas Operations 7,241 2,982 19,583 9,047
Maxim 1,534 (56) 1,699 867
Interest expense not allocated to segments (67) — (67) (1,121)
Total Operating Businesses 16,133 4,056 40,876 26,631
Corporate and other (3,305) (3,302) (9,769) (8,595)
Investment gains (losses) (849) 4,534 (4,184) 6,465
Investment partnership gains (losses) 29,658 (20,231) (82,244) 27,344
$ 41,637 $ (14,943) $ (55,321) $ 51,845

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


	Revenues
	First Quarter
	2023		2022
Operating Businesses:
Restaurant Operations:
Steak n Shake	$	58,487	$	57,753
Western Sizzlin	2,642		2,094
Total Restaurant Operations	61,129		59,847

Insurance Operations:
Underwriting:
First Guard	8,899		8,731
Southern Pioneer	5,865		5,438
Investment income and other	1,465		910
Total Insurance Operations	16,229		15,079

Oil and Gas Operations:
Abraxas Petroleum	7,252		—
Southern Oil	4,971		9,812
Total Oil and Gas Operations	12,223		9,812

Maxim	595		634
	$	90,176	$	85,372

1916

Table of Contents

Note 16. Business Segment Reporting (continued)


	Earnings (Losses) Before Income Taxes
	First Quarter
	2023		2022
Operating Businesses:
Restaurant Operations:
Steak n Shake	$	7,325	$	4,198
Western Sizzlin	472		232
Total Restaurant Operations	7,797		4,430

Insurance Operations:
Underwriting:
First Guard	1,862		732
Southern Pioneer	(111)		(337)
Investment income and other	1,036		969
Total Insurance Operations	2,787		1,364

Oil and Gas Operations:
Abraxas Petroleum	1,209		—
Southern Oil	894		3,921
Total Oil and Gas Operations	2,103		3,921

Maxim	122		(336)
Interest expense not allocated to segments	(167)		—
Total Operating Businesses	12,642		9,379

Corporate and other	(3,593)		(3,412)
Investment gains	3,638		225
Investment partnership gains (losses)	72,588		(6,661)

	$	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. ~~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.

As of ~~September 30, 2022,~~March 31, 2023, Mr. Biglari beneficially owns shares of the Company that represent approximately 66.3% of the economic interest and 70.4% 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.

Third Quarter First Nine Months
2022 2021 2022 2021
Operating businesses:
Restaurant $ 3,320 $ (1,515) $ 9,588 $ 5,146
Insurance 2,389 2,985 5,292 8,902
Oil and gas 5,574 2,325 14,867 7,016
Brand licensing 1,150 (43) 1,274 662
Interest expense (52) — (52) (841)
Corporate and other (2,742) (2,526) (7,630) (6,649)
Total operating businesses 9,639 1,226 23,339 14,236
Investment gains (657) 3,390 (3,287) 4,896
Investment partnership gains (losses) 23,057 (15,285) (62,091) 21,169
32,039 (10,669) (42,039) 40,301
Earnings attributable to noncontrolling interest 34 — 34 —
$ 32,005 $ (10,669) $ (42,073) $ 40,301


	First Quarter
	2023		2022
Operating businesses:
Restaurant	$	5,840	$	3,262
Insurance	2,169		1,044
Oil and gas	1,670		2,924
Brand licensing	91		(251)
Interest expense	(129)		—
Corporate and other	(2,998)		(2,651)
Total operating businesses	6,643		4,328
Investment partnership gains (losses)	56,029		(4,801)
Investment gains	2,865		175
Net earnings (loss)	65,537		(298)
Earnings attributable to noncontrolling interest	651		—
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders	$	64,886	$	(298)

2018

Table of Contents

~~Item 2.~~ 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 ~~552~~532 company-operated and franchise restaurants as of ~~September 30, 2022.~~March 31, 2023.


		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, 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
		Company- operated	Franchise Partner	Traditional Franchise	Company- operated	Franchise	Total
Total stores as of December 31, 2021	Total stores as of December 31, 2021	199	159	178	3	38	577	Total stores as of December 31, 2021	199	159	178	3	38	577
Corporate stores transitioned	Corporate stores transitioned	(12)	12	—	—	—	—	Corporate stores transitioned	(12)	12	—	—	—	—
Net restaurants opened (closed)	Net restaurants opened (closed)	(6)	—	(19)	—	—	(25)	Net restaurants opened (closed)	(3)	—	1	—	—	(2)
Total stores as of September 30, 2022		181	171	159	3	38	552

Total stores as of December 31, 2020		276	86	194	3	39	598
Corporate stores transitioned		(54)	54	—	—	—	—
Net restaurants opened (closed)		(1)	—	(15)	—	(1)	(17)
Total stores as of September 30, 2021		221	140	179	3	38	581
Total stores as of March 31, 2022								Total stores as of March 31, 2022	184	171	179	3	38	575

As of ~~September 30, 2022, 39~~March 31, 2023, 36 of the ~~181~~172 company-operated Steak n Shake stores were closed. ~~We plan~~Steak n Shake has contracted to sell seven of the 36 closed stores. An additional seventeen closed stores are listed with brokers for lease or sale. Steak n Shake plans to refranchise ~~a majority of our~~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.

2119

Table of Contents

~~Item 2.~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Restaurant operations are summarized below.


		Third Quarter								First Nine Months								First Quarter
		2022				2021				2022				2021										2023						2022
Revenue	Revenue																					Revenue
Net sales	Net sales	$	37,448			$	41,916			$	113,345			$	146,269							Net sales		$	36,894					$	38,216
Franchise partner fees	Franchise partner fees	15,880				11,508				47,929				31,744								Franchise partner fees		17,912						15,624
Franchise royalties and fees	Franchise royalties and fees	5,089				4,865				15,472				14,594								Franchise royalties and fees		4,258						5,146
Other revenue	Other revenue	1,020				855				2,862				3,817								Other revenue		2,065						861
Total revenue	Total revenue	59,437				59,144				179,608				196,424								Total revenue		61,129						59,847

Restaurant cost of sales	Restaurant cost of sales																					Restaurant cost of sales
Cost of food	Cost of food	11,359		30.3	%	13,123		31.3	%	33,684		29.7	%	43,404		29.7	%					Cost of food		10,448			28.3	%		10,960		28.7	%
Restaurant operating costs	Restaurant operating costs	20,745		55.4	%	24,496		58.4	%	61,127		53.9	%	71,751		49.1	%					Restaurant operating costs		18,457			50.0	%		20,032		52.4	%
Occupancy costs	Occupancy costs	4,058		10.8	%	4,075		9.7	%	12,658		11.2	%	14,142		9.7	%					Occupancy costs		3,833			10.4	%		4,360		11.4	%
Total cost of sales	Total cost of sales	36,162				41,694				107,469				129,297								Total cost of sales		32,738						35,352

Selling, general and administrative	Selling, general and administrative																					Selling, general and administrative
General and administrative	General and administrative	9,556		16.1	%	9,255		15.6	%	28,327		15.8	%	27,416		14.0	%					General and administrative		10,463			17.1	%		8,650		14.5	%
Marketing	Marketing	2,758		4.6	%	2,302		3.9	%	9,589		5.3	%	10,212		5.2	%					Marketing		2,953			4.8	%		3,744		6.3	%
Other expenses		(825)		(1.4)	%	1,332		2.3	%	(1,141)		(0.6)	%	2,266		1.2	%
Other expenses (income)																			Other expenses (income)	(1,612)			(2.6)		%	45			0.1		%
Total selling, general and administrative	Total selling, general and administrative	11,489		19.3	%	12,889		21.8	%	36,775		20.5	%	39,894		20.3	%					Total selling, general and administrative		11,804			19.3	%		12,439		20.8	%

Impairments	Impairments	—				—				(20)				(559)								Impairments		(776)						—
Depreciation and amortization	Depreciation and amortization	(6,081)				(5,811)				(18,401)				(15,615)								Depreciation and amortization		(6,707)						(6,214)
Interest on finance leases and obligations	Interest on finance leases and obligations	(1,372)				(1,462)				(4,169)				(4,619)								Interest on finance leases and obligations		(1,307)						(1,412)

Earnings (loss) before income taxes	Earnings (loss) before income taxes	4,333				(2,712)				12,774				6,440								Earnings (loss) before income taxes		7,797						4,430

Income tax expense (benefit)	Income tax expense (benefit)	1,013				(1,197)				3,186				1,294								Income tax expense (benefit)		1,957						1,168

Contribution to net earnings (loss)		$	3,320			$	(1,515)			$	9,588			$	5,146
Contribution to net earnings																			Contribution to net earnings	$	5,840					$	3,262

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

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

The novel coronavirus (“COVID-19”), declared a pandemic by the World Health Organization in March 2020, caused governments to impose restrictive measures to contain its spread. The COVID-19 pandemic adversely affected our restaurant operations and financial results. Our restaurants were required to close their dining rooms during the first quarter of 2020. The majority of Steak n Shake’s dining rooms were reopened during 2021, and in doing so a self-service model has been implemented.

Net sales for ~~the third quarter and first nine months of 2022~~2023 were ~~$37,448 and $113,345, respectively,~~$36,894, representing a decrease of ~~$4,468~~$1,322 or ~~10.7% and $32,924 or 22.5%,~~3.5% compared to ~~the third quarter and first nine months of 2021, respectively.~~2022. The decrease in revenue of company-owned restaurants is primarily due to the shift of company units to franchise partner units. 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 $17,912 during the first quarter of 2023, as compared to $15,624 during the first quarter of 2022.As of March 31, 2023, there were 178 franchise partner units, compared to 171 franchise partner units as of March 31, 2022. Included in franchise partner fees were $5,575 and $4,774 of rental income during the first quarter of 2023 and 2022, respectively. Franchise partners rent buildings and equipment from Steak n Shake.

2220

Table of Contents

~~Item 2.~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

~~Franchise partner fees were $15,880 during the third quarter of 2022, as compared to $11,508 during the third quarter of 2021.~~Franchise partner fees were $47,929 and $31,744 during the first nine months of 2022 and 2021, respectively. As of September 30, 2022, there were 171 franchise partner units, compared to 140 franchise partner units as of September 30, 2021. For a franchise partner to be awarded a restaurant, he or she must demonstrate the gold standard in service.

The franchise royalties and fees generated by the traditional franchising business were ~~$5,089~~$4,258 during the ~~third~~first quarter of ~~2022,~~2023, as compared to ~~$4,865~~$5,146 during the ~~third~~first quarter of ~~2021. Franchise~~2022. The decrease in franchise royalties and fees ~~during the first nine months~~was primarily because of ~~2022~~reduced marketing by franchisees. There were ~~$15,472~~143 Steak n Shake traditional units open on March 31, 2023, as compared to ~~$14,594 during the first nine months of 2021.~~

179 units open on March 31, 2022.

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

The operating costs at company-operated restaurants during the ~~third~~first quarter ~~and first nine months~~ of ~~2022 was 30.3% and 29.7%, respectively,~~2023 were $18,457 or 50.0% of net sales, as compared to ~~31.3% and 29.7%~~$20,032 or 52.4% of net sales during the ~~third quarter and~~ first ~~nine months of 2021, respectively. Cost of food as a percentage of net sales were lower during the third~~ quarter of ~~2022 compared to 2021 primarily because of higher menu prices.~~

~~Restaurant~~2022. The decrease in operating costs as a percentage of net sales was mainly attributable to lower labor costs.

General and administrative expenses during the ~~third~~first quarter of ~~2022~~2023 were ~~55.4%,~~$10,463 or 17.1% of total revenue, as compared to ~~58.4%~~$8,650 or 14.5% of ~~net sales in the third quarter of 2021.Restaurant operating costs~~total revenue during the first ~~nine months~~quarter of ~~2022 were 53.9% of net sales, as compared~~2022. The increase in general and administrative expenses was mainly attributable to ~~49.1% of net sales in 2021. The increase~~increased support for franchise partnerships.

Marketing expense decreased by $791 during the first ~~nine months~~quarter of 2023 compared to the first quarter of 2022. The decrease was primarily ~~the result of higher wages.~~attributable to reduced marketing by traditional franchisees.

~~Selling, general and administrative costs during~~During the ~~third~~first quarter ~~and first nine months~~ of ~~2022 were $11,489 and $36,775, respectively, compared to $12,889 and $39,894 in the third quarter and first nine months of 2021, respectively.~~2023, Steak n Shake ~~recorded gains on~~sold the ~~disposal~~property of ~~assets~~a former company-operated restaurant for a gain of ~~$1,084 and $1,749 in the third quarter and first nine months of 2022, respectively.~~$1,431.

The Company recorded no impairment charges ~~in the third quarter and $20~~of $776 in the first ~~nine months~~quarter of ~~2022. The Company recorded~~2023 related to underperforming stores. There were no ~~impairment charges in the third quarter and $559~~impairments in the first ~~nine months~~quarter of ~~2021, respectively. Impairments~~2022.

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

Interest on obligations under leases was $1,307 during 2023 versus $1,412 during 2022. The year-over-year decrease in interest expense is primarily attributable to the maturity and retirement of lease obligations.

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.


		Third Quarter				First Nine Months				First Quarter
		2022		2021		2022		2021				2023		2022
Underwriting gain (loss) attributable to:
Underwriting gain attributable to:											Underwriting gain attributable to:
First Guard	First Guard	$	2,354	$	2,832	$	4,800	$	7,922		First Guard	$	1,862	$	732
Southern Pioneer	Southern Pioneer	(483)		397		(1,101)		1,511			Southern Pioneer	(111)		(337)
Pre-tax underwriting gain	Pre-tax underwriting gain	1,871		3,229		3,699		9,433			Pre-tax underwriting gain	1,751		395
Income tax expense	Income tax expense	392		681		776		1,984			Income tax expense	368		83
Net underwriting gain	Net underwriting gain	$	1,479	$	2,548	$	2,923	$	7,449		Net underwriting gain	$	1,383	$	312

2321

Table of Contents

~~Item 2.~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Earnings of our insurance operations are summarized below.

Third Quarter First Nine Months
2022 2021 2022 2021
Premiums earned $ 15,116 $ 13,901 $ 44,511 $ 41,166
Insurance losses 8,814 6,657 27,646 20,040
Underwriting expenses 4,431 4,015 13,166 11,693
Pre-tax underwriting gain 1,871 3,229 3,699 9,433
Other income and expenses
Investment income 362 195 832 652
Other income (expenses) 859 418 2,356 1,313
Total other income 1,221 613 3,188 1,965
Earnings before income taxes 3,092 3,842 6,887 11,398
Income tax expense 703 857 1,595 2,496
Contribution to net earnings (loss) $ 2,389 $ 2,985 $ 5,292 $ 8,902


	First Quarter
	2023		2022
Premiums earned	$	14,764	$	14,169

Insurance losses	8,596		9,588
Underwriting expenses	4,417		4,186
Pre-tax underwriting gain	1,751		395
Other income and expenses
Investment income	585		213
Other income (expenses)	451		756
Total other income	1,036		969
Earnings before income taxes	2,787		1,364
Income tax expense	618		320
Contribution to net earnings	$	2,169	$	1,044

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.


		Third Quarter								First Nine Months								First Quarter
		2022				2021				2022				2021					2023					2022
		Amount		%		Amount		%		Amount		%		Amount		%								Amount			%		Amount		%
Premiums earned	Premiums earned	$	9,112	100.0	%	$	8,458	100.0	%	$	26,858	100.0	%	$	24,760	100.0	%						Premiums earned	$	8,899		100.0	%	$	8,731	100.0	%

Insurance losses	Insurance losses	4,815		52.8	%	3,935		46.5	%	16,468		61.3	%	11,746		47.4	%						Insurance losses	5,244			58.9	%	6,188		70.9	%
Underwriting expenses	Underwriting expenses	1,943		21.3	%	1,691		20.0	%	5,590		20.8	%	5,092		20.6	%						Underwriting expenses	1,793			20.1	%	1,811		20.7	%
Total losses and expenses	Total losses and expenses	6,758		74.1	%	5,626		66.5	%	22,058		82.1	%	16,838		68.0	%						Total losses and expenses	7,037			79.0	%	7,999		91.6	%
Pre-tax underwriting gain		$	2,354			$	2,832			$	4,800			$	7,922
Pretax underwriting gain																				Pretax underwriting gain	$	1,862				$	732

First Guard’s ratio of losses and loss adjustment expenses to premiums earned was 58.9% 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.

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.


		Third Quarter								First Nine Months								First Quarter
		2022				2021				2022				2021					2023					2022
		Amount		%		Amount		%		Amount		%		Amount		%								Amount			%		Amount		%
Premiums earned	Premiums earned	$	6,004	100.0	%	$	5,443	100.0	%	$	17,653	100.0	%	$	16,406	100.0	%						Premiums earned	$	5,865		100.0	%	$	5,438	100.0	%

Insurance losses	Insurance losses	3,999		66.6	%	2,722		50.0	%	11,178		63.3	%	8,294		50.6	%						Insurance losses	3,352			57.2	%	3,400		62.5	%
Underwriting expenses	Underwriting expenses	2,488		41.4	%	2,324		42.7	%	7,576		42.9	%	6,601		40.2	%						Underwriting expenses	2,624			44.7	%	2,375		43.7	%
Total losses and expenses	Total losses and expenses	6,487		108.0	%	5,046		92.7	%	18,754		106.2	%	14,895		90.8	%						Total losses and expenses	5,976			101.9	%	5,775		106.2	%
Pre-tax underwriting gain (loss)		$	(483)			$	397			$	(1,101)			$	1,511
Pretax underwriting gain (loss)																				Pretax underwriting gain (loss)	$	(111)				$	(337)

~~Table~~Southern Pioneer’s ratio of ~~Contents~~

~~Item 2. Management’s Discussion~~losses and ~~Analysis~~loss adjustment expenses to premiums earned was 57.2% during the first quarter of ~~Financial Condition and Results~~2023 as compared to 62.5% during the first quarter of ~~Operations~~ ~~(continued)~~

~~Insurance - Investment Income~~2022. Southern Pioneer’s underwriting losses were primarily attributable to a higher expense ratio, an increase 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.


		Third Quarter				First Nine Months					First Quarter
		2022		2021		2022		2021			2023		2022
Interest, dividends and other investment income:	Interest, dividends and other investment income:									Interest, dividends and other investment income:
First Guard	First Guard	$	202	$	54	$	398	$	84	First Guard	$	387	$	74
Southern Pioneer	Southern Pioneer	160		141		434		568		Southern Pioneer	198		139
Pre-tax investment income	Pre-tax investment income	362		195		832		652		Pre-tax investment income	585		213
Income tax expense	Income tax expense	76		41		175		137		Income tax expense	123		45
Net investment income	Net investment income	$	286	$	154	$	657	$	515	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
Oil and gas revenues	$	12,223	$	9,812

Oil and gas production costs	5,471		3,819
Depreciation, depletion and accretion	2,850		1,519
General and administrative expenses	1,799		553
Earnings before income taxes	2,103		3,921
Income tax expense	433		997
Contribution to net earnings	$	1,670	$	2,924

Our oil and gas business is highly dependent on oil and natural gas prices. The average West Texas Intermediate price per barrel for the first quarter of 2023 was approximately $76.11 as compared to approximately $94.82 in the first quarter of 2022. It is expected that the prices of oil and gas commodities will remain volatile, which will be reflected in our financial results.

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.


		Third Quarter				First Nine Months				First Quarter
		2022		2021		2022		2021				2023		2022
Oil and gas revenue		$	12,688	$	7,353	$	36,940	$	24,310
Oil and gas revenues											Oil and gas revenues	$	4,971	$	9,812

Oil and gas production costs	Oil and gas production costs	3,484		2,050		11,146		6,957			Oil and gas production costs	2,340		3,819
Depreciation, depletion and accretion	Depreciation, depletion and accretion	1,873		1,717		4,926		6,286			Depreciation, depletion and accretion	1,184		1,519
General and administrative expenses	General and administrative expenses	536		604		1,731		2,020			General and administrative expenses	553		553
Earnings before income taxes	Earnings before income taxes	6,795		2,982		19,137		9,047			Earnings before income taxes	894		3,921
Income tax expense	Income tax expense	1,564		657		4,613		2,031			Income tax expense	155		997
Contribution to net earnings	Contribution to net earnings	$	5,231	$	2,325	$	14,524	$	7,016		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.~~Basin of West Texas. Earnings for Abraxas Petroleum ~~from the date of acquisition on September 14, 2022~~ are summarized below.

~~Third~~First Quarter

~~2022~~2023

Oil and gas ~~revenue~~revenues

~~1,692~~7,252

Oil and gas production costs

~~606~~3,131

Depreciation, depletion and accretion

~~360~~1,666

General and administrative expenses

~~280~~1,246

Earnings before income taxes

~~446~~1,209

Income tax expense

~~103~~278

Contribution to net earnings

~~343~~

~~Earnings attributable to noncontrolling interests~~

~~Net earnings attributable to Biglari Holdings Inc. shareholders~~

~~309~~931

~~Table of Contents~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ ~~(continued)~~

Brand Licensing

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


		Third Quarter				First Nine Months				First Quarter
		2022		2021		2022		2021				2023		2022
Licensing and media revenue		$	1,905	$	863	$	3,788	$	2,695
Licensing and media revenues											Licensing and media revenues	$	595	$	634

Licensing and media costs	Licensing and media costs	345		880		1,975		1,749			Licensing and media costs	452		953
General and administrative expenses	General and administrative expenses	26		39		114		79			General and administrative expenses	21		17
Earnings (loss) before income taxes		1,534		(56)		1,699		867
Earnings before income taxes											Earnings before income taxes	122		(336)
Income tax expense (benefit)	Income tax expense (benefit)	384		(13)		425		205			Income tax expense (benefit)	31		(85)
Contribution to net earnings (loss)		$	1,150	$	(43)	$	1,274	$	662
Contribution to net earnings											Contribution to net earnings	$	91	$	(251)

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 losses net of tax for the third quarter of 2022 were $657 compared to investment gains net of tax for the third quarter of 2021 of $3,390. Investment losses net of tax for the first nine months of 2022 were $3,287 compared to investment gains net of tax for the first ~~nine months~~quarter of ~~2021 of $4,896.~~2023 and 2022 were $2,865 and $175, respectively. Dividends 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 Partnership Gains~~

Earnings (loss) from our investments in partnerships are summarized below.


		Third Quarter				First Nine Months				First Quarter
		2022		2021		2022		2021				2023		2022
Investment partnership gains (losses)	Investment partnership gains (losses)	$	29,658	$	(20,231)	$	(82,244)	$	27,344		Investment partnership gains (losses)	$	72,588	$	(6,661)
Tax expense (benefit)	Tax expense (benefit)	6,601		(4,946)		(20,153)		6,175			Tax expense (benefit)	16,559		(1,860)
Contribution to net earnings (loss)		$	23,057	$	(15,285)	$	(62,091)	$	21,169
Contribution to net earnings											Contribution to net earnings	$	56,029	$	(4,801)

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.

~~Table of Contents~~

~~Item 2. Management’s Discussion~~Investment gains and ~~Analysis of Financial Condition~~losses in 2023 and ~~Results of Operations~~ ~~(continued)~~

2022 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.

Interest Expense

The Company’s interest expense is summarized below.


		Third Quarter				First Nine Months				First Quarter
		2022		2021		2022		2021				2023		2022
Interest expense on notes payable		$	67	$	—	$	67	$	1,121
Interest expense on line of credit											Interest expense on line of credit	$	167	$	—
Tax benefit	Tax benefit	15		—		15		280			Tax benefit	38		—
Interest expense net of tax	Interest expense net of tax	$	52	$	—	$	52	$	841		Interest expense net of tax	$	129	$	—

On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000. The balance of the line of credit was $6,500 and $10,000 on March 31, 2023 and 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 ~~third~~first quarter ~~and first nine months~~ of ~~2022~~2023 were relatively ~~flat compared~~consistent to the same period ~~in 2021.~~during 2022.

Income Taxes

Income tax expense for the ~~third~~first quarter of ~~2022~~2023 was ~~$9,598~~$19,738 compared to an income tax benefit of ~~$4,274 for the third quarter of 2021. Income tax benefit~~$171 for the first ~~nine months~~quarter of ~~2022 was $13,282 compared to an income tax expense of $11,544 for the first nine months of 2021.~~2022. The variance in income taxes between ~~2022~~2023 and ~~2021~~2022 is attributable to taxes on income generated by the investment partnerships. Investment partnership ~~pre-tax~~pretax gains were ~~$29,658 during the third quarter of 2022 compared to pre-tax losses of $20,231 during the third quarter of 2021. Investment partnership pre-tax losses were $82,244~~$72,588 during the first ~~nine months~~quarter of ~~2022~~2023 compared to ~~pre-tax gains~~pretax losses of ~~$27,344~~$6,661 during the first ~~nine months~~quarter of ~~2021.~~2022.

Financial Condition

Consolidated cash and investments are summarized below.


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	64,842	$	42,349	Cash and cash equivalents	$	39,363	$	37,467
Investments	Investments	70,032		83,061		Investments	79,652		69,466
Fair value of interest in investment partnerships	Fair value of interest in investment partnerships	338,314		474,201		Fair value of interest in investment partnerships	507,499		383,004
Total cash and investments	Total cash and investments	473,188		599,611		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	(193,450)		(223,802)		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	$	279,738	$	375,809	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.

2726

Table of Contents

~~Item 2.~~ 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 Nine Months					First Quarter
		2022		2021			2023		2022
Net cash provided by operating activities	Net cash provided by operating activities	$	99,754	$	211,245	Net cash provided by operating activities	$	19,923	$	21,092
Net cash used in investing activities	Net cash used in investing activities	(102,464)		(55,782)		Net cash used in investing activities	(12,735)		(16,077)
Net cash provided by (used in) financing activities		25,353		(154,586)
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	(150)		(85)		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	$	22,493	$	792	Increase in cash, cash equivalents and restricted cash	$	2,146	$	3,428

~~Cash provided by operating activities~~The increase in cash during 2023 was ~~$99,754 during 2022~~$2,146 compared to ~~$211,245 in 2021. The decrease in cash provided by operating activities is mainly attributable to distributions from investment partnerships~~ ~~of $51,200 for 2022 and $172,420 for 2021. The distributions~~$3,428 during ~~2021 were primarily used to repay Steak n Shake’s debt.~~

Cash used in investing activities during 2022 was $102,464 compared to $55,782 in 2021. Capital expenditures were lower during 2022 by $23,049 compared to 2021. Steak n Shake incurred higher capital expenditures during 2021 for its transition to a self-service model.

~~Cash provided by financing activities was $25,353 in 2022 compared to $154,586 used in 2021. The Company repaid Steak n Shake’s debt during 2021.~~

2022. We intend to meet the working capital needs of our operating subsidiaries principally through anticipated cash flows generated from operations and cash on hand. We continually review available financing alternatives.

Biglari Holdings Line of Credit

On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000. The line of credit will be available on a revolving basis until September 12, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants. ~~As of September 30, 2022, we were in compliance with all covenants.~~ The balance ofon the line of credit on ~~September 30, 2022~~March 31, 2023 was ~~$30,000.~~$6,500. The line of credit was paid in full in April 2023.

~~Steak n Shake Credit Facility~~Western Sizzlin Revolver

OnWestern Sizzlin’s available line of credit is $500. As of March ~~19, 2014, Steak n Shake and~~31, 2023, Western Sizzlin had no debt outstanding on its subsidiaries entered into a credit agreement which provided for a senior secured term loan facility in an aggregate principal amount of $220,000. The term loan was scheduled to mature on March 19, 2021. The Company repaid the balance of Steak n Shake’s term facility on February 19, 2021.revolver.

~~Table of Contents~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~ ~~(continued)~~

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, ~~2021.~~2022.

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

The majority of our investments are conducted through investment partnerships which generally hold common stocks. We also hold marketable securities directly. Through investment partnerships we hold concentrated positions. A significant decline in the general stock market or in the prices of major investments may produce a large net loss 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. 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 $21,490 along with a corresponding change in shareholders’ equity of approximately 3%.

~~We have had minimal exposure to foreign currency exchange rate fluctuations in the first nine months of 2022 and 2021.~~

Our oil and natural gas business is fundamentally a commodity business. This means our operations and earnings may be significantly affected by changes in oil and gas prices. Such commodity prices depend on local, regional and global events or conditions that affect supply and demand for oil and gas. Any material decline in crude oil or natural gas prices could have a material adverse effect on our operations.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 ~~September 30, 2022.~~March 31, 2023.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2022~~March 31, 2023 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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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, ~~2021.~~2022.

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

None

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						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						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.

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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: ~~November 4, 2022~~May 5, 2023	By:	/s/ BRUCE LEWIS
		Bruce Lewis
		Controller

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