FORM 10-Q ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 BIGLARI HOLDINGS INC. (Exact name of registrant as specified in its charter) | --- | --- | --- | |----------------------------------------------------------------------|----------------------------------------------------|-------------------------------------------------------| | 19100 Ridgewood Parkway, Suite \nSan Antonio, Texas | 1200 | 78259 | | (Address of principal executive offices) | | (Zip Code) | | ...

Financial Performance - The cost of food at company-operated units in Q2 2023 was $11,702, representing 29.6% of net sales, a decrease from 30.2% in Q2 2022[9] - General and administrative expenses in Q2 2023 were $10,790, or 16.7% of total revenue, slightly down from 16.8% in Q2 2022[10] - Interest on lease obligations decreased to $2,608 in 2023 from $2,797 in 2022 due to the maturity and retirement of lease obligations[11] - First Guard's pre-tax underwriting gain increased to $2,704 in Q2 2023 from $1,433 in Q2 2022, while Southern Pioneer reported a pre-tax underwriting loss of $451 in Q2 2023[13] - Total premiums earned in Q2 2023 were $15,971, up from $15,226 in Q2 2022, with insurance losses decreasing to $8,372 from $9,244[14] - Oil and gas revenues in Q2 2023 were $4,810, a significant decline from $14,440 in Q2 2022, with production costs at $1,868 compared to $3,843[19] - Licensing and media revenue in Q2 2023 was $761, down from $1,249 in Q2 2022, with a corresponding decrease in costs[20] - Net investment income for Q2 2023 was $594 million, a significant increase from $203 million in Q2 2022, and for the first six months of 2023, it reached $1,056 million compared to $371 million in the same period of 2022[34] - Earnings before income taxes for Q2 2023 were $2,890 million, a decrease from $8,421 million in Q2 2022, with first six months earnings at $4,993 million compared to $12,342 million in 2022[35] - Total revenues for the second quarter of 2023 reached $93,540 thousand, up from $92,367 thousand in the same period of 2022, reflecting a year-over-year increase of 1.3%[83] - Net earnings attributable to Biglari Holdings Inc. shareholders for the second quarter of 2023 were $1,936 thousand, compared to a loss of $73,780 thousand in the second quarter of 2022[83] - The company reported a total of $64,491 thousand in revenues from restaurant operations for the second quarter of 2023, an increase from $60,324 thousand in the same quarter of 2022, marking a growth of 3.6%[83] - Net earnings for the first six months of 2023 were $67,413, compared to a loss of $74,078 in the same period of 2022[87] - Total comprehensive income attributable to Biglari Holdings Inc. shareholders for the second quarter of 2023 was $1,614, compared to a loss of $74,801 in the same quarter of 2022[101] Investment and Assets - The company acquired Maxim to transform its business model and generate non-magazine revenue through licensing and consumer products[37] - Total assets increased to $889,996 thousand in 2023 from $828,474 thousand in 2022, representing a growth of approximately 7.5%[67] - The company’s investment partnerships grew significantly to $228,736 thousand in 2023, up from $155,794 thousand in 2022, indicating a growth of approximately 46.7%[67] - The total fair value of financial assets as of June 30, 2023, was $105,222, compared to $88,267 as of December 31, 2022, indicating an increase of 19.2%[200] - The total assets of the investment partnerships as of June 30, 2023, were $423.880 million, with total liabilities of $19.939 million[120] Cash Flow and Liquidity - Net cash used in investing activities decreased by $4,345 in 2023 compared to 2022, with capital expenditures down by $5,856[27] - The company maintains significant liquidity, with consolidated cash flow activities reflecting improved asset sales[26] - Net cash provided by operating activities for the first six months of 2023 was $31,518 million, down from $34,204 million in 2022[42] - The company utilized $6,400 million for net payments on its line of credit during 2023, contributing to a decrease in cash[43] - The company reported net cash provided by operating activities of $31,518 for the first six months of 2023, down from $34,204 in 2022[87] - Cash, cash equivalents, and restricted cash at the end of the second quarter of 2023 totaled $32,469, a decrease from $41,850 at the end of the second quarter of 2022[87] - The company reported a decrease in cash and cash equivalents from $38,805 at the beginning of the year to $32,469 at the end of the second quarter[87] - The company’s cash and cash equivalents decreased to $30,881 thousand in 2023 from $37,467 thousand in 2022, a decline of about 17.4%[67] Liabilities and Expenses - Current liabilities decreased to $121,446 thousand in 2023 from $134,897 thousand in 2022, a reduction of approximately 10%[67] - Total liabilities slightly increased to $273,642 thousand in 2023 from $272,906 thousand in 2022, reflecting a marginal rise of 0.3%[67] - The net liabilities as of June 30, 2023, were $14,680, compared to $13,474 as of June 30, 2022, reflecting an increase of approximately 8.9%[148] - The company reported incurred losses and loss adjustment expenses of $16,968 for the first six months of 2023, down from $18,832 in the same period of 2022, indicating a decrease of about 9.9%[166] - The effective income tax expense for the first six months of 2023 was $20,756, compared to an income tax benefit of $22,880 for the same period in 2022, reflecting a significant change due to income generated by investment partnerships[174] Franchise and Operations - Franchise partner fees for the first six months of 2023 totaled $36.982 million, compared to $32.049 million in the same period of 2022, showing growth in franchise operations[144] - Franchise partner fees related to rental income for the first six months of 2023 were $11,338, up from $9,831 in the same period of 2022, showing an increase of about 15.3%[162] - Total lease income for the second quarter of 2023 was $5,965, compared to $5,371 in the second quarter of 2022, representing an increase of approximately 11%[157] - The company reported a total of 177 franchise partner units as of June 30, 2023, unchanged from the previous year, but with a decrease in traditional units from 166 to 138[205] - The company plans to refranchise the remaining closed company-operated Steak n Shake restaurants, with 30 out of 167 stores closed as of June 30, 2023[202] Operational Performance - Total operating businesses generated $16,253 in earnings for the second quarter of 2023, compared to $15,364 in the same quarter of 2022, reflecting a year-over-year increase of 5.8%[187] - Restaurant operations, including Steak n Shake and Western Sizzlin, reported earnings of $9,227 for the second quarter of 2023, up from $4,011 in the same quarter of 2022, representing a significant increase of 130.5%[187] - The insurance operations reported earnings of $3,968 for the second quarter of 2023, compared to $2,431 in the same quarter of 2022, reflecting a year-over-year increase of 63.4%[187] - Investment income and other for the second quarter of 2023 was $1,265, compared to $998 in the same quarter of 2022, representing a growth of 26.8%[187] - The company incurred a total interest expense of $(40) for the second quarter of 2023, compared to $(207) in the same quarter of 2022, showing a reduction in interest expenses[187]

Financial Performance - Net sales for Q1 2023 were $36,894, a decrease of $1,322 or 3.5% compared to Q1 2022, primarily due to the transition from company-operated units to franchise partner units [38]. - Total revenue for Q1 2023 was $61,129, an increase from $59,847 in Q1 2022 [37]. - Net earnings attributable to Biglari Holdings Inc. shareholders were $64,886 in Q1 2023, compared to a loss of $298 in Q1 2022 [44]. - The company reported investment partnership pre-tax gains of $72,588 in Q1 2023, compared to pre-tax losses of $6,661 in Q1 2022 [16]. Franchise Operations - Franchise partner fees increased to $17,912 in Q1 2023 from $15,624 in Q1 2022, with 178 franchise partner units as of March 31, 2023, compared to 171 units a year earlier [39]. - The franchise royalties and fees from traditional franchising were $4,258 in Q1 2023, down from $5,146 in Q1 2022, attributed to reduced marketing by franchisees [50]. - As of March 31, 2023, 36 of the 172 company-operated Steak n Shake stores were closed, with plans to refranchise the remaining closed restaurants [35]. Cost Management - The cost of food at company-operated units was $10,448 or 28.3% of net sales in Q1 2023, slightly down from $10,960 or 28.7% in Q1 2022 [42]. - General and administrative expenses rose to $10,463 or 17.1% of total revenue in Q1 2023, up from $8,650 or 14.5% in Q1 2022, mainly due to increased support for franchise partnerships [51]. - Operating costs at company-operated restaurants were $18,457, or 50.0% of net sales, down from $20,032, or 52.4% of net sales in Q1 2022, primarily due to lower labor costs [58]. Investment Activities - The company purchased Series A Preferred Stock of Abraxas Petroleum for $80 million and exchanged it for 90% of the outstanding common stock of Abraxas Petroleum [43]. - Steak n Shake sold a former company-operated restaurant property for a gain of $1,431 in Q1 2023 [52]. - The company recorded impairment charges of $776 in Q1 2023, compared to no impairments in Q1 2022 [52]. Insurance Operations - Southern Pioneer's premiums earned were $5,865 in Q1 2023, up from $5,438 in Q1 2022, with insurance losses decreasing to $3,352, or 57.2% of premiums earned [57]. - First Guard's underwriting gain increased to $1,862 in Q1 2023 from $732 in Q1 2022, with a loss ratio of 58.9% compared to 70.9% in the prior year [61][73]. - Investment income for insurance operations was $585 in Q1 2023, compared to $213 in Q1 2022, contributing to a net investment income of $462 [75]. Cash Flow and Liquidity - Net cash provided by operating activities for Q1 2023 was $19,923, down from $21,092 in Q1 2022, reflecting a decrease of about 5.6% [104]. - Net cash used in investing activities was $12,735 in Q1 2023, compared to $16,077 in Q1 2022, showing a reduction of approximately 20% [104]. - The line of credit balance on March 31, 2023, was $6,500, with the total line of credit available being $30,000, indicating ongoing liquidity management [95]. - Biglari Holdings had a line of credit balance of $6,500 as of March 31, 2023, with an interest rate of 7.3% [84]. - The increase in cash, cash equivalents, and restricted cash in Q1 2023 was $2,146, compared to an increase of $3,428 in Q1 2022, indicating a decline in cash growth [104]. - The company continues to review available financing alternatives to meet working capital needs, emphasizing proactive financial management [104]. Market Conditions - Oil and gas revenues for Q1 2023 were $12,223, up from $9,812 in Q1 2022, but net earnings decreased to $1,670 from $2,924 [70]. - The average West Texas Intermediate price per barrel was approximately $76.11 in Q1 2023, down from $94.82 in Q1 2022, indicating volatility in oil and gas prices [70]. - Corporate and other net losses remained consistent in Q1 2023 compared to the same period in 2022 [85].

Revenue and Growth - Southern Pioneer's premiums earned in 2022 were $24,035 million, an increase from $21,890 million in 2021, reflecting a growth of 9.8%[177] - Southern Oil's oil and gas revenue for 2022 was $46,091 million, a significant increase from $33,004 million in 2021, representing a growth of 39.7%[182] - Maxim's licensing and media revenue for 2022 was $4,577 million, up from $3,203 million in 2021, showing an increase of 42.8%[187] - Franchise partner fees increased to $63,853 million in 2022 from $55,641 million in 2021, marking a growth of 14.4%[195] - Other revenue rose to $8,853 million in 2022 from $6,000 million in 2021, primarily driven by gift card breakage[197] - Total revenues for 2022 were $368,231 thousand, slightly up from $366,106 thousand in 2021, indicating a marginal growth of about 0.6%[406] Expenses and Costs - The ratio of losses and loss adjustment expenses to premiums earned for Southern Pioneer was 61.9% in 2022, up from 51.7% in 2021, indicating increased claim frequency and severity[177] - The cost of food at company-operated units in 2022 was $44,461, or 29.8% of net sales, compared to $55,315, or 29.4% in 2021[198] - Operating costs at company-operated restaurants in 2022 were $79,921, or 53.6% of net sales, down from $92,543, or 49.2% in 2021[199] - Selling, general and administrative expenses decreased to $51,833, or 21.5% of total revenue in 2022, from $57,186, or 21.1% in 2021[200] Net Earnings and Losses - Net underwriting gain from insurance operations was $4,188 in 2022, down from $9,730 in 2021[205] - Net earnings for the year 2022 were a loss of $32,305 thousand, compared to a profit of $35,478 thousand in 2021, representing a significant negative swing[406] - The company reported a comprehensive loss of $33,188 thousand for the year 2022, compared to a comprehensive income of $35,102 thousand in 2021[410] - The company reported a net loss per equivalent Class A share of $107.43 for 2022, compared to a profit of $111.83 per share in 2021[406] Investments and Acquisitions - Investment losses were $3,393 in 2022, compared to investment gains of $6,401 in 2021[222] - Investment partnership losses amounted to $(75,953) in 2022, a significant decline from gains of $10,953 in 2021[224] - The company acquired Maxim to transform its business model and generate non-magazine revenue through licensing[221] - The company made acquisitions totaling $58.274 million, net of cash acquired, with no acquisitions reported in the previous year[415] Assets and Liabilities - Total assets decreased from $894,807 thousand in December 2021 to $828,474 thousand in December 2022, a decline of approximately 7.4%[402] - Total liabilities decreased from $307,111 thousand in December 2021 to $272,906 thousand in December 2022, a reduction of approximately 11%[402] - Cash and cash equivalents decreased from $42,349 thousand in December 2021 to $37,467 thousand in December 2022, a decline of about 11%[402] - The current liabilities decreased from $143,641 thousand in December 2021 to $134,897 thousand in December 2022, a decrease of about 6%[402] Future Projections and Reserves - Future net cash flows for 2022 were estimated at $332,848,000, up from $107,510,000 in 2021, indicating a growth of approximately 209.5%[233] - The standardized measure of discounted future net cash flows increased from $77,759,000 at December 31, 2021 to $210,067,000 at December 31, 2022, reflecting a growth of approximately 169.5%[235] - Total proved reserves increased from 6,376 MBOE at December 31, 2020 to 13,188 MBOE at December 31, 2022, representing a growth of approximately 106.5%[228] - Proved developed reserves rose from 4,968 MBOE at December 31, 2021 to 11,371 MBOE at December 31, 2022, an increase of approximately 128.5%[228] - Future production costs for 2022 were estimated at $(288,816,000), compared to $(78,207,000) in 2021, indicating a significant increase in expected costs[233] Financial Reporting and Controls - The company’s internal control over financial reporting was deemed effective as of December 31, 2022, according to the audit report[393] - The allowance for doubtful accounts increased to $1.151 million in 2022 from $505 thousand in 2021, reflecting a rise in expected credit losses[438] Other Financial Information - Depreciation and amortization expense increased by $6,012 in 2022 due to higher capital expenditures in 2021[201] - Interest on lease obligations decreased to $5,493 in 2022 from $6,039 in 2021[201] - Capital expenditures for 2022 were $29.746 million, significantly lower than $64.549 million in 2021[415] - The company experienced a net cash used in investing activities of $136.605 million, compared to $58.525 million in 2021, indicating increased investment outflows[415] - Cash equivalents primarily consist of U.S. Government securities and money market accounts, carried at fair value[433] - No impairments were recorded to goodwill and other intangible assets during 2022 and 2021[443] - An impairment of $300 million to goodwill and $3,728 million to indefinite life intangible assets was recorded in 2020[443] - Goodwill and indefinite life intangible assets are tested for potential impairment annually[443] - Class A common shares have one vote per share, while Class B common stock has economic rights equal to one-fifth of Class A but no voting rights[445]

[Part I – Financial Information](index=4&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Biglari Holdings Inc.'s unaudited consolidated financial statements for Q3 and the first nine months of 2022, including balance sheets, earnings, cash flows, and notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $862.1 million from $894.8 million, mainly due to lower investment partnership values, while total shareholders' equity declined to $545.4 million Consolidated Balance Sheets (in thousands) | Account | Sep 30, 2022 (Unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$862,145** | **$894,807** | | Cash and cash equivalents | $64,842 | $42,349 | | Investment partnerships | $144,864 | $250,399 | | **Total Liabilities** | **$316,737** | **$307,111** | | Line of credit | $30,000 | $— | | **Total Shareholders' Equity** | **$545,408** | **$587,696** | [Consolidated Statements of Earnings](index=5&type=section&id=Consolidated%20Statements%20of%20Earnings) The company reported a Q3 2022 net income of $32.0 million, a turnaround from a $10.7 million loss, driven by investment partnership gains, but a nine-month net loss of $42.1 million Consolidated Statements of Earnings (in thousands) | Metric | Q3 2022 (Unaudited) | Q3 2021 (Unaudited) | First Nine Months 2022 (Unaudited) | First Nine Months 2021 (Unaudited) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$92,034** | **$82,083** | **$269,773** | **$267,158** | | Restaurant operations | $59,437 | $59,144 | $179,608 | $196,424 | | Investment partnership gains (losses) | $29,658 | $(20,231) | $(82,244) | $27,344 | | **Net Earnings (Loss) Attributable to BH** | **$32,005** | **$(10,669)** | **$(42,073)** | **$40,301** | | **Net Earnings (Loss) per Class A Share** | **$109.13** | **$(33.74)** | **$(140.30)** | **$125.79** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to $99.8 million, while investing activities used $102.5 million due to an acquisition, and financing provided $25.4 million from a new credit line Consolidated Statements of Cash Flows (in thousands) | Activity | First Nine Months 2022 (Unaudited) | First Nine Months 2021 (Unaudited) | | :--- | :--- | :--- | | Net cash provided by operating activities | $99,754 | $211,245 | | Net cash used in investing activities | $(102,464) | $(55,782) | | Net cash provided by (used in) financing activities | $25,353 | $(154,586) | | **Increase in cash** | **$22,493** | **$792** | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, business segments, the Abraxas Petroleum acquisition, and the significant impact of investment partnerships on earnings - On September 14, 2022, the company acquired Abraxas Petroleum Corporation for **$80 million**, funded by working capital and a line of credit, now a consolidated entity[26](index=26&type=chunk) - Investment partnerships generated a pre-tax gain of **$29.7 million** in Q3 2022 versus a loss of **$20.2 million** in Q3 2021, but recorded a pre-tax loss of **$82.2 million** for the first nine months of 2022 compared to a gain of **$27.3 million** in the prior year[43](index=43&type=chunk) Segment Revenue (in thousands) | Segment Revenue | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Restaurant Operations | $59,437 | $59,144 | | Insurance Operations | $16,312 | $14,723 | | Oil and Gas Operations | $14,380 | $7,353 | | Maxim (Licensing/Media) | $1,905 | $863 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=26&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20%28MD%26A%29) Management discusses performance by segment, financial condition, liquidity, and cash flow changes, including the Abraxas Petroleum acquisition and new line of credit - The company's net earnings are highly volatile due to the significant impact of investment partnership gains and losses, which are recorded in the income statement[107](index=107&type=chunk)[138](index=138&type=chunk) - On September 13, 2022, the company entered into a new **$30 million** revolving line of credit, fully drawn as of September 30, 2022, to help fund the Abraxas Petroleum acquisition[63](index=63&type=chunk)[152](index=152&type=chunk) [Results of Operations by Segment](index=27&type=section&id=Results%20of%20Operations%20by%20Segment) Segment performance review shows a shift in restaurant revenue to franchise fees, lower insurance underwriting gains, significant growth in oil and gas, and increased licensing revenue - The restaurant segment is transitioning to a franchise partner model, increasing 'Franchise partner fees' while decreasing 'Net sales', with **171 franchise partner units** as of September 30, 2022, up from 140 a year prior[110](index=110&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) Segment Pre-Tax Earnings (Loss) (in thousands) | Segment Pre-Tax Earnings (Loss) | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Restaurant Operations | $4,333 | $(2,712) | | Insurance Operations | $3,092 | $3,842 | | Oil and Gas Operations | $7,241 | $2,982 | | Maxim (Licensing/Media) | $1,534 | $(56) | - First Guard's insurance underwriting gain decreased in Q3 and the first nine months of 2022 due to a higher loss ratio of **52.8%** in Q3 2022 versus 46.5% in Q3 2021, while Southern Pioneer swung to an underwriting loss[127](index=127&type=chunk)[128](index=128&type=chunk) - The Oil and Gas segment's earnings before tax increased to **$7.2 million** in Q3 2022 from **$3.0 million** in Q3 2021, driven by higher commodity prices and the contribution from the newly acquired Abraxas Petroleum[101](index=101&type=chunk)[131](index=131&type=chunk)[133](index=133&type=chunk) [Financial Condition and Liquidity](index=36&type=section&id=Financial%20Condition%20and%20Liquidity) The company maintains significant liquidity despite a decrease in cash and investments to $279.7 million due to investment partnership losses, and operating cash flow declined due to lower distributions Total Cash and Investments (Fair Value, in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $64,842 | $42,349 | | Investments | $70,032 | $83,061 | | Fair value of interest in investment partnerships | $338,314 | $474,201 | | **Total cash and investments** | **$473,188** | **$599,611** | - Net cash from operating activities decreased to **$99.7 million** in the first nine months of 2022 from **$211.2 million** in 2021, mainly because distributions from investment partnerships fell to **$51.2 million** from **$172.4 million**[149](index=149&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces market risk from concentrated equity investments, with a 10% price change impacting carrying value by $21.5 million, and commodity price risk in oil and gas operations - The company holds concentrated equity positions through its investment partnerships, where a significant decline in the stock market or these specific investments could lead to a large net loss[158](index=158&type=chunk) - A hypothetical **10%** change in the market price of the company's investments would result in a corresponding change in carrying value of **$21.5 million**[159](index=159&type=chunk) - The oil and natural gas business is exposed to commodity price fluctuations, where a material decline in crude oil or natural gas prices could have a material adverse effect on operations[161](index=161&type=chunk) [Controls and Procedures](index=38&type=section&id=Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting - The Chief Executive Officer and Controller concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[162](index=162&type=chunk) [Part II – Other Information](index=39&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [Other Information](index=39&type=section&id=Item%201.%20Legal%20Proceedings) This section covers other required disclosures, including legal proceedings referenced in Note 13, and confirms no material changes to risk factors or unregistered equity sales - Information regarding legal proceedings is incorporated by reference from Note 13 to the Consolidated Financial Statements[165](index=165&type=chunk) - There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021[166](index=166&type=chunk)

Financial Performance - Net sales for Q2 2022 were $37,681 million, a decrease of 23.7% compared to Q2 2021, and for the first six months of 2022, net sales were $75,897 million, down 27.3% from the same period in 2021[100]. - The net contribution to earnings for Q2 2022 was $3,006 million, compared to $2,543 million in Q2 2021[100]. - Franchise royalties and fees for Q2 2022 were $5,237 million, up from $4,594 million in Q2 2021, and for the first six months, they increased to $10,383 million from $9,729 million[102]. - Franchise partner fees increased to $16,425 million in Q2 2022 from $12,383 million in Q2 2021, and for the first six months, fees rose to $32,049 million from $20,236 million[101]. Costs and Expenses - Cost of food in Q2 2022 was $11,365 million, representing 30.2% of net sales, compared to $14,727 million or 29.8% in Q2 2021[103]. - Restaurant operating costs in Q2 2022 were $20,350 million, accounting for 54.0% of net sales, compared to $22,058 million or 44.6% in Q2 2021[104]. - General and administrative costs for Q2 2022 were $10,121 million, a slight decrease from $10,481 million in Q2 2021[105]. - Marketing expenses in Q2 2022 were $3,087 million, down from $3,287 million in Q2 2021[106]. - The company recorded impairment charges of $20 million in Q2 2022, significantly lower than $261 million in Q2 2021[106]. Insurance and Underwriting - Premiums earned for the second quarter of 2022 were $9,015 million, up from $8,225 million in 2021, representing an increase of 9.6%[112]. - Insurance losses for the second quarter of 2022 were $5,465 million, which is 60.6% of premiums earned, compared to $3,809 million (46.3%) in 2021[112]. - Total losses and expenses for the second quarter of 2022 amounted to $7,301 million, which is 81.0% of premiums earned, compared to $5,266 million (64.0%) in 2021[112]. - Pre-tax underwriting gain for the second quarter of 2022 was $1,714 million, down from $2,959 million in 2021[112]. Oil and Gas Operations - Oil and gas revenue for the second quarter of 2022 was $14,440 million, significantly higher than $8,365 million in 2021, marking a 72.5% increase[115]. - Contribution to net earnings from oil and gas operations for the second quarter of 2022 was $6,369 million, compared to $2,336 million in 2021, reflecting a substantial increase[115]. Investments and Cash Flow - Consolidated cash and investments as of June 30, 2022, totaled $461,622 million, down from $599,611 million at the end of 2021[126]. - Cash provided by operating activities was $34,204 in the first six months of 2022, a decrease of 81.7% compared to $187,208 in 2021[128]. - Cash used in investing activities was $32,819 in 2022, slightly lower than $32,839 in 2021, with capital expenditures decreasing by $10,425 due to a transition to a self-service model[129]. - Cash used in financing activities was $3,134 in 2022, significantly lower than $153,136 in 2021, as the company repaid Steak n Shake's debt in 2021[130]. Market and Risk Factors - A hypothetical 10% increase or decrease in the market price of investments would result in a respective change in carrying value of $22,352, affecting shareholders' equity by approximately 3%[136]. - The company has had minimal exposure to foreign currency exchange rate fluctuations in the first six months of 2022 and 2021[137]. - Southern Oil's operations may be significantly affected by changes in oil and gas prices, which depend on various local, regional, and global events[138]. Internal Controls and Accounting Policies - There have been no material changes to critical accounting policies as disclosed in the annual report for the year ended December 31, 2021[132]. - The company has effective disclosure controls and procedures as of June 30, 2022[139]. - There have been no changes in internal control over financial reporting that materially affected the company during the quarter ended June 30, 2022[140].

Financial Performance - Net sales for 2022 were $38,216 million, a decrease of $16,734 million or 30.5% compared to 2021[105] - Total revenue for 2022 was $59,847 million, down from $69,954 million in 2021[105] - Contribution to net earnings for 2022 was $3,262 million, down from $4,118 million in 2021[105] Costs and Expenses - Cost of food was $10,960 million or 28.7% of net sales in 2022, compared to $15,554 million or 28.3% in 2021[107] - Restaurant operating costs were $20,032 million or 52.4% of net sales in 2022, up from $25,197 million or 45.9% in 2021[107] - General and administrative costs rose to $8,650 million in 2022, representing 14.5% of total revenue, compared to $7,680 million or 11.0% in 2021[108] Franchise Operations - Franchise partner fees increased to $15,624 million in 2022 from $7,853 million in 2021, with 171 franchise partner units as of March 31, 2022[106] Investment Performance - Oil and gas revenue for the first quarter of 2022 was $9,812 million, an increase from $8,592 million in 2021[117] - Investment gains net of tax for the first quarter of 2022 were $175 million, compared to $2,414 million in 2021[120] - Investment partnership pretax losses were $6,661 in Q1 2022 compared to pretax gains of $81,766 in Q1 2021[125] Cash Flow and Liquidity - Net cash provided by operating activities was $21,092 in Q1 2022, a significant decrease from $165,298 in Q1 2021, primarily due to lower distributions from investment partnerships[129] - Cash used in investing activities increased to $16,077 in Q1 2022 from $8,780 in Q1 2021, with capital expenditures rising by $1,846[130] - Total cash and investments as of March 31, 2022, were $604,719, up from $599,611 on December 31, 2021[127] - The carrying value of cash and investments on the balance sheet was $375,295 as of March 31, 2022, slightly down from $375,809 at the end of 2021[127] Tax and Interest - Income tax benefit for Q1 2022 was $171, compared to an income tax expense of $22,016 in Q1 2021[125] - Interest expense net of tax was $841 in Q1 2021, with no interest expense reported for Q1 2022[123] Operational Strategy - The company intends to meet working capital needs primarily through anticipated cash flows generated from operations and cash on hand[131] - Unrealized gains/losses from investments held by partnerships are eliminated in the company's consolidated financial results[127] - The company has minimal exposure to foreign currency exchange rate fluctuations in Q1 2022 and Q1 2021[139] Impairment Charges - The company recorded no impairment charges in 2022, while there were $298 million in impairments in the first quarter of 2021[108]

Part I – Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The financial statements for the period ended June 30, 2021, show total assets decreased to **$933.9 million**, net earnings for the first six months turned around to **$51.0 million**, and **$187.2 million** in operating cash flow was generated for debt repayment [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2021, total assets decreased to **$933.9 million** due to lower investment partnership values, while total liabilities significantly decreased to **$320.4 million** due to debt repayment, leading to an increase in shareholders' equity to **$613.5 million** Consolidated Balance Sheets (in thousands) | | June 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$933,895** | **$1,017,968** | | Total Current Assets | $152,279 | $147,778 | | Investment Partnerships | $311,878 | $419,550 | | **Total Liabilities** | **$320,403** | **$453,140** | | Total Current Liabilities | $141,926 | $288,447 | | **Total Shareholders' Equity** | **$613,492** | **$564,828** | [Consolidated Statements of Earnings](index=5&type=section&id=Consolidated%20Statements%20of%20Earnings) For Q2 2021, the company reported a net loss of **$20.7 million** due to investment partnership losses, while the first six months saw net earnings of **$51.0 million**, a significant improvement from the prior year, despite a decrease in total revenues to **$185.1 million** Consolidated Statements of Earnings (in thousands) | (in thousands) | Q2 2021 (Unaudited) | Q2 2020 | First Six Months 2021 (Unaudited) | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$90,787** | **$96,502** | **$185,075** | **$232,202** | | Restaurant operations | $67,326 | $78,764 | $137,280 | $192,908 | | Investment partnership gains (losses) | ($34,191) | $59,248 | $47,575 | ($116,494) | | **Net Earnings (Loss)** | **($20,737)** | **$42,466** | **$50,970** | **($95,419)** | | **Net Earnings (Loss) per equivalent Class A share** | **($64.04)** | **$121.51** | **$158.06** | **($275.04)** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly increased to **$187.2 million** for the first six months of 2021, primarily from investment partnership distributions, while net cash used in financing activities rose to **$153.1 million** due to substantial debt repayment Consolidated Statements of Cash Flows (in thousands) | (in thousands) | First Six Months 2021 (Unaudited) | First Six Months 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $187,208 | $98,685 | | Net cash used in investing activities | ($32,839) | ($103,360) | | Net cash used in financing activities | ($153,136) | ($24,156) | | **Increase (decrease) in cash** | **$1,209** | **($28,834)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's diversified holding structure, the significant impact of investment partnerships, the acquisition of Southern Pioneer Insurance, segment revenue and earnings, and the full repayment of the Steak n Shake credit facility - Biglari Holdings operates as a diversified holding company across insurance, media, restaurants, and oil and gas, with all major investment decisions made by **Chairman and CEO Sardar Biglari**[15](index=15&type=chunk) - The company fully repaid Steak n Shake's **$152.5 million** term loan on February 19, 2021[51](index=51&type=chunk) Revenue by Segment (in thousands) | (in thousands) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Revenue by Segment** | | | | | | Restaurant Operations | $67,326 | $78,764 | $137,280 | $192,908 | | Insurance Operations | $14,387 | $14,605 | $29,006 | $24,279 | | Southern Oil | $8,365 | $2,151 | $16,957 | $13,525 | | Maxim | $709 | $982 | $1,832 | $1,490 | | **Total Revenue** | **$90,787** | **$96,502** | **$185,075** | **$232,202** | Earnings (Loss) Before Income Taxes (in thousands) | (in thousands) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | **Earnings (Loss) Before Income Taxes** | | | | | | Total Operating Businesses | $11,249 | ($787) | $22,575 | ($4,464) | | Investment partnership gains (losses) | ($34,191) | $59,248 | $47,575 | ($116,494) | | **Total Earnings (Loss) Before Income Taxes** | **($26,935)** | **$57,230** | **$66,788** | **($124,485)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's financial performance for the first six months of 2021 shows improved operating business contributions of **$17.1 million** to net earnings, though overall results remain significantly influenced by volatile investment partnership gains of **$36.5 million**, alongside the strategic repayment of the **$152.5 million** Steak n Shake term loan [Restaurants](index=24&type=section&id=Restaurants) The restaurant segment's strategic shift to a franchise partner model led to a **40.1%** decrease in net sales but a significant increase in franchise fees, resulting in a turnaround to **$9.2 million** in pre-tax earnings for the first six months of 2021 Store Type (Number of Stores) | Store Type | Dec 31, 2020 (Number of Stores) | June 30, 2021 (Number of Stores) | Change (Number of Stores) | | :--- | :--- | :--- | :--- | | **Steak n Shake** | | | | | Company-operated | 276 | 230 | (46) | | Franchise Partner | 86 | 131 | +45 | | Traditional Franchise | 194 | 186 | (8) | | **Western Sizzlin** | | | | | Company-operated | 3 | 3 | 0 | | Franchise | 39 | 38 | (1) | | **Total Stores** | **598** | **588** | **(10)** | - Revenue decrease from company-operated restaurants is primarily due to the strategic shift to franchise partner units, altering revenue recognition[98](index=98&type=chunk) - As of June 30, 2021, **49** of the **230** company-operated Steak n Shake stores were temporarily closed[92](index=92&type=chunk) [Insurance](index=27&type=section&id=Insurance) Insurance operations, including First Guard and Southern Pioneer, showed improved results for the first six months of 2021, with pre-tax underwriting gain increasing to **$6.2 million** and total premiums written growing **23%** to **$27.3 million** Insurance Performance (in thousands) | (in thousands) | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | | Premiums written | $27,265 | $22,163 | | Pre-tax underwriting gain | $6,204 | $4,587 | | Contribution to net earnings | $5,917 | $4,615 | - First Guard's pre-tax underwriting gain for the first six months of 2021 was **$5.1 million**, an increase from **$4.9 million** in 2020[110](index=110&type=chunk) - Southern Pioneer, acquired in March 2020, achieved a pre-tax underwriting gain of **$1.1 million** for the first six months of 2021, reversing a prior-year loss[113](index=113&type=chunk) [Oil and Gas](index=29&type=section&id=Oil%20and%20Gas) The Southern Oil segment experienced a strong recovery in the first six months of 2021, with revenue increasing to **$17.0 million** and earnings before income taxes turning around significantly to **$6.1 million** due to higher commodity prices Oil and Gas Performance (in thousands) | (in thousands) | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | | Oil and gas revenue | $16,957 | $13,525 | | Earnings before income taxes | $6,065 | $763 | | Contribution to net earnings | $4,691 | $889 | - Performance improvement is linked to the recovery in crude oil prices that began in mid-2020 following the COVID-19 pandemic's initial impact[118](index=118&type=chunk) [Investment Gains and Investment Partnership Gains](index=30&type=section&id=Investment%20Gains%20and%20Investment%20Partnership%20Gains) Investment partnership results are a highly volatile and significant component of overall earnings, contributing a **$36.5 million** gain in the first six months of 2021, reversing a prior-year loss, despite a **$26.2 million** loss in Q2 2021 Investment Partnership Gains (Losses) (in thousands) | Contribution to Net Earnings (in thousands) | Q2 2021 | Q2 2020 | First Six Months 2021 | First Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Investment partnership gains (losses) | ($26,195) | $45,365 | $36,454 | ($88,994) | - The company does not consider quarterly or annual investment fluctuations meaningful for understanding its core operating business results[125](index=125&type=chunk) [Financial Condition and Liquidity](index=31&type=section&id=Financial%20Condition%20and%20Liquidity) The company maintains strong liquidity with **$436.2 million** in cash and investments, generating **$187.2 million** in operating cash flow primarily from investment partnership distributions, which facilitated the full repayment of Steak n Shake's **$152.5 million** term loan - The company fully repaid Steak n Shake's outstanding term loan balance of **$152.5 million** on February 19, 2021[136](index=136&type=chunk)[127](index=127&type=chunk) - Increased cash from operating activities was mainly due to **$158.1 million** in investment partnership distributions in H1 2021, primarily utilized for debt repayment[134](index=134&type=chunk) Cash and Investments (Fair Value, in thousands) | (in thousands) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $28,212 | $24,503 | | Investments | $96,094 | $94,861 | | Fair value of interest in investment partnerships | $551,942 | $590,926 | | **Total cash and investments (Fair Value)** | **$676,248** | **$710,290** | [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk stems from equity investments, where a **10%** price change would alter carrying value by **$40.8 million**, alongside commodity price risk in Southern Oil operations, while foreign currency risk remains minimal - The company's main market risk is from equity investments, where a hypothetical **10%** price change would alter carrying value by **$40.8 million**[142](index=142&type=chunk) - Southern Oil's earnings are significantly impacted by fluctuations in oil and gas commodity prices[143](index=143&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) The Chief Executive Officer and Controller concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Controller affirmed the effectiveness of the company's disclosure controls and procedures as of June 30, 2021[144](index=144&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2021[145](index=145&type=chunk) Part II – Other Information [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) Shareholder class action lawsuits filed in 2018 against the company and its Board of Directors were dismissed, with the dismissal affirmed on appeal and further review denied by the Indiana Supreme Court, concluding all cases in the company's favor - Shareholder class action lawsuits filed in 2018 alleging breach of fiduciary duty were dismissed, with the dismissal affirmed on appeal and further review denied by the Indiana Supreme Court, concluding all cases in the company's favor[69](index=69&type=chunk)[70](index=70&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes have occurred from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020[147](index=147&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2021, The Lion Fund II, L.P., an affiliated purchaser, acquired shares of the company's common stock through open market transactions without a publicly announced repurchase plan Common Stock Purchases by Affiliated Purchaser | Period | Total Class A Shares Purchased (Number of Shares) | Avg. Price Paid per Share (Class A) (USD) | Total Class B Shares Purchased (Number of Shares) | Avg. Price Paid per Share (Class B) (USD) | | :--- | :--- | :--- | :--- | :--- | | May 1 - May 31, 2021 | 895 | $778.74 | 19,311 | $149.07 | | June 1 - June 30, 2021 | 3,391 | $871.76 | — | — | | **Total** | **4,286** | | **19,311** | | - The Lion Fund II, L.P., an affiliated purchaser, acquired Class A and Class B common stock through open market transactions between May 11, 2021, and June 16, 2021[148](index=148&type=chunk) [Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[151](index=151&type=chunk) [Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[151](index=151&type=chunk) [Other Information](index=35&type=section&id=Item%205.%20Other%20Information) The company reported no other information - None[151](index=151&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including certifications by principal executive and financial officers and Interactive Data Files (XBRL) - Filed exhibits include CEO and Controller certifications under Sarbanes-Oxley Act Sections 302 and 906, along with Interactive Data Files[152](index=152&type=chunk)

Table of Contents 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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission file number 001-38477 BIGLARI HOLDINGS INC. (Exact name of registrant as specified in its charter) Indiana 82-3784946 (State or other jurisdiction of ...