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What changed in Biglari Holdings Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Biglari Holdings Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+105 added−105 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-26)

Top changes in Biglari Holdings Inc.'s 2024 10-K

105 paragraphs added · 105 removed · 83 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAs of December 31, 2023, the fair value of the investment partnerships was $472.8 million. In addition, the Company held marketable securities (outside the investment partnerships) of $91.9 million at fair value. Employees As of December 31, 2023, the Company employed 2,466 persons.
Biggest changeThe Company also held marketable securities (outside the investment partnerships) of $103.0 million at fair value. Employees As of December 31, 2024, the Company employed 2,535 persons. Additional information with respect to Biglari Holdings’ businesses Information related to our reportable segments may be found in Part II, Item 8 of this Form 10-K.
Item 1. Business 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.
Item 1. Business Biglari Holdings Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities, including property and casualty insurance and reinsurance, licensing and media, restaurants, and oil and gas. The Company’s largest operating subsidiaries are involved in the franchising and operating of restaurants.
Southern Pioneer underwrites garage liability and commercial property as well as homeowners and dwelling fire insurance on an admitted basis. Insurance coverages are offered nationwide, primarily through insurance agents. Southern Pioneer competes with large companies and local insurers. Southern Pioneer is headquartered in Jonesboro, Arkansas.
Southern Pioneer underwrites garage liability and commercial property as well as homeowners and dwelling fire insurance on an admitted basis. Insurance coverages are offered nationwide, primarily through insurance agents. Southern Pioneer competes with large companies and local insurers.
Southern Oil’s and Abraxas Petroleum’s operations and earnings, therefore, may be significantly affected by changes in oil and natural gas prices. Biglari Holdings’ oil and gas operations compete with fully integrated, major global petroleum companies, as well as independent and national petroleum companies.
The oil and gas industry is fundamentally a commodity business. Southern Oil’s and Abraxas Petroleum’s operations and earnings, therefore, may be significantly affected by changes in oil and natural gas prices. Biglari Holdings’ oil and gas operations compete with fully integrated, major global petroleum companies, as well as independent and national petroleum companies.
As of December 31, 2023, Mr. Biglari beneficially owns shares of the Company that represent approximately 66.8% of the economic interest and approximately 71.0% of the voting interest. Restaurant Operations The Company’s restaurant operations are conducted through two subsidiaries: Steak n Shake Inc. (“Steak n Shake”) and Western Sizzlin Corporation (“Western Sizzlin”) for a combined 492 units.
As of December 31, 2024, Mr. Biglari beneficially owns shares of the Company that represent approximately 74.3% of the voting interest. Restaurant Operations The Company’s restaurant operations are conducted through two subsidiaries: Steak n Shake Inc. (“Steak n Shake”) and Western Sizzlin Corporation (“Western Sizzlin”) for a combined 458 units.
As of December 31, 2023, Steak n Shake had 148 company-operated restaurants, 181 franchise partner units, and 128 traditional franchise units. Western Sizzlin had 3 company-operated restaurants and 32 franchise units. Founded in 1934 in Normal, Illinois, on Route 66, Steak n Shake is a classic American brand serving premium burgers and milkshakes.
As of December 31, 2024, Steak n Shake had 146 company-operated restaurants, 173 franchise partner units, and 107 traditional franchise units. Western Sizzlin had 3 company-operated restaurants and 29 franchise units. Founded in 1934 in Normal, Illinois, on Route 66, Steak n Shake is a classic American brand serving premium burgers and milkshakes.
The insurance business is stringently regulated by state insurance departments. Insurers based in the United States are subject to regulation by their states of domicile and by those states in which they are licensed to write policies on an admitted basis. First Guard and Southern Pioneer operate under licenses issued by various state insurance authorities.
(collectively “Southern Pioneer”); and Biglari Reinsurance Ltd. Insurers based in the U.S. are subject to regulation by their states of domicile and by those states in which they are licensed to write policies on an admitted basis. First Guard and Southern Pioneer operate under licenses issued by various state insurance authorities.
Insurance Business Biglari Holdings’ insurance activities are conducted through two insurance entities, First Guard Insurance Company and its affiliated agency, 1st Guard Corporation (collectively “First Guard”), and Southern Pioneer Property & Casualty Insurance Company and its affiliated agency, Southern Pioneer Insurance Agency, Inc. (collectively “Southern Pioneer”). Our insurance businesses provide insurance of property and casualty.
Property and Casualty Insurance and Reinsurance Business Biglari Holdings’ insurance and reinsurance business activities are conducted through domestic and foreign-based insurance subsidiaries. Included in this group of subsidiaries is First Guard Insurance Company and its affiliated agency, 1st Guard Corporation (collectively “First Guard”); Southern Pioneer Property & Casualty Insurance Company and its affiliated agency, Southern Pioneer Insurance Agency, Inc.
Southern Oil primarily operates oil and natural gas properties offshore in the shallow waters of the Gulf of Mexico. Abraxas Petroleum operates oil and natural gas wells in the Permian Basin. 2 Table of Contents On September 14, 2022, the Company purchased Preferred Shares of Abraxas Petroleum for $80.0 million.
Southern Oil primarily operates oil and natural gas properties offshore in Louisiana state waters. Abraxas Petroleum operates oil and natural gas wells in the Permian Basin. In 2022, the Company purchased 90% of Abraxas Petroleum for $80.0 million. In 2023, the Company acquired the remaining 10% of Abraxas Petroleum for $5.4 million.
Additional information with respect to Biglari Holdings’ businesses Information related to our reportable segments may be found in Part II, Item 8 of this Form 10-K. Biglari Holdings maintains a website ( biglariholdings.com ) where its annual reports, press releases, interim shareholder reports, and links to its subsidiaries’ websites can be found.
Biglari Holdings maintains a website ( biglariholdings.com ) where its annual reports, press releases, interim shareholder reports, and links to its subsidiaries’ websites can be found.
Admitted insurers are generally required to obtain regulatory approval of their policy forms and premium rates. Except for regulatory considerations, there are virtually no barriers to entry into the insurance industry. First Guard is a direct underwriter of commercial truck insurance, primarily selling physical damage and nontrucking liability insurance to truckers.
Admitted insurers are generally required to obtain regulatory approval of their policy forms and premium rates. Except for regulatory considerations, there are virtually no barriers to entry into the insurance industry. The Insurance Act 1978 of Bermuda and related regulations, as amended (the “Insurance Act”), regulates the insurance business of Biglari Reinsurance Ltd.
Removed
On October 26, 2022, the Company exchanged the Preferred Shares for 90% of the outstanding common stock of Abraxas Petroleum. On June 14, 2023, the remaining 10% of the outstanding common stock of Abraxas Petroleum was acquired for $5.4 million. The oil and gas industry is fundamentally a commodity business.
Added
The Insurance Act provides that no person may carry on any insurance business in or from within Bermuda unless registered as an insurer under the Insurance Act by the Bermuda Monetary Authority. The Bermuda Monetary Authority, in deciding whether to grant registration, has broad discretion to act in the public interest.
Removed
When hiring personnel, we do not consider circumstances of birth, race, gender, ethnicity, religion, or any other factor unrelated to talent. The factor of prime importance to us, talent, is invariably found across a wide spectrum of humanity. We seek to associate with people of high character and competence.
Added
The Insurance Act imposes solvency and liquidity standards as well as auditing and reporting requirements and confers on the Bermuda Monetary Authority powers to supervise, investigate, and intervene in the affairs of insurance companies. First Guard is a direct underwriter of commercial truck insurance, primarily selling physical damage and nontrucking liability insurance to truckers.
Added
Southern Pioneer is headquartered in Jonesboro, Arkansas. 2 Table of Contents Biglari Reinsurance Ltd. received its insurance license on July 31, 2024, from the Bermuda Monetary Authority. Biglari Reinsurance is headquartered in Hamilton, Bermuda.
Added
As of December 31, 2024, the fair value of the investment partnerships was $656.3 million. The investments are subject to a rolling five-year lock-up period under the terms of the respective partnership agreements. The lock-up period can be waived by the general partner in its sole discretion.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeUnder the terms of their partnership agreements, each contribution made by the Company to the investment partnerships is subject to a five-year lock-up period, and any distribution upon our withdrawal of funds will be paid out over a two-year period (and may be paid in-kind rather than in cash, thus increasing the difficulty of liquidating these investments).
Biggest changeBiglari. Our investment activities are conducted mainly through these outside investment partnerships. Under the terms of their partnership agreements, each contribution made by the Company to the investment partnerships is subject to a rolling five-year lock-up period.
We are a “controlled company” within the meaning of the New York Stock Exchange rules and thus can rely on exemptions from certain corporate governance requirements. Because Mr. Biglari beneficially owns more than 50% of the Company’s outstanding voting stock, we are considered a “controlled company” pursuant to New York Stock Exchange rules.
We are a “controlled company” within the meaning of the New York Stock Exchange rules and thus can rely on exemptions from certain corporate governance requirements. Because Mr. Biglari beneficially owns more than 50% of the Company’s outstanding voting stock, we are considered a “controlled company” pursuant to New York Stock Exchange (“NYSE”) rules.
Risks Relating to Our Insurance Business Our success depends on our ability to underwrite risks accurately and to charge adequate rates to policyholders. Our results of operations depend on our ability to underwrite and set rates accurately for risks assumed.
Risks Relating to Our Insurance and Reinsurance Business Our success depends on our ability to underwrite risks accurately and to charge adequate rates to policyholders. Our results of operations depend on our ability to underwrite and set rates accurately for risks assumed.
Accordingly, existing or new regulations related to these or other matters, or regulatory actions imposing restrictions on our insurance business, may adversely impact its results of operations. 7 Table of Contents Risks Relating to Our Brand Licensing Business Licensing opportunities for the Maxim brand may be difficult to maintain. Maxim’s success depends to a significant degree upon licensing agreements.
Accordingly, existing or new regulations related to these or other matters, or regulatory actions imposing restrictions on our insurance business, may adversely impact its results of operations. Risks Relating to Our Brand Licensing Business Licensing opportunities for the Maxim brand may be difficult to maintain. Maxim’s success depends to a significant degree upon licensing agreements.
In addition, adverse developments with respect to our ownership of certain of our operating subsidiaries, including significant appreciation or depreciation in the market value of certain of our publicly traded holdings, could result in our inadvertently becoming an investment company.
In addition, adverse developments with respect to our ownership of certain of our operating subsidiaries, including significant appreciation in the market value of certain of our publicly traded holdings, could result in our inadvertently becoming an investment company.
Litigation or changes in national, state, or local environmental regulations or laws, including those designed to stop or impede the development or production of oil and natural gas, could adversely affect our operations and profitability. Item 1B. Unresolved Staff Comments None.
Litigation or changes in national, state, or local environmental regulations or laws, including those designed to stop or impede the development or production of oil and natural gas, could adversely affect our operations and profitability. Item 1B. Unresolved Staff Comments None. 8 Table of Contents
We cannot predict whether we will continue to be able to anticipate and react to changing food costs by adjusting our purchasing practices, menu offerings, and menu prices, and a failure to do so could adversely affect our operating results. 5 Table of Contents Adverse weather conditions or losses due to casualties could negatively impact our operating performance.
We cannot predict whether we will continue to be able to anticipate and react to changing food costs by adjusting our purchasing practices, menu offerings, and menu prices, and a failure to do so could adversely affect our operating results. Adverse weather conditions or losses due to casualties could negatively impact our operating performance.
We attempt to manage our exposure to these events through reinsurance programs, although there is no assurance we will be successful in doing so. Our insurance business is subject to extensive existing state, local, and foreign governmental regulations that restrict its ability to do business and generate revenues.
We attempt to manage our exposure to these events through reinsurance programs, although there is no assurance we will be successful in doing so. 7 Table of Contents Our insurance business is subject to extensive existing state, local, and foreign governmental regulations that restrict its ability to do business and generate revenues.
Biglari, as Chairman and Chief Executive Officer of Biglari Capital, is entitled with respect to our investments under the terms of the respective partnership agreements is equal to 25% of the net profits allocated to the limited partners in excess of a 6% hurdle rate over the previous high-water mark. 6 Table of Contents Our investments may be concentrated, and fair values are subject to a loss in value.
Biglari, as Chairman and Chief Executive Officer of Biglari Capital, is entitled with respect to our investments under the terms of the respective partnership agreements is equal to 25% of the net profits allocated to the limited partners in excess of a 6% hurdle rate over the previous high-water mark.
The majority of our investments are held through the investment partnerships, which generally invest in common stocks. These investments may be largely concentrated in the common stocks of a few investees.
Our investments may be concentrated, and fair values are subject to a loss in value. The majority of our investments are held through the investment partnerships, which generally invest in common stocks. These investments may be largely concentrated in the common stocks of a few investees.
There is a high likelihood that we will make additional investments in these investment partnerships in the future.
There is a high likelihood that we will make additional investments in these investment partnerships in the future. The incentive allocation to which Mr.
Restaurant businesses compete on the basis of price, convenience, service, experience, menu variety, and product quality. The restaurant business is often affected by changes in consumer tastes and by national, regional, and local economic conditions. The performance of individual restaurants may be impacted by factors such as traffic patterns, demographic trends, weather conditions, and competing restaurants.
The restaurant business is often affected by changes in consumer tastes and by national, regional, and local economic conditions. The performance of individual restaurants may be impacted by factors such as traffic patterns, demographic trends, weather conditions, and competing restaurants.
There can be no assurance that the fees paid will be commensurate with the benefits received. The incentive allocation to which Mr.
There can be no assurance that the fees paid to the Biglari Entities will be commensurate with the benefits received.
As a result, decreased cash flow generated from our business may adversely affect our financial position and our ability to fund our operations. In addition, macroeconomic disruptions could adversely impact the availability of financing for our franchisees’ expansions and operations. Fluctuations in commodity and energy prices and the availability of commodities, including beef and dairy, could affect our restaurant business.
In addition, macroeconomic disruptions could adversely impact the availability of financing for our franchisees’ expansions and operations. 5 Table of Contents Fluctuations in commodity and energy prices and the availability of commodities, including beef and dairy, could affect our restaurant business.
Failure to comply with new or existing franchise laws and regulations in any jurisdiction, or to obtain required government approvals, could result in a ban or temporary suspension on future franchise sales. Further national, state, and local government initiatives, such as mandatory health insurance coverage or increases in minimum wage rates, could adversely affect our business.
Failure to comply with new or existing franchise laws and regulations in any jurisdiction, or to obtain required government approvals, could result in a ban or temporary suspension on future franchise sales.
Risks Relating to Our Restaurant Operations Our restaurant operations face intense competition from a wide range of industry participants. The restaurant business is one of the most intensely competitive industries. As there are virtually no barriers to entry into the restaurant business, competitors may include national, regional, and local establishments.
The restaurant business is one of the most intensely competitive industries. As there are virtually no barriers to entry into the restaurant business, competitors may include national, regional, and local establishments. Restaurant businesses compete on the basis of price, convenience, service, experience, menu variety, and product quality.
Risks Relating to Our Investment Activities The majority of our investment activities are conducted through outside investment partnerships, The Lion Fund, L.P., and The Lion Fund II, L.P., which are controlled by Mr. Biglari. Our investment activities are conducted mainly through these outside investment partnerships.
Further national, state, and local government initiatives, such as mandatory health insurance coverage or increases in minimum wage rates, could adversely affect our business. 6 Table of Contents Risks Relating to Our Investment Activities The majority of our investment activities are conducted through outside investment partnerships, The Lion Fund, L.P., and The Lion Fund II, L.P., which are controlled by Mr.
Added
We have identified a material weakness in our internal control over financial reporting. The Company manages its operating businesses on a decentralized basis. Decentralized operations can inherently create additional control risks. Management is responsible for establishing and maintaining adequate internal control over financial reporting.
Added
Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 using criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and determined that the Company did not design effective internal controls over financial reporting to mitigate potential risks.
Added
We cannot be certain that the measures we may take in the future will be sufficient to remediate the control deficiencies that led to our material weakness in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses.
Added
If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, we would be exposed to greater risk of misstatement in the financial statements. Risks Relating to Our Restaurant Operations Our restaurant operations face intense competition from a wide range of industry participants.
Added
As a result, decreased cash flow generated from our business may adversely affect our financial position and our ability to fund our operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed7 unchanged
Biggest changeGiven the wide variations in the nature and size of business activities, specific practices may vary widely among our operating subsidiaries. 8 Table of Contents
Biggest changeGiven the wide variations in the nature and size of business activities, specific practices may vary widely among our operating subsidiaries. 9 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed1 unchanged
Biggest changeSteak n Shake Western Sizzlin Company Operated Franchise Partner Traditional Franchise Company Operated Franchise Total Domestic: Alabama 1 1 4 — 5 11 Arkansas — — 4 — 6 10 California — — 2 — — 2 Colorado 1 — — — — 1 Florida 16 60 5 — — 81 Georgia 7 11 10 — 4 32 Illinois 37 17 8 — — 62 Indiana 35 20 1 — — 56 Iowa 2 1 1 — — 4 Kansas — — 2 — — 2 Kentucky — 12 6 — — 18 Louisiana — — 1 — — 1 Maryland — — — — 1 1 Michigan 7 6 1 — — 14 Mississippi — — 6 — 1 7 Missouri 6 14 20 — — 40 Nebraska — — 1 — — 1 Nevada — — 5 — — 5 North Carolina 1 5 2 — 6 14 Ohio 27 19 1 — 1 48 Oklahoma — — 2 — 2 4 Pennsylvania 1 — 1 — — 2 South Carolina 1 — 2 — 1 4 Tennessee 1 7 9 — 3 20 Texas 1 8 10 — — 19 Virginia — — 4 2 2 8 Washington, D.C. — — 1 — — 1 West Virginia — — 2 1 — 3 International: France 2 — 17 — — 19 Monaco 1 — — — — 1 Spain 1 — — — — 1 Total 148 181 128 3 32 492 As of December 31, 2023, 17 of the 148 Steak n Shake company-operated stores were closed.
Biggest changeSteak n Shake Western Sizzlin Company Operated Franchise Partner Traditional Franchise Company Operated Franchise Total Domestic: Alabama 1 1 3 — 4 9 Arkansas — — 3 — 5 8 California — — 2 — — 2 Colorado 1 — — — — 1 Florida 19 56 4 — — 79 Georgia 7 11 11 — 3 32 Illinois 35 14 7 — — 56 Indiana 32 21 — — — 53 Iowa 2 1 1 — — 4 Kentucky — 12 6 — — 18 Louisiana — — 1 — — 1 Maryland — — — — 1 1 Michigan 9 4 1 — — 14 Mississippi — — 6 — 1 7 Missouri 4 15 20 — — 39 Nebraska — — 1 — — 1 Nevada — — 4 — — 4 North Carolina 1 5 1 — 6 13 Ohio 25 18 1 — 1 45 Oklahoma — — 1 — 2 3 Pennsylvania 1 — — — — 1 South Carolina 1 — 2 — 1 4 Tennessee 1 7 5 — 3 16 Texas 1 8 5 — — 14 Virginia — — 4 2 2 8 Washington, D.C. — — 1 — — 1 West Virginia — — 3 1 — 4 International: France 4 — 14 — — 18 Monaco 1 — — — — 1 Spain 1 — — — — 1 Total 146 173 107 3 29 458 As of December 31, 2024, 10 of the 146 Steak n Shake company-operated stores were closed.
Item 3. Legal Proceedings Refer to Commitments and Contingencies - Note 15 to the Consolidated Financial Statements included in Item 8 for a discussion of legal proceedings. Item 4. Mine Safety Disclosures Not applicable. 10 Table of Contents Part II
Item 3. Legal Proceedings Refer to Commitments and Contingencies - Note 15 to the Consolidated Financial Statements included in Item 8 for a discussion of legal proceedings. Item 4. Mine Safety Disclosures Not applicable. Part II
Steak n Shake plans to sell or lease 10 of the 17 locations and refranchise the balance. 9 Table of Contents Other Properties Southern Oil primarily operates oil and natural gas wells in Louisiana. Its operations are primarily offshore in the shallow waters of the Gulf of Mexico. Abraxas Petroleum operates oil and natural gas wells in the Permian Basin.
Steak n Shake plans to sell or lease six of the 10 locations and refranchise the balance. 10 Table of Contents Other Properties Southern Oil primarily operates oil and natural gas wells in Louisiana. Its operations are primarily offshore in Louisiana state waters. Abraxas Petroleum operates oil and natural gas wells in the Permian Basin.
Item 2. Properties Restaurant Properties As of December 31, 2023, restaurant operations included 492 company-operated and franchise locations. Restaurant operations own the land and building for 142 restaurants; they also own one other property. The following table lists the locations of the restaurants as of December 31, 2023.
Item 2. Properties Restaurant Properties As of December 31, 2024, restaurant operations included 458 company-operated and franchise locations. Restaurant operations own the land and building for 136 restaurants. The following table lists the locations of the restaurants as of December 31, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal Number of Class A Shares Purchased Average Price Paid per Class A Share Total Number of Class B Shares Purchased Average Price Paid per Class B Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs October 1, 2023 - October 31, 2023 — $ — — $ — — — November 1, 2023 - November 30, 2023 — $ — — $ — — — December 1, 2023 - December 31, 2023 1,100 $ 828.69 9,813 $ 164.99 — — Total 1,100 9,813 — Item 6. [Reserved] 11 Table of Contents
Biggest changeTotal Number of Class A Shares Purchased Average Price Paid per Class A Share Total Number of Class B Shares Purchased Average Price Paid per Class B Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs October 1, 2024 - October 31, 2024 — $ — — $ — — — November 1, 2024 - November 30, 2024 4,349 $ 1,012.12 34,838 $ 203.90 — — December 1, 2024 - December 31, 2024 1,508 $ 1,188.35 10,528 $ 231.10 — — Total 5,857 45,366 — Item 6. [Reserved] 11 Table of Contents
Shareholders Biglari Holdings had 1,551 beneficial shareholders of its Class A common stock and 4,374 beneficial shareholders of its Class B common stock as of February 1, 2024. Dividends Biglari Holdings has never declared a dividend.
Shareholders Biglari Holdings had 1,403 beneficial shareholders of its Class A common stock and 4,348 beneficial shareholders of its Class B common stock as of February 6, 2025. Dividends Biglari Holdings has never declared a dividend.
Issuer Purchases of Equity Securities From December 1, 2023 through December 31, 2023, The Lion Fund, L.P. purchased 1,100 shares of Class A common stock and 9,813 shares of Class B common stock. The Lion Fund, L.P. may be deemed an “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended.
Issuer Purchases of Equity Securities From November 12, 2024 through December 17, 2024, The Lion Fund, L.P. purchased 5,857 shares of Class A common stock and 45,366 shares of Class B common stock. The Lion Fund, L.P. may be deemed an “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

46 edited+13 added−20 removed25 unchanged
Biggest changeSteak n Shake plans to sell or lease 10 of the 17 locations and refranchise the balance. 12 Table of Contents Management’s Discussion and Analysis (continued) Restaurant operations for 2023, 2022, and 2021 are summarized below. 2023 2022 2021 Revenue Net sales $ 152,545 $ 149,184 $ 187,913 Franchise partner fees 72,552 63,853 55,641 Franchise royalties and fees 16,443 19,678 21,736 Other revenue 9,317 8,853 6,000 Total revenue 250,857 241,568 271,290 Restaurant cost of sales Cost of food 44,993 29.5 % 44,461 29.8 % 55,315 29.4 % Labor costs 47,090 30.9 % 50,524 33.9 % 58,159 30.9 % Occupancy and other 45,903 30.1 % 45,279 30.4 % 54,017 28.7 % Total cost of sales 137,986 140,264 167,491 Selling, general and administrative General and administrative 44,120 17.6 % 40,206 16.6 % 39,940 14.7 % Marketing 12,631 5.0 % 13,921 5.8 % 13,923 5.1 % Other expenses (income) (7,935) (3.2) % (2,294) (0.9) % 3,323 1.2 % Total selling, general and administrative 48,816 51,833 57,186 Impairments 3,947 1.6 % 3,520 1.5 % 4,635 1.7 % Depreciation and amortization 27,031 10.8 % 27,496 11.4 % 21,484 7.9 % Interest on finance leases and obligations 5,114 5,493 6,039 Earnings before income taxes 27,963 12,962 14,455 Income tax expense 6,132 3,579 3,220 Contribution to net earnings $ 21,831 $ 9,383 $ 11,235 Cost of food, labor, and occupancy and other costs are expressed as a percentage of net sales.
Biggest changeSteak n Shake plans to sell or lease six of the 10 locations and refranchise the balance. 12 Table of Contents Management’s Discussion and Analysis (continued) Restaurant operations for 2024, 2023, and 2022 are summarized below. 2024 2023 2022 Revenue Net sales $ 159,213 $ 152,545 $ 149,184 Franchise partner fees 70,616 72,552 63,853 Franchise royalties and fees 13,632 16,443 19,678 Other revenue 7,986 9,317 8,853 Total revenue 251,447 250,857 241,568 Restaurant cost of sales Cost of food 47,891 30.1 % 44,993 29.5 % 44,461 29.8 % Labor costs 50,431 31.7 % 47,090 30.9 % 50,524 33.9 % Occupancy and other 45,127 28.3 % 45,903 30.1 % 45,279 30.4 % Total cost of sales 143,449 137,986 140,264 Selling, general and administrative General and administrative 47,130 18.7 % 44,120 17.6 % 40,206 16.6 % Marketing 12,584 5.0 % 12,631 5.0 % 13,921 5.8 % Other expenses (income) (5,800) (2.3) % (7,935) (3.2) % (2,294) (0.9) % Total selling, general and administrative 53,914 48,816 51,833 Impairments 107 — % 3,947 1.6 % 3,520 1.5 % Depreciation and amortization 27,002 10.7 % 27,031 10.8 % 27,496 11.4 % Interest on finance leases and obligations 5,361 5,114 5,493 Earnings before income taxes 21,614 27,963 12,962 Income tax expense 6,144 6,132 3,579 Contribution to net earnings $ 15,470 $ 21,831 $ 9,383 Cost of food, labor, and occupancy and other costs are expressed as a percentage of net sales.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands, except per-share data) 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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (dollars in thousands, except per-share data) Biglari Holdings Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities, including property and casualty insurance and reinsurance, licensing and media, restaurants, and oil and gas.
Investment gains and losses in 2023 and 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 gains/losses are generally meaningless for analytical purposes in understanding our reported quarterly or annual results.
Investment gains in 2024 and 2023 were mainly derived from our investments in equity securities and included unrealized gains and losses from market price changes during the period. We believe that investment gains/losses are generally meaningless for analytical purposes in understanding our reported quarterly or annual results.
Investment gains and losses in 2023 and 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 gains/losses are generally meaningless for analytical purposes in understanding our reported quarterly and annual results.
Investment gains and losses in 2024 and 2023 were mainly derived from our investments in equity securities and included unrealized gains and losses from market price changes during the period. We believe that investment gains/losses are generally meaningless for analytical purposes in understanding our reported quarterly and annual results.
The following discussion should also be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and the risks and uncertainties described in Item 1A, Risk Factors, set forth above. Our Management Discussion and Analysis generally discusses 2023 and 2022 items.
The following discussion should also be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements” and the risks and uncertainties described in Item 1A, Risk Factors, set forth above. Our Management Discussion and Analysis generally discusses 2024 and 2023 items.
Biglari Holdings’ insurance operations consist of First Guard and Southern Pioneer.
Biglari Holdings’ insurance operations consist of First Guard, Southern Pioneer, and Biglari Reinsurance.
Discussions of 2021 items can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 27, 2023.
Discussions of 2022 items can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 26, 2024.
Restaurants Our restaurant businesses, which include Steak n Shake and Western Sizzlin, comprise 492 company-operated and franchise restaurants as of December 31, 2023.
Restaurants Our restaurant businesses, which include Steak n Shake and Western Sizzlin, comprise 458 company-operated and franchise restaurants as of December 31, 2024.
Western Sizzlin Revolver Western Sizzlin’s available line of credit is $500. As of December 31, 2023 and 2022, Western Sizzlin had no debt outstanding under its revolver. Critical Accounting Policies Certain accounting policies require us to make estimates and judgments in determining the amounts reflected in the consolidated financial statements.
Our interest rate was 7.8% on December 31, 2024. Western Sizzlin Revolver Western Sizzlin’s available line of credit is $500. As of December 31, 2024 and 2023, Western Sizzlin had no debt outstanding under its revolver. Critical Accounting Policies Certain accounting policies require us to make estimates and judgments in determining the amounts reflected in the consolidated financial statements.
Earnings from our investments in partnerships are summarized below. 2023 2022 2021 Investment partnership gains (losses) $ 19,440 $ (75,953) $ 10,953 Tax expense (benefit) 4,794 (18,992) 2,054 Contribution to net earnings $ 14,646 $ (56,961) $ 8,899 Investment partnership gains include gains/losses from changes in the market values of underlying investments and dividends earned by the partnerships.
Earnings from our investments in partnerships are summarized below. 2024 2023 2022 Investment partnership gains (losses) $ (41,058) $ 19,440 $ (75,953) Tax expense (benefit) (12,939) 4,794 (18,992) Contribution to net earnings $ (28,119) $ 14,646 $ (56,961) Investment partnership gains include gains/losses from changes in the market values of underlying investments and dividends earned by the partnerships.
Discussion of Operations Net earnings attributable to Biglari Holdings Inc. shareholders are disaggregated in the table that follows. 2023 2022 2021 Operating businesses: Restaurant $ 21,831 $ 9,383 $ 11,235 Insurance 10,262 7,662 11,290 Oil and gas 25,406 19,091 7,528 Brand licensing 8 1,313 2,364 Interest expense (531) (305) (841) Corporate and other (17,814) (9,806) (9,829) Total operating businesses 39,162 27,338 21,747 Investment partnership gains (losses) 14,646 (56,961) 8,899 Investment gains (losses) 1,731 (2,682) 4,832 Net earnings (loss) 55,539 (32,305) 35,478 Earnings (loss) attributable to noncontrolling interest 591 (287) — Net earnings (loss) attributable to Biglari Holdings Inc. shareholders $ 54,948 $ (32,018) $ 35,478 The following discussion should be read in conjunction with Item 1, Business and our Consolidated Financial Statements and the notes thereto included in this Form 10-K.
Discussion of Operations Net earnings attributable to Biglari Holdings Inc. shareholders are disaggregated in the table that follows. 2024 2023 2022 Operating businesses: Restaurant $ 15,470 $ 21,831 $ 9,383 Insurance 7,169 10,262 7,662 Oil and gas 15,458 25,406 19,091 Brand licensing (884) 8 1,313 Interest expense (589) (531) (305) Corporate and other (12,503) (17,814) (9,806) Total operating businesses 24,121 39,162 27,338 Investment partnership gains (losses) (28,119) 14,646 (56,961) Investment gains (losses) 239 1,731 (2,682) Net earnings (loss) (3,759) 55,539 (32,305) Earnings (loss) attributable to noncontrolling interest — 591 (287) Net earnings (loss) attributable to Biglari Holdings Inc. shareholders $ (3,759) $ 54,948 $ (32,018) The following discussion should be read in conjunction with Item 1, Business and our Consolidated Financial Statements and the notes thereto included in this Form 10-K.
Steak n Shake Western Sizzlin Company- operated Franchise Partner Traditional Franchise Company- operated Franchise Total Stores on December 31, 2020 276 86 194 3 39 598 Corporate stores transitioned (73) 73 — — — — Net restaurants opened (closed) (4) — (16) — (1) (21) Stores on December 31, 2021 199 159 178 3 38 577 Corporate stores transitioned (16) 16 — — — — Net restaurants opened (closed) (6) — (24) — (2) (32) Stores on December 31, 2022 177 175 154 3 36 545 Corporate stores transitioned (6) 7 (1) — — — Net restaurants opened (closed) (23) (1) (25) — (4) (53) Stores on December 31, 2023 148 181 128 3 32 492 As of December 31, 2023, 17 of the 148 company-operated Steak n Shake stores were closed.
Steak n Shake Western Sizzlin Company- operated Franchise Partner Traditional Franchise Company- operated Franchise Total Stores on December 31, 2021 199 159 178 3 38 577 Corporate stores transitioned (16) 16 — — — — Net restaurants opened (closed) (6) — (24) — (2) (32) Stores on December 31, 2022 177 175 154 3 36 545 Corporate stores transitioned (6) 7 (1) — — — Net restaurants opened (closed) (23) (1) (25) — (4) (53) Stores on December 31, 2023 148 181 128 3 32 492 Corporate stores transitioned 9 (8) (1) — — — Net restaurants opened (closed) (11) — (20) — (3) (34) Stores on December 31, 2024 146 173 107 3 29 458 As of December 31, 2024, 10 of the 146 company-operated Steak n Shake stores were closed.
Oil and Gas A summary of revenue and earnings of oil and gas operations follows. 2023 2022 2021 Oil and gas revenue $ 45,071 $ 57,546 $ 33,004 Oil and gas production costs 17,365 17,842 10,470 Depreciation, depletion, and accretion 10,339 8,013 8,073 Gain on sale of properties (13,563) — — General and administrative expenses 5,164 6,500 4,748 Earnings before income taxes 25,766 25,191 9,713 Income tax expense (benefit) 360 6,100 2,185 Contribution to net earnings $ 25,406 $ 19,091 $ 7,528 Our oil and gas business is highly dependent on oil and natural gas prices.
Oil and Gas A summary of revenue and earnings of oil and gas operations follows. 2024 2023 2022 Oil and gas revenue $ 36,945 $ 45,071 $ 57,546 Oil and gas production costs 16,636 17,365 17,842 Depreciation, depletion, and accretion 11,102 10,339 8,013 General and administrative expenses 6,135 5,164 6,500 Total cost and expenses 33,873 32,868 32,355 Gain on sale of properties 16,700 13,563 — Earnings before income taxes 19,772 25,766 25,191 Income tax expense 4,314 360 6,100 Contribution to net earnings $ 15,458 $ 25,406 $ 19,091 Our oil and gas business is highly dependent on oil and natural gas prices.
Based on a review of the qualitative factors, if we determine it is not more likely than not that the fair value is less than the carrying value, we may bypass the quantitative impairment test. We may also elect not to perform the qualitative assessment for the reporting unit or intangible assets and perform a quantitative impairment test instead.
Based on a review of the qualitative factors, if we determine it is not more likely than not that the fair value is less than the carrying value, we may bypass the quantitative impairment test.
Because we derive most of our revenue from our share of the profits, revenue will decline as we transition from company-operated units to franchise partner units. Fees generated by our franchise partners were $72,552 during 2023 as compared to $63,853 during 2022.
Because we derive most of our revenue from our share of the profits, revenue will decline as we transition from company-operated units to franchise partner units. 13 Table of Contents Management’s Discussion and Analysis (continued) Fees generated by our franchise partners were $70,616 in 2024 as compared to $72,552 during 2023.
Underwriting results of our insurance operations are summarized below. 2023 2022 2021 Underwriting gain (loss) attributable to: First Guard $ 9,492 $ 6,578 $ 10,573 Southern Pioneer (1,038) (1,277) 1,744 Pre-tax underwriting gain 8,454 5,301 12,317 Income tax expense 1,775 1,113 2,587 Net underwriting gain $ 6,679 $ 4,188 $ 9,730 Earnings of our insurance operations are summarized below. 2023 2022 2021 Premiums earned $ 61,225 $ 59,949 $ 55,411 Insurance losses 35,668 37,187 27,649 Underwriting expenses 17,103 17,461 15,445 Pre-tax underwriting gain 8,454 5,301 12,317 Other income and expenses Investment income 3,074 1,380 704 Other income 1,555 3,223 1,414 Total other income 4,629 4,603 2,118 Earnings before income taxes 13,083 9,904 14,435 Income tax expense 2,821 2,242 3,145 Contribution to net earnings $ 10,262 $ 7,662 $ 11,290 Insurance premiums and other on the consolidated statement of earnings includes premiums earned, investment income, other income, and commissions.
Underwriting results of our insurance operations are summarized below. 2024 2023 2022 Underwriting gain (loss) attributable to: First Guard $ 4,038 $ 9,492 $ 6,578 Southern Pioneer 400 (1,038) (1,277) Pre-tax underwriting gain 4,438 8,454 5,301 Income tax expense 932 1,775 1,113 Net underwriting gain $ 3,506 $ 6,679 $ 4,188 Earnings of our insurance operations are summarized below. 2024 2023 2022 Premiums written $ 68,394 $ 63,064 $ 61,108 Premiums earned $ 65,809 $ 61,225 $ 59,949 Insurance losses 43,643 35,668 37,187 Underwriting expenses 17,728 17,103 17,461 Pre-tax underwriting gain 4,438 8,454 5,301 Other income and expenses Investment income 3,928 3,074 1,380 Other income 724 1,555 3,223 Total other income 4,652 4,629 4,603 Earnings before income taxes 9,090 13,083 9,904 Income tax expense 1,921 2,821 2,242 Contribution to net earnings $ 7,169 $ 10,262 $ 7,662 Insurance premiums and other on the consolidated statement of earnings includes premiums earned, investment income, other income, and commissions.
Consolidated cash flow activities are summarized below. 2023 2022 2021 Net cash provided by operating activities $ 73,002 $ 127,825 $ 228,767 Net cash used in investing activities (66,080) (136,605) (58,525) Net cash provided by (used in) financing activities (16,132) 3,860 (156,157) Effect of exchange rate changes on cash 59 38 (64) Increase (decrease) in cash, cash equivalents, and restricted cash $ (9,151) $ (4,882) $ 14,021 In 2023, cash from operating activities decreased by $54,823 as compared to 2022.
Consolidated cash flow activities are summarized below. 2024 2023 2022 Net cash provided by operating activities $ 49,660 $ 73,002 $ 127,825 Net cash used in investing activities (87,388) (66,080) (136,605) Net cash provided by (used in) financing activities 39,484 (16,132) 3,860 Effect of exchange rate changes on cash 22 59 38 Increase (decrease) in cash, cash equivalents, and restricted cash $ 1,778 $ (9,151) $ (4,882) In 2024, cash provided by operating activities decreased by $23,342 as compared to 2023.
We believe the franchise partner information is useful to readers, as they have a direct effect on Steak n Shake’s profitability. 2023 2022 Revenue Net sales and other $ 324,281 $ 296,045 Restaurant cost of sales Cost of food $ 91,317 28.2 % $ 81,952 27.7 % Labor costs 86,286 26.6 % 84,191 28.4 % Occupancy and other 66,135 20.4 % 59,647 20.1 % Total cost of sales $ 243,738 $ 225,790 The Company’s consolidated financial statements do not include data in the table above.
We believe the franchise partner information is useful to readers, as it has a direct effect on Steak n Shake’s profitability. 2024 2023 Revenue Net sales and other $ 326,736 $ 324,281 Restaurant cost of sales Cost of food $ 96,550 29.5 % $ 91,317 28.2 % Labor costs 88,009 26.9 % 86,286 26.6 % Occupancy and other 68,061 20.8 % 66,135 20.4 % Total cost of sales $ 252,620 $ 243,738 The Company’s consolidated financial statements do not include data in the table above.
Earnings for Abraxas Petroleum from the date of acquisition, September 14, 2022, are summarized below. 2023 2022 Oil and gas revenue $ 27,576 $ 11,455 Oil and gas production costs 9,605 4,487 Depreciation, depletion, and accretion 6,359 2,510 Gain on sale of properties (13,563) — General and administrative expenses 2,765 3,806 Earnings before income taxes 22,410 652 Income tax expense (benefit) (384) 154 Contribution to net earnings $ 22,794 $ 498 Southern Oil Southern Oil primarily operates oil and natural gas properties offshore in the shallow waters of the Gulf of Mexico.
Earnings for Abraxas Petroleum from the date of acquisition, September 14, 2022, are summarized below. 2024 2023 2022 Oil and gas revenue $ 22,590 $ 27,576 $ 11,455 Oil and gas production costs 9,517 9,605 4,487 Depreciation, depletion, and accretion 6,202 6,359 2,510 General and administrative expenses 3,718 2,765 3,806 Total cost and expenses 19,437 18,729 10,803 Gain on sale of properties 16,700 13,563 — Earnings before income taxes 19,853 22,410 652 Income tax expense (benefit) 4,361 (384) 154 Contribution to net earnings $ 15,492 $ 22,794 $ 498 Abraxas Petroleum’s revenue decreased $4,986, or 18.1% during 2024 compared to 2023.
A summary of First Guard’s underwriting results follows. 2023 2022 2021 Amount % Amount % Amount % Premiums earned $ 36,917 100.0 % $ 35,914 100.0 % $ 33,521 100.0 % Insurance losses 20,861 56.5 % 22,299 62.1 % 16,338 48.7 % Underwriting expenses 6,564 17.8 % 7,037 19.6 % 6,610 19.7 % Total losses and expenses 27,425 74.3 % 29,336 81.7 % 22,948 68.4 % Pre-tax underwriting gain $ 9,492 $ 6,578 $ 10,573 First Guard’s ratio of losses and loss adjustment expenses to premiums earned was 56.5% during 2023 as compared to 62.1% during 2022.
A summary of First Guard’s underwriting results follows. 2024 2023 2022 Amount % Amount % Amount % Premiums written $ 37,691 $ 36,917 $ 35,914 Premiums earned $ 37,691 100.0 % $ 36,917 100.0 % $ 35,914 100.0 % Insurance losses 27,236 72.3 % 20,861 56.5 % 22,299 62.1 % Underwriting expenses 6,417 17.0 % 6,564 17.8 % 7,037 19.6 % Total losses and expenses 33,653 89.3 % 27,425 74.3 % 29,336 81.7 % Pre-tax underwriting gain $ 4,038 $ 9,492 $ 6,578 First Guard produced an underwriting gain in 2024.
Interest on obligations under leases was $5,114 during 2023 versus $5,493 during 2022. The year-over-year decrease in interest expense was primarily attributable to the maturity and retirement of lease obligations. To better convey the performance of the franchise partnership model, the table below shows the underlying sales, cost of food, labor costs, and other restaurant costs of the franchise partners.
Other income decreased during 2024 compared to 2023, primarily because of fewer real estate transactions. Interest on obligations under leases was $5,361 during 2024 versus $5,114 during 2023. To better convey the performance of the franchise partnership model, the table below shows the underlying sales, cost of food, labor costs, and other restaurant costs of the franchise partners.
Southern Pioneer’s performance in both years was primarily attributable to weather-related losses. 16 Table of Contents Management’s Discussion and Analysis (continued) Insurance – Investment Income A summary of net investment income attributable to our insurance operations follows. 2023 2022 2021 Interest, dividends, and other investment income: First Guard $ 1,873 $ 751 $ 133 Southern Pioneer 1,201 629 571 Pre-tax investment income 3,074 1,380 704 Income tax expense 646 289 148 Net investment income $ 2,428 $ 1,091 $ 556 We consider investment income as a component of our aggregate insurance operating results.
Southern Pioneer’s ratio of losses and loss adjustment expenses to premiums earned was 58.4% during 2024 as compared to 60.9% during 2023. 16 Table of Contents Management’s Discussion and Analysis (continued) Insurance – Investment Income A summary of net investment income attributable to our insurance operations follows. 2024 2023 2022 Interest, dividends, and other investment income: First Guard $ 1,976 $ 1,873 $ 751 Southern Pioneer 1,895 1,201 629 Biglari Reinsurance 57 — — Pre-tax investment income 3,928 3,074 1,380 Income tax expense 825 646 289 Net investment income $ 3,103 $ 2,428 $ 1,091 We consider investment income as a component of our aggregate insurance operating results.
As of December 31, 2023, there were 181 franchise partner units as compared to 175 franchise partner units as of December 31, 2022. Included in the franchise partner fees were $22,687 and $20,426 of rental income during 2023 and 2022, respectively.
As of December 31, 2024, there were 173 franchise partner units as compared to 181 franchise partner units as of December 31, 2023. Included in the franchise partner fees were $22,884 and $22,687 of rental income during 2024 and 2023, respectively. Franchise partners rent buildings and equipment from Steak n Shake.
For finance leases, we recognize amortization expense on the right-of-use asset and interest expense on the lease liability over the lease term. 22 Table of Contents Management’s Discussion and Analysis (continued) Recently Issued Accounting Pronouncements For detailed information regarding recently issued accounting pronouncements and the expected impact on our consolidated financial statements, see Note 1 “Summary of Significant Accounting Policies” in the accompanying notes to consolidated financial statements included in Part II, Item 8 of this report on Form 10-K.
We may also elect not to perform the qualitative assessment for the reporting unit or intangible assets and perform a quantitative impairment test instead. 22 Table of Contents Management’s Discussion and Analysis (continued) Recently Issued Accounting Pronouncements For detailed information regarding recently issued accounting pronouncements and the expected impact on our consolidated financial statements, see Note 1 “Summary of Significant Accounting Policies” in the accompanying notes to consolidated financial statements included in Part II, Item 8 of this report on Form 10-K.
General and administrative, marketing, other expenses, impairments, and depreciation and amortization are expressed as a percentage of total revenue. Net sales during 2023 were $152,545 as compared to $149,184 during 2022.
General and administrative, marketing, other expenses, impairments, and depreciation and amortization are expressed as a percentage of total revenue. Net sales during 2024 were $159,213 as compared to $152,545 during 2023. Steak n Shake’s same-store sales increased 6.4% at its company-operated units.
All major investment and capital allocation decisions are made for the Company and its subsidiaries by Mr. Biglari. As of December 31, 2023, Mr. Biglari beneficially owns shares of the Company that represent approximately 66.8% of the economic interest and approximately 71.0% of the voting interest.
All major investment and capital allocation decisions are made for the Company and its subsidiaries by Mr. Biglari. As of December 31, 2024, Mr. Biglari beneficially owns shares of the Company that represent approximately 74.3% of the voting interest. Business Acquisitions During 2022, the Company purchased 90% of Abraxas Petroleum Corporation (“Abraxas Petroleum”) for $80,000.
Cash provided by financing activities of $3,860 during 2022 was primarily due to net borrowings on the Company’s line of credit. We intend to meet the working capital needs of our operating subsidiaries, principally through cash flows generated from operations and cash on hand. We continually review available financing alternatives.
We intend to meet the working capital needs of our operating subsidiaries, principally through cash flows generated from operations and cash on hand. We continually review available financing alternatives. Biglari Holdings Lines of Credit Biglari Holdings’ line of credit was amended on September 13, 2024, and the available line of credit was increased to $35,000.
The cost of food expressed as a percentage of net sales in 2023 remained consistent with 2022. The labor costs at company-operated restaurants during 2023 were $47,090, or 30.9% of net sales as compared to $50,524, or 33.9% of net sales in 2022.
The labor costs at company-operated restaurants during 2024 were $50,431, or 31.7% of net sales as compared to $47,090, or 30.9% of net sales in 2023. Labor costs expressed as a percentage of net sales increased during 2024 compared to 2023 primarily due to an increase in store-level managers.
December 31, 2023 2022 Cash and cash equivalents $ 28,066 $ 37,467 Investments 91,879 69,466 Fair value of interest in investment partnerships 472,772 383,004 Total cash and investments 592,717 489,937 Less: portion of Company stock held by investment partnerships (273,669) (227,210) Carrying value of cash and investments on balance sheet $ 319,048 $ 262,727 Unrealized gains/losses of Biglari Holdings’ stock held by the investment partnerships are eliminated in the Company’s consolidated financial results. 20 Table of Contents Management’s Discussion and Analysis (continued) Liquidity Our balance sheet continues to maintain significant liquidity.
December 31, 2024 2023 Cash and cash equivalents $ 30,709 $ 28,066 Investments 102,975 91,879 Fair value of interest in investment partnerships 656,266 472,772 Total cash and investments 789,950 592,717 Less: portion of Company stock held by investment partnerships (454,539) (273,669) Carrying value of cash and investments on balance sheet $ 335,411 $ 319,048 Unrealized gains/losses of Biglari Holdings’ stock held by the investment partnerships are eliminated in the Company’s consolidated financial results.
Earnings of operations are summarized below. 2023 2022 2021 Licensing and media revenue $ 2,118 $ 4,577 $ 3,203 Licensing and media cost 1,840 2,695 2,275 General and administrative expenses 267 122 114 Earnings before income taxes 11 1,760 814 Income tax expense 3 447 (1,550) Contribution to net earnings $ 8 $ 1,313 $ 2,364 Licensing and media revenue decreased $2,459 in 2023 compared to 2022 primarily because an important licensing transaction shifted from 2023 to 2024.
Earnings of operations are summarized below. 2024 2023 2022 Licensing and media revenue $ 1,029 $ 2,118 $ 4,577 Licensing and media cost 2,036 1,840 2,695 General and administrative expenses 173 267 122 Earnings (loss) before income taxes (1,180) 11 1,760 Income tax expense (296) 3 447 Contribution to net earnings $ (884) $ 8 $ 1,313 Licensing and media revenue decreased $1,089 in 2024 compared to 2023 primarily due to the poor performance of an important licensing arrangement. 19 Table of Contents Management’s Discussion and Analysis (continued) Investment Gains and Investment Partnership Gains Investment gains net of tax were $239 in 2024 as compared to $1,731 in 2023.
The Company’s financial results include the results of Abraxas Petroleum from the initial acquisition date to the end of the calendar year.
During 2023, the Company acquired the remaining 10% of Abraxas Petroleum for $5,387. The Company’s financial results include the results of Abraxas Petroleum from the date of acquisition, September 14, 2022, to the end of the calendar year.
Investment Gains and Investment Partnership Gains Investment gains were $2,211 ($1,731 net of tax) in 2023 as compared to investment losses of $3,393 ($2,682 net of tax) in 2022. Dividends and interest earned on investments are reported as investment income by our insurance companies. We consider investment income as a component of our aggregate insurance operating results.
Dividends and interest earned on investments are reported as investment income by our insurance companies. We consider investment income as a component of our aggregate insurance operating results. However, we consider investment gains and losses, whether realized or unrealized, as non-operating.
A summary of Southern Pioneer’s underwriting results follows. 2023 2022 2021 Amount % Amount % Amount % Premiums earned $ 24,308 100.0 % $ 24,035 100.0 % $ 21,890 100.0 % Insurance losses 14,807 60.9 % 14,888 61.9 % 11,311 51.7 % Underwriting expenses 10,539 43.4 % 10,424 43.4 % 8,835 40.4 % Total losses and expenses 25,346 104.3 % 25,312 105.3 % 20,146 92.1 % Pre-tax underwriting gain (loss) $ (1,038) $ (1,277) $ 1,744 Southern Pioneer’s ratio of losses and loss adjustment expenses to premiums earned was 60.9% during 2023 as compared to 61.9% during 2022.
A summary of Southern Pioneer’s underwriting results follows. 2024 2023 2022 Amount % Amount % Amount % Premiums written $ 30,703 $ 26,147 $ 25,194 Premiums earned $ 28,118 100.0 % $ 24,308 100.0 % $ 24,035 100.0 % Insurance losses 16,407 58.4 % 14,807 60.9 % 14,888 61.9 % Underwriting expenses 11,311 40.2 % 10,539 43.4 % 10,424 43.4 % Total losses and expenses 27,718 98.6 % 25,346 104.3 % 25,312 105.3 % Pre-tax underwriting gain (loss) $ 400 $ (1,038) $ (1,277) Premiums earned increased $3,810, or 15.7% in 2024 compared to 2023, primarily because of growth in its personal lines, e.g., homeowners insurance.
Earnings for Southern Oil are summarized below. 2023 2022 2021 Oil and gas revenue $ 17,495 $ 46,091 $ 33,004 Oil and gas production costs 7,760 13,355 10,470 Depreciation, depletion, and accretion 3,980 5,503 8,073 General and administrative expenses 2,399 2,694 4,748 Earnings before income taxes 3,356 24,539 9,713 Income tax expense 744 5,946 2,185 Contribution to net earnings $ 2,612 $ 18,593 $ 7,528 18 Table of Contents Management’s Discussion and Analysis (continued) Brand Licensing Maxim’s business lies principally in licensing and media.
Earnings for Southern Oil are summarized below. 2024 2023 2022 Oil and gas revenue $ 14,355 $ 17,495 $ 46,091 Oil and gas production costs 7,119 7,760 13,355 Depreciation, depletion, and accretion 4,900 3,980 5,503 General and administrative expenses 2,417 2,399 2,694 Total cost and expenses 14,436 14,139 21,552 Earnings (loss) before income taxes (81) 3,356 24,539 Income tax expense (benefit) (47) 744 5,946 Contribution to net earnings $ (34) $ 2,612 $ 18,593 Southern Oil’s revenue decreased $3,140, or 17.9% during 2024 compared to 2023.
On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000. There was no balance on the line of credit on December 31, 2023. The balance on the line of credit was $10,000 on December 31, 2022.
There was no balance on the line of credit on December 31, 2023. Our interest rate was 7.1% on December 31, 2024, and 8.1% on December 31, 2023, respectively. 21 Table of Contents Management’s Discussion and Analysis (continued) On November 8, 2024, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $75,000.
Franchise partners rent buildings and equipment from Steak n Shake. 13 Table of Contents Management’s Discussion and Analysis (continued) The franchise royalties and fees generated by the traditional franchising business were $16,443 during 2023 as compared to $19,678 during 2022. The decrease in franchise royalties and fees was primarily due to the closing of certain traditional franchise stores.
The franchise royalties and fees generated by the traditional franchising business were $13,632 during 2024 as compared to $16,443 during 2023. The decrease in franchise royalties and fees was primarily due to the closing of certain traditional franchise stores. There were 136 traditional units open on December 31, 2024, as compared to 160 units open on December 31, 2023.
There were 160 traditional units open on December 31, 2023, as compared to 190 units open on December 31, 2022. The cost of food at company-operated units in 2023 was $44,993, or 29.5% of net sales as compared to $44,461, or 29.8% of net sales in 2022.
The cost of food at company-operated units in 2024 was $47,891, or 30.1% of net sales as compared to $44,993, or 29.5% of net sales in 2023. The increase was primarily due to cost inflation.
The change was primarily attributable to distributions from investment partnerships of $14,500 in 2023 compared to $70,700 in 2022. The distributions during 2022 were primarily used to acquire Abraxas Petroleum. Net cash used in investing activities was $70,525 lower during 2023 as compared to 2022.
The change was primarily attributable to a decrease of $15,511 in cash from our business operations and a $4,500 decrease in distributions from investment partnerships. Net cash used in investing activities was $21,308 higher during 2024 as compared to 2023.
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 13, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants.
The line of credit will be available on a revolving basis until November 7, 2027. The line of credit includes customary covenants as well as financial maintenance covenants. As of December 31, 2024, we were in compliance with all covenants. The balance of the line of credit was $10,000 on December 31, 2024.
As a result of the transaction, a gain of $13,563 was recorded in 2023. 17 Table of Contents Management’s Discussion and Analysis (continued) Abraxas Petroleum Abraxas Petroleum operates oil and natural gas properties in the Permian Basin.
It is expected that the prices of oil and gas commodities will remain volatile, which will be reflected in our financial results. 17 Table of Contents Management’s Discussion and Analysis (continued) Abraxas Petroleum Abraxas Petroleum operates oil and natural gas properties in the Permian Basin.
During the third quarter of 2023, Abraxas Petroleum entered into a royalty-based arrangement with an unaffiliated party to conduct development activities that will establish proved undeveloped reserves on its proportional share; however, Abraxas Petroleum will not be required to fund any exploration expenditures on its undeveloped properties.
Abraxas Petroleum reduced production by shutting in wells during 2024 due to lower natural gas prices. Abraxas Petroleum recorded a gain of $16,700 as a result of selling undeveloped reserves to an unaffiliated party whose aim is to conduct development activities; however, Abraxas Petroleum will not be required to fund any exploration expenditures on its undeveloped properties.
The 3-percentage-point decrease in costs was primarily attributable to a 2.7-percentage-point decrease in Steak n Shake’s labor costs as a result of a gain in productivity. General and administrative expenses during 2023 were $44,120, or 17.6% of total revenue as compared to $40,206, or 16.6% of total revenue during 2022.
General and administrative expenses during 2024 were $47,130, or 18.7% of total revenue as compared to $44,120, or 17.6% of total revenue during 2023. The increase in general and administrative expenses was mainly attributable to Steak n Shake: higher legal fees ($700), fees related to its new prototype ($500), and contractual services ($900).
As of December 31, 2023, we were in compliance with all covenants. There was no balance on the line of credit on December 31, 2023. The balance of the line of credit was $10,000 on December 31, 2022. Our interest rate is based on the 30-day Secured Overnight Financing Rate plus 2.73%.
The line of credit matures on September 13, 2026. The line of credit includes customary covenants as well as financial maintenance covenants. As of December 31, 2024, we were in compliance with all covenants. There was a $35,000 balance on the line of credit on December 31, 2024.
The Company records gains from the investment partnerships (inclusive of the investment partnerships’ unrealized gains and losses on their securities) in the consolidated statement of earnings based on our proportional ownership interest in the investment partnerships. 21 Table of Contents Management’s Discussion and Analysis (continued) Impairment of Restaurant Long-lived Assets We review company-operated restaurants for impairment on a restaurant-by-restaurant basis when events or circumstances indicate a possible impairment.
A discussion of our principal accounting policies that required the application of significant judgments as of December 31, 2024, follows. Impairment of Restaurant Long-lived Assets We review company-operated restaurants for impairment on a restaurant-by-restaurant basis when events or circumstances indicate a possible impairment.
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. Southern Pioneer Southern Pioneer underwrites garage liability and commercial property insurance, as well as homeowners and dwelling fire insurance.
Southern Pioneer Southern Pioneer underwrites garage liability and commercial property insurance, as well as homeowners and dwelling fire insurance.
Corporate and Other Corporate expenses exclude the activities of the restaurant, insurance, brand licensing, and oil and gas businesses. Corporate and other net losses increased in 2023 compared to 2022 primarily due to an incentive fee of $7,271.
The effective tax rate for the Company (excluding investment partnership activities) was 26.0% during 2024 compared to 9.9% during 2023. The increase in the effective tax rates is primarily attributable to certain tax benefits recognized by Abraxas Petroleum during 2023. Corporate and Other Corporate expenses exclude the activities of the restaurant, insurance, brand licensing, and oil and gas businesses.
Removed
Business Acquisitions On September 14, 2022, the Company purchased Preferred Shares of Abraxas Petroleum Corporation (“Abraxas Petroleum”) for $80,000. On October 26, 2022, the Company converted the Preferred Shares to 90% of the outstanding common stock of Abraxas Petroleum. On June 14, 2023, the remaining 10% of the outstanding common stock of Abraxas Petroleum was acquired for $5,387.
Added
Our share of franchise partner fees was $1,936, or 2.7% lower during 2024 as compared to 2023 primarily because our franchise partners’ cost of food expenses were 1.3 percentage points higher during 2024 as compared to 2023. Our share of the increased cost of food expenses was $2,617.
Removed
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 purchase price allocation included $70,200 of oil and gas properties, cash of $21,726, and liabilities, net of other assets, of $11,926.
Added
Its underwriting gain declined $5,454, or 57.5% in 2024 as compared to 2023, reflecting significant increases in average claim severity, primarily due to significant cost inflation in physical damage claims. It is the nature of the insurance business to experience volatility in underwriting performance.
Removed
General and administrative expenses increased during 2023 as compared to 2022 primarily because of higher salaries and wages. An increase in overall personnel and additional franchise partner training accounted for much of the increase in general and administrative expenses. Other income increased during 2023 compared to 2022 primarily because of gains on the sale of real estate.
Added
We did not record any impairments to our oil and gas assets during 2024. However, we may be required to record impairments of our oil and gas properties resulting from prolonged declines in oil and gas prices.
Removed
The average West Texas Intermediate price per barrel for the year ended December 31, 2023, was approximately $77.64 as compared to approximately $94.53 for the year ended December 31, 2022. It is expected that the prices of oil and gas commodities will remain volatile, which will be reflected in our financial results.
Added
During the third quarter of 2023, Abraxas Petroleum entered into a similar royalty-based arrangement on its undeveloped properties, which began producing in the third quarter of 2024. Abraxas Petroleum’s general and administrative expenses increased $953, or 34.5%, primarily because of estimated costs to plug, abandon, and reclaim wells in North Dakota.
Removed
Oil and gas production costs have remained constant despite a decrease in revenue primarily because of the acquisition of Abraxas Petroleum and costs to repair nonperforming wells at Southern Oil.
Added
The costs relate to wells that Abraxas used prior to our acquisition of Abraxas Petroleum. 18 Table of Contents Management’s Discussion and Analysis (continued) Southern Oil Southern Oil primarily operates oil and natural gas properties offshore in Louisiana state waters.
Removed
Depreciation, depletion, and accretion expense during 2023 increased $2,326 as compared to 2022, primarily due to the acquisition of Abraxas Petroleum in the third quarter of 2022, offset by temporarily shutting producing wells.
Added
Southern Oil repaired several nonperforming wells throughout 2024. Southern Oil completed the drilling of a well during the second half of 2024, which accounted for the majority of the increased depletion costs. Brand Licensing Maxim’s business lies principally in licensing and media.
Removed
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.
Added
Interest Expense The Company’s interest expense is summarized below. 2024 2023 2022 Interest expense on notes payable and other borrowings $ (771) $ (681) $ (399) Tax benefit (182) (150) (94) Interest expense net of tax $ (589) $ (531) $ (305) Income Taxes The consolidated income tax benefit was $4,395 in 2024 versus the tax expense of $9,308 in 2023.
Removed
However, we consider investment gains and losses, whether realized or unrealized, as non-operating.
Added
The variance in income taxes between 2024 and 2023 is attributable to taxes on income generated by the investment partnerships. Excluding investment partnership activities, pretax income was $32,904 and $45,407 and tax expense was $8,544 and $4,514 during 2024 and 2023, respectively.
Removed
These gains and losses have caused and will continue to cause significant volatility in our periodic earnings. 19 Table of Contents Management’s Discussion and Analysis (continued) Interest Expense The Company’s interest expense is summarized below. 2023 2022 2021 Interest expense on notes payable and other borrowings $ (681) $ (399) $ (1,121) Tax benefit (150) (94) (280) Interest expense net of tax $ (531) $ (305) $ (841) The Company paid Steak n Shake’s outstanding credit facility in full in February 2021.
Added
Net losses for Corporate and other were $12,503 during 2024 and $17,814 during 2023.
Removed
Income Taxes The consolidated income tax expense was $9,308 in 2023 versus a benefit of $10,722 in 2022. During 2023, the Company recognized tax benefits of $5,660 associated with the tax attributes of Abraxas Petroleum’s oil and gas properties offset by an increase in tax expense of $23,786 for investment partnership gains in 2023.
Added
The decrease in net losses was primarily due to a decrease in accrued incentive fees. 20 Table of Contents Management’s Discussion and Analysis (continued) Financial Condition Our consolidated shareholders’ equity on December 31, 2024, was $572,961, a decrease of $26,369 as compared to the December 31, 2023 balance.
Removed
Financial Condition Our consolidated shareholders’ equity on December 31, 2023, was $599,330, an increase of $52,364 as compared to the December 31, 2022 balance. The increase in shareholders’ equity was primarily due to net income of $54,948 and an increase in additional paid-in capital for purchases of noncontrolling interest of $3,806, offset by a change in treasury stock of $6,662.
Added
The decrease in shareholders’ equity was primarily due to a net loss of $3,759 and a change in treasury stock of $22,256. Consolidated cash and investments are summarized below.
Removed
Capital expenditures were $6,341 higher in 2022 primarily due to Steak n Shake’s implementation of a self-service model. Proceeds from sales of property and equipment were $19,309 higher in 2023 primarily due to the sale of oil and gas properties for $13,563 and the sale of restaurant properties for $10,883.
Added
Liquidity Our balance sheet continues to maintain significant liquidity.
Removed
During 2022, the Company acquired 90% of Abraxas Petroleum for $58,274, net of cash acquired. In 2023, the Company acquired the remaining 10% of Abraxas Petroleum for $5,387. Cash used by financing activities of $16,132 during 2023 was primarily due to net repayments on the Company’s line of credit.
Added
Capital expenditures by our oil and gas business increased $11,239 primarily due to the drilling of an oil well by Southern Oil, and purchases of limited partnership interests, which were $30,908 higher during 2024 as compared to 2023. The Company had net borrowings of $45,000 on its lines of credit in 2024 and had net repayments of $10,000 in 2023.
Removed
A discussion of our principal accounting policies that required the application of significant judgments as of December 31, 2023, follows. Consolidation The consolidated financial statements include the accounts of Biglari Holdings Inc. and the wholly owned subsidiaries of Biglari Holdings Inc. The analysis as to whether to consolidate an entity is subject to a significant amount of judgment.
Removed
All intercompany accounts and transactions are eliminated in consolidation. Our interests in the investment partnerships are accounted for as equity method investments because of our retained limited partner interest in the investment partnerships.
Removed
Leases We determine whether a contract is or contains a lease at contract inception based on the presence of identified assets and our right to obtain substantially all of the economic benefit from, or to direct the use of, such assets.
Removed
When we determine a lease exists, we record a right-of-use asset and corresponding lease liability on our consolidated balance sheets. Right-of-use assets represent our right to use an underlying asset for the lease term. Lease liabilities represent our obligation to make lease payments arising from the lease.
Removed
Right-of-use assets are recognized at the commencement date at the value of the lease liability and are adjusted for any prepayments, lease incentives received, and initial direct costs incurred. Lease liabilities are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term.
Removed
As the discount rate implicit in the lease is not readily determinable in most of our leases, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.
Removed
Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We do not record lease contracts with a term of 12 months or less on our consolidated balance sheets. We recognize fixed lease expense for operating leases on a straight-line basis over the lease term.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk 23 Item 8. Financial Statements and Supplementary Data 24 Consolidated Balance Sheets 27 Consolidated Statements of Earnings 28 Consolidated Statements of Comprehensive Income 29 Consolidated Statements of Cash Flows 30 Consolidated Statements of Changes in Shareholders’ Equity 31 Notes to Consolidated Financial Statements 32
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk 23 Item 8. Financial Statements and Supplementary Data 24 Consolidated Balance Sheets 28 Consolidated Statements of Earnings 29 Consolidated Statements of Comprehensive Income 30 Consolidated Statements of Cash Flows 31 Consolidated Statements of Changes in Shareholders’ Equity 32 Notes to Consolidated Financial Statements 33

Other BH 10-K year-over-year comparisons