Biglari (BH) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion for Q2 and 6M 2025 ITEM 1. FINANCIAL STATEMENTS This section presents unaudited consolidated financial statements for Q2 and 6M 2025, including balance sheets, earnings, cash flows, and detailed notes Consolidated Balance Sheets This section provides a snapshot of the company's financial position at June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (dollars in thousands): | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Assets | $863,579 | $866,133 | | Total Current Assets | $174,281 | $170,615 | | Cash and Cash Equivalents | $32,766 | $30,709 | | Total Liabilities | $274,293 | $293,172 | | Total Current Liabilities | $126,087 | $147,316 | | Biglari Holdings Inc. Shareholders' Equity | $589,286 | $572,961 | - Total assets decreased slightly from $866,133 thousand at December 31, 2024, to $863,579 thousand at June 30, 2025. Total liabilities decreased from $293,172 thousand to $274,293 thousand, while shareholders' equity increased from $572,961 thousand to $589,286 thousand[10] Consolidated Statements of Earnings This section details the company's financial performance, including revenues, expenses, and net earnings, for Q2 and 6M 2025 and 2024 Consolidated Statements of Earnings Highlights (dollars in thousands, except per share amounts): | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Total Revenues | $100,619 | $91,141 | $195,654 | $180,592 | | Total Costs and Expenses | $96,946 | $71,437 | $181,987 | $155,191 | | Total Other Income (Expenses) | $61,429 | $(82,619) | $10,252 | $(58,921) | | Earnings (Loss) before Income Taxes | $65,102 | $(62,915) | $23,919 | $(33,520) | | Net Earnings (Loss) | $50,931 | $(48,190) | $17,656 | $(25,611) | | Net Earnings (Loss) per Avg. Equivalent Class A Share | $194.57 | $(171.89) | $67.26 | $(90.80) | - The company reported a significant turnaround in net earnings, moving from a loss of $48,190 thousand in Q2 2024 to a gain of $50,931 thousand in Q2 2025. This was largely driven by a substantial increase in 'Total Other Income (Expenses)', primarily from investment partnership gains[13] Consolidated Statements of Comprehensive Income This section presents total comprehensive income, including net earnings and other comprehensive income items, for the specified periods Consolidated Statements of Comprehensive Income Highlights (dollars in thousands): | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Net Earnings (Loss) | $50,931 | $(48,190) | $17,656 | $(25,611) | | Foreign Currency Translation | $1,010 | $(118) | $1,480 | $(149) | | Comprehensive Income (Loss) | $51,941 | $(48,308) | $19,136 | $(25,760) | - Comprehensive income mirrored the net earnings trend, showing a strong positive shift in Q2 2025 and the first six months of 2025, primarily due to improved net earnings and positive foreign currency translation adjustments[16] Consolidated Statements of Cash Flows This section outlines cash flows from operating, investing, and financing activities for the first six months of 2025 and 2024 Consolidated Statements of Cash Flows Highlights (dollars in thousands): | Metric | 6M 2025 | 6M 2024 | | :------------------------------------ | :------ | :------ | | Net Cash Provided by Operating Activities | $57,942 | $20,910 | | Net Cash Used in Investing Activities | $(27,161) | $(19,586) | | Net Cash Used in Financing Activities | $(28,778) | $(2,691) | | Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | $2,045 | $(1,374) | | Cash, Cash Equivalents and Restricted Cash at End of Second Quarter | $33,477 | $28,280 | - Net cash provided by operating activities significantly increased to $57,942 thousand in the first six months of 2025, up from $20,910 thousand in the same period of 2024, primarily due to $35,000 thousand in distributions from investment partnerships[18][163] - Cash used in investing activities increased by $7,575 thousand in 2025 compared to 2024, mainly due to reduced proceeds from property and equipment sales. Cash used in financing activities also increased by $26,087 thousand, primarily due to payments on the Company's line of credit[164] Consolidated Statements of Changes in Shareholders' Equity This section details changes in shareholders' equity from December 31, 2024, to June 30, 2025, driven by net earnings and other comprehensive income Consolidated Statements of Changes in Shareholders' Equity Highlights (dollars in thousands): | Metric | Dec 31, 2024 | June 30, 2025 | | :-------------------------------- | :----------- | :------------ | | Balance at Period Start | $572,961 | $572,961 | | Net Earnings (Loss) | $17,656 | $17,656 | | Other Comprehensive Loss | $1,480 | $1,480 | | Adjustment for holdings in investment partnerships | $(2,811) | $(2,811) | | Balance at Period End | $589,286 | $589,286 | Note: The table above reflects the changes for the first six months of 2025, starting from the balance at December 31, 2024, and ending at June 30, 2025. The 'Net earnings (loss)' and 'Other comprehensive loss' values are for the first six months of 2025. - Shareholders' equity increased from $572,961 thousand at December 31, 2024, to $589,286 thousand at June 30, 2025, driven by net earnings and positive other comprehensive income, partially offset by adjustments for investment partnership holdings[21] Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements Note 1. Summary of Significant Accounting Policies This note outlines the company's diverse business activities and significant accounting principles applied in financial reporting - Biglari Holdings Inc. is a holding company with diverse business activities including property and casualty insurance and reinsurance, licensing and media, restaurants, and oil and gas. Its largest operating subsidiaries are in the restaurant sector[23] - The company operates with decentralized business units but centralized financial decision-making, with all major investment and capital allocation decisions made by Chairman and CEO Sardar Biglari, who beneficially owns approximately 74.3% of the voting interest as of June 30, 2025[24][25] Note 2. Earnings Per Share This note details the calculation of earnings per share, including the treatment of company stock held by investment partnerships Equivalent Class A Common Stock for EPS Calculation: | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :------------------------------------------------ | :------ | :------ | :------ | :------ | | Equivalent Class A common stock outstanding | 620,592 | 620,592 | 620,592 | 620,592 | | Proportional ownership of Company stock held by investment partnerships | 358,832 | 340,232 | 358,088 | 338,518 | | Equivalent Class A common stock for earnings per share | 261,760 | 280,360 | 262,504 | 282,074 | - The company applies the 'two-class method' for EPS, excluding proportional shares of Biglari Holdings' stock held by investment partnerships from the weighted average common shares outstanding, as these are considered treasury stock[27][29] Note 3. Investments This note describes the company's investment classifications and the reporting of investment gains and losses Investment Gains (Losses) (dollars in thousands): | Period | 2025 | 2024 | | :-------------------- | :----- | :----- | | Second Quarter | $2,925 | $(2,729) | | First Six Months | $1,340 | $(1,016) | - The company classifies fixed maturity securities as available-for-sale and considers investment gains and losses as non-operating, while dividends and interest are reported as investment income by insurance companies[31] Note 4. Investment Partnerships This note explains the accounting for limited partnership interests and the impact of investment partnership gains and losses on earnings Investment Partnership Gains (Losses) (dollars in thousands): | Period | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Second Quarter Gains (Losses) | $58,504 | $(79,890) | | First Six Months Gains (Losses) | $8,912 | $(57,905) | | Q2 2025 Contribution to Net Earnings | $46,194 | $(60,748) | | 6M 2025 Contribution to Net Earnings | $6,768 | $(43,600) | Carrying Value of Investment Partnerships (dollars in thousands): | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Carrying value of investment partnerships | $202,893 | $201,727 | | Deferred tax liability related to investment partnerships | $(30,030) | $(17,255) | | Carrying value of investment partnerships net of deferred taxes | $172,863 | $184,472 | - The company reports limited partnership interests under the equity method, recording its proportional share of equity but excluding company common stock held by the partnerships, which is treated as treasury stock. Investment partnership gains/losses, including unrealized gains/losses on securities, are recorded in the consolidated statements of earnings[33] - Biglari Capital Corp., solely owned by Mr. Biglari, is the general partner and earns an incentive reallocation fee of 25% of net profits above a 6% annual hurdle rate, though no incentive reallocations were accrued in the first six months of 2025 or 2024[34][41][42] Note 5. Property and Equipment This note provides details on the company's property and equipment, including depreciation and impairment charges Property and Equipment, Net (dollars in thousands): | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Total Property and Equipment (Gross) | $816,701 | $818,432 | | Less: Accumulated Depreciation, Depletion, and Amortization | $(451,439) | $(442,277) | | Property and Equipment, Net | $365,262 | $376,155 | - The company recorded $1,251 thousand in impairment charges to restaurant long-lived assets in Q2 2025 and the first six months of 2025 due to underperforming stores. No impairments were recorded for oil and gas assets in these periods[47][48] - Abraxas Petroleum recorded gains of $794 thousand in Q2 2025 and $10,117 thousand in the first six months of 2025 from selling undeveloped reserves, with potential future royalties[49] Note 6. Goodwill and Other Intangible Assets This note details the carrying values of goodwill and other intangible assets, along with any impairment considerations Goodwill and Other Intangible Assets (dollars in thousands): | Metric | Dec 31, 2024 | June 30, 2025 | | :------------------------------------ | :----------- | :------------ | | Goodwill | $52,496 | $52,568 | | Other Intangibles (Trade Names & Lease Rights) | $22,820 | $23,676 | | Total Goodwill and Other Intangible Assets | $75,316 | $76,244 | - Goodwill increased slightly due to changes in foreign exchange rates. No goodwill impairment was recorded for Steak n Shake in the first six months of 2025 or 2024, and no impairment for Western Sizzlin goodwill in 2025 (compared to $1,000 thousand in 2024)[53] Note 7. Restaurant Operations Revenues This note disaggregates revenues from restaurant operations, including net sales, franchise fees, and royalties Restaurant Operations Revenues (dollars in thousands): | Revenue Type | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Net Sales | $46,858 | $40,815 | $88,473 | $79,550 | | Franchise Partner Fees | $20,150 | $18,149 | $37,289 | $35,907 | | Franchise Royalties and Fees | $3,128 | $3,615 | $6,617 | $7,092 | | Other | $1,875 | $1,896 | $3,981 | $3,922 | | Total Revenues | $72,011 | $64,475 | $136,360 | $126,471 | - Total restaurant revenues increased by 11.2% for the first six months of 2025 compared to 2024, primarily driven by a 14.8% increase in net sales in Q2 2025, largely due to a 10.7% increase in Steak n Shake's same-store sales[57][118] - Franchise partner fees, which include up to 15% of sales and 50% of profits, increased despite fewer open units, indicating improved performance at franchise partner units[59][120] Note 8. Accounts Payable and Accrued Expenses This note provides a breakdown of accounts payable and accrued expenses, highlighting changes over the period Accounts Payable and Accrued Expenses (dollars in thousands): | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accounts Payable | $25,538 | $28,542 | | Gift Cards and Other Marketing | $4,593 | $6,655 | | Insurance Accruals | $1,074 | $1,746 | | Compensation | $5,198 | $4,911 | | Deferred Revenue | $5,167 | $3,723 | | Taxes Payable | $4,191 | $8,134 | | Oil and Gas Payable | $2,042 | $1,912 | | Professional Fees | $3,588 | $3,052 | | Due to Broker | $4,276 | $3,517 | | Other | $751 | $1,189 | | Total | $56,418 | $63,381 | - Total accounts payable and accrued expenses decreased from $63,381 thousand at December 31, 2024, to $56,418 thousand at June 30, 2025, primarily due to decreases in accounts payable, gift cards and other marketing, and taxes payable[65] Note 9. Lines of Credit This note details the company's outstanding balances on lines of credit and compliance with loan covenants Lines of Credit Balances (dollars in thousands): | Line of Credit | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Biglari Holdings Inc. (2022) | $19,000 | $35,000 | | Biglari Holdings Inc. (2024) | $0 | $10,000 | | Western Sizzlin Revolver | $0 | $0 | - Biglari Holdings reduced its outstanding balance on its 2022 line of credit from $35,000 thousand to $19,000 thousand and fully paid off its 2024 line of credit by June 30, 2025. The company was in compliance with all covenants for both lines of credit[66][67][165][166] Note 10. Unpaid Losses and Loss Adjustment Expenses This note presents the liabilities for unpaid insurance losses and loss adjustment expenses, net of reinsurance Claim Liabilities, Net of Reinsurance (dollars in thousands): | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Net Liabilities at Beginning of Year | $17,250 | $15,168 | | Incurred Losses and Loss Adjustment Expenses | $24,466 | $22,209 | | Paid Losses and Loss Adjustment Expenses | $24,513 | $21,682 | | Net Liabilities at June 30 | $17,203 | $15,695 | - Net liabilities for unpaid losses and loss adjustment expenses remained relatively stable at $17,203 thousand at June 30, 2025, compared to $17,250 thousand at the beginning of the year. The company recorded net increases of $872 thousand for prior accident years in 2025, compared to net reductions of $1,330 thousand in 2024[70] Note 11. Lease Assets and Obligations This note provides information on the company's lease assets, obligations, and associated lease costs Total Lease Obligations (dollars in thousands): | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Current Portion of Lease Obligations | $15,054 | $14,449 | | Total Long-Term Lease Obligations | $91,384 | $90,739 | | Total Lease Obligations | $106,438 | $105,188 | Total Lease Costs (dollars in thousands): | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Finance Lease Costs | $313 | $304 | $600 | $614 | | Operating and Variable Lease Costs | $2,862 | $2,948 | $5,798 | $5,777 | | Sublease Income | $(2,512) | $(2,986) | $(5,120) | $(5,975) | | Total Lease Costs | $663 | $266 | $1,278 | $416 | - Total lease obligations increased slightly. Total lease costs for the first six months of 2025 increased to $1,278 thousand from $416 thousand in 2024, primarily due to lower sublease income[72][76] Note 12. Income Taxes This note details the income tax expense or benefit and discusses factors influencing tax variances, including recent tax legislation Income Tax Expense (Benefit) (dollars in thousands): | Period | 2025 | 2024 | | :-------------------- | :----- | :----- | | Second Quarter | $14,171 | $(14,725) | | First Six Months | $6,263 | $(7,909) | - The significant variance in income taxes between 2025 and 2024 is primarily due to taxes on income generated by investment partnerships. Investment partnerships shifted from pre-tax losses of $79,890 thousand in Q2 2024 to pre-tax gains of $58,504 thousand in Q2 2025[86][159] - The 'One Big Beautiful Bill Act', signed on July 4, 2025, makes permanent certain expiring provisions of the Tax Cuts and Jobs Act, including 100% bonus depreciation and business interest expense limitation[87] Note 13. Commitments and Contingencies This note addresses the company's involvement in legal proceedings and other claims, assessing their potential financial impact - The company is involved in various legal proceedings and unresolved claims but believes that the ultimate liability, if any, in excess of amounts already provided, is not likely to materially affect its financial results[88] Note 14. Fair Value of Financial Assets This note describes the fair value measurement of financial assets, categorized by input levels Total Assets at Fair Value (dollars in thousands): | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Level 1 Assets | $116,208 | $109,287 | | Level 2 Assets | $4,268 | $5,995 | | Level 3 Assets | $0 | $0 | | Total Assets at Fair Value | $120,476 | $115,282 | - The fair values of financial instruments are measured using market or income approaches, categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs). The majority of assets are classified as Level 1[90][91][92][93] Note 15. Related Party Transactions This note discloses transactions with related parties, including service agreements and incentive arrangements with the CEO Service Fees Paid to Biglari Enterprises LLC (dollars in thousands): | Period | 2025 | 2024 | | :-------------------- | :----- | :----- | | First Six Months | $5,700 | $4,800 | - The company has a service agreement with Biglari Enterprises LLC, owned by Mr. Biglari, for business and administrative services. An incentive agreement also provides Mr. Biglari with a performance-based annual incentive payment of 25% of adjusted equity growth above a 6% hurdle rate[96][98] Note 16. Business Segment Reporting This note provides financial information for the company's reportable business segments, including revenues and earnings before income taxes - Biglari Holdings manages its diverse businesses on a decentralized basis, with reportable segments including Restaurant Operations (Steak n Shake, Western Sizzlin), Insurance Operations (First Guard, Southern Pioneer, Biglari Reinsurance), Oil and Gas Operations (Southern Oil, Abraxas Petroleum), and Brand Licensing (Maxim)[99] Total Operating Businesses - Revenues and Earnings Before Income Taxes (dollars in thousands): | Metric | Q2 2025 Revenue | Q2 2024 Revenue | Q2 2025 Earnings (Loss) before Tax | Q2 2024 Earnings (Loss) before Tax | | :-------------------------- | :-------------- | :-------------- | :--------------------------------- | :--------------------------------- | | Total Operating Businesses | $100,619 | $91,141 | $9,078 | $24,711 | | Metric | 6M 2025 Revenue | 6M 2024 Revenue | 6M 2025 Earnings (Loss) before Tax | 6M 2024 Earnings (Loss) before Tax | | :-------------------------- | :-------------- | :-------------- | :--------------------------------- | :--------------------------------- | | Total Operating Businesses | $195,654 | $180,592 | $24,220 | $32,947 | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on financial performance, condition, and liquidity for Q2 and 6M 2025 compared to 2024 Overview This overview introduces Biglari Holdings' diverse business activities and presents a disaggregation of net earnings by segment - Biglari Holdings Inc. is a holding company with diverse business activities, including property and casualty insurance and reinsurance, licensing and media, restaurants, and oil and gas, led by Chairman and CEO Sardar Biglari[110] Net Earnings (Loss) Disaggregation (dollars in thousands): | Segment | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Restaurant | $4,555 | $4,244 | $6,744 | $7,717 | | Insurance | $1,399 | $1,454 | $2,600 | $3,192 | | Oil and Gas | $849 | $13,369 | $9,147 | $14,518 | | Brand Licensing | $(198) | $(193) | $(465) | $(458) | | Interest Expense | $(656) | $(32) | $(1,349) | $(32) | | Total Operating Businesses | $5,949 | $18,842 | $16,677 | $24,937 | | Goodwill Impairment | $0 | $(1,000) | $0 | $(1,000) | | Corporate and Other | $(3,530) | $(3,125) | $(6,819) | $(5,121) | | Investment Partnership Gains (Losses) | $46,194 | $(60,748) | $6,768 | $(43,600) | | Investment Gains (Losses) | $2,318 | $(2,159) | $1,030 | $(827) | | Net Earnings (Loss) | $50,931 | $(48,190) | $17,656 | $(25,611) | Restaurants This section analyzes the performance of restaurant operations, including store count, revenues, and key cost metrics Restaurant Store Count: | Store Type | Dec 31, 2024 | June 30, 2025 | | :-------------------- | :----------- | :------------ | | Company-operated | 146 | 143 | | Franchise Partner | 173 | 174 | | Traditional Franchise | 107 | 100 | | Western Sizzlin Company-operated | 3 | 3 | | Western Sizzlin Franchise | 29 | 29 | | Total Stores | 458 | 449 | Restaurant Operations Revenue and Costs (as % of Net Sales for Cost of Food, Labor, Occupancy; as % of Total Revenue for G&A, Marketing, Impairments, Depreciation): | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Net Sales | $46,858 | $40,815 | $88,473 | $79,550 | | Franchise Partner Fees | $20,150 | $18,149 | $37,289 | $35,907 | | Franchise Royalties and Fees | $3,128 | $3,615 | $6,617 | $7,092 | | Total Revenue | $72,011 | $64,475 | $136,360 | $126,471 | | Cost of Food (% of Net Sales) | 30.2% | 30.3% | 30.1% | 29.3% | | Labor Costs (% of Net Sales) | 29.9% | 31.8% | 31.0% | 32.1% | | General & Administrative (% of Total Revenue) | 17.7% | 20.2% | 18.1% | 19.6% | | Marketing (% of Total Revenue) | 6.8% | 4.4% | 5.9% | 4.6% | | Impairments (% of Total Revenue) | 1.7% | 0.0% | 0.9% | 0.1% | | Earnings before Income Taxes | $6,435 | $5,765 | $9,749 | $10,643 | - Net sales increased by 14.8% in Q2 2025 and 11.2% in the first six months of 2025, primarily due to a 10.7% increase in Steak n Shake's same-store sales[118][120] - Franchise partner fees, which include up to 15% of sales and 50% of profits, increased despite fewer open units, indicating improved performance at franchise partner units[59][120] - Labor costs as a percentage of net sales decreased in 2025 compared to 2024, mainly due to a decrease in management labor. Marketing expenses increased due to promotions of new products and payment methods[124][126] Insurance This section reviews the underwriting results and overall financial performance of the company's insurance operations Insurance Operations Underwriting Results (dollars in thousands): | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | First Guard Pre-tax Underwriting Gain | $2,091 | $1,331 | $3,306 | $2,131 | | Southern Pioneer Pre-tax Underwriting Gain (Loss) | $(857) | $(785) | $(1,359) | $(726) | | Total Pre-tax Underwriting Gain | $1,234 | $546 | $1,947 | $1,405 | Insurance Operations Earnings Summary (dollars in thousands): | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Premiums Written | $17,403 | $16,848 | $36,425 | $33,375 | | Premiums Earned | $17,166 | $16,291 | $34,931 | $32,213 | | Pre-tax Underwriting Gain | $1,234 | $546 | $1,947 | $1,405 | | Total Other Income (Investment Income + Other) | $559 | $1,304 | $1,383 | $2,691 | | Earnings before Income Taxes | $1,793 | $1,850 | $3,330 | $4,096 | | Contribution to Net Earnings | $1,399 | $1,454 | $2,600 | $3,192 | - First Guard's underwriting gain increased by $1,175 thousand in the first six months of 2025 compared to 2024. Southern Pioneer's premiums earned increased by 24.0% in the first six months of 2025 due to rate increases in personal lines, despite an underwriting loss[137][139] Oil and Gas This section discusses the revenues, costs, and earnings from oil and gas operations, including gains on property sales Oil and Gas Operations Summary (dollars in thousands): | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Oil and Gas Revenues | $7,498 | $8,671 | $17,428 | $18,181 | | Total Cost and Expenses | $7,175 | $7,485 | $15,780 | $16,010 | | Gain on Sale of Properties | $794 | $16,165 | $10,117 | $16,646 | | Earnings before Income Taxes | $1,117 | $17,351 | $11,765 | $18,817 | | Contribution to Net Earnings | $849 | $13,369 | $9,147 | $14,518 | - Oil and gas revenues decreased in Q2 2025 and the first six months of 2025 compared to 2024. The significant decrease in earnings before income taxes is largely due to lower gains on the sale of properties in 2025 compared to 2024[143] - Abraxas Petroleum recorded a $10,117 thousand gain from selling undeveloped reserves in the first six months of 2025. Southern Oil's revenue remained consistent, with increased production offset by lower crude oil sales prices[146][148] Brand Licensing This section details the financial performance of the Maxim brand licensing segment, including revenues and costs Maxim Brand Licensing Operations Summary (dollars in thousands): | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Licensing and Media Revenue | $2,287 | $301 | $3,694 | $513 | | Total Cost and Expenses | $2,554 | $556 | $4,318 | $1,122 | | Earnings (Loss) before Income Taxes | $(267) | $(255) | $(624) | $(609) | | Contribution to Net Earnings (Loss) | $(198) | $(193) | $(465) | $(458) | - Maxim's revenue significantly increased in the first half of 2025 compared to 2024, primarily due to the launch of various new digital contests, though the segment still reported a net loss[150] Investment Gains and Investment Partnership Gains This section analyzes the impact of investment gains and losses, particularly from investment partnerships, on overall earnings Investment Gains (Losses) (dollars in thousands): | Period | 2025 | 2024 | | :-------------------- | :----- | :----- | | Q2 Net of Tax | $2,318 | $(2,159) | | 6M Net of Tax | $1,030 | $(827) | Investment Partnership Gains (Losses) (dollars in thousands): | Period | 2025 | 2024 | | :-------------------- | :----- | :----- | | Q2 Pre-tax | $58,504 | $(79,890) | | 6M Pre-tax | $8,912 | $(57,905) | | Q2 Net of Tax | $46,194 | $(60,748) | | 6M Net of Tax | $6,768 | $(43,600) | - The company experienced a significant positive swing in investment gains and investment partnership gains in 2025 compared to losses in 2024, which contributed substantially to the overall net earnings turnaround. These gains and losses, particularly from investment partnerships, cause significant volatility in periodic earnings[151][153][155] Interest Expense This section details the interest expense incurred on notes payable and its impact on financial results Interest Expense on Notes Payable (dollars in thousands): | Period | 2025 | 2024 | | :-------------------- | :----- | :----- | | Q2 Pre-tax | $852 | $42 | | 6M Pre-tax | $1,752 | $42 | | Q2 Net of Tax | $656 | $32 | | 6M Net of Tax | $1,349 | $32 | - Interest expense on notes payable increased significantly in 2025 compared to 2024, reflecting higher borrowings[157] Corporate and Other This section reports on the net losses attributable to corporate and other unallocated activities - Corporate and other net losses increased to $3,530 thousand in Q2 2025 and $6,819 thousand in the first six months of 2025, compared to $3,125 thousand and $5,121 thousand in the respective 2024 periods[158] Income Taxes This section explains the income tax expense or benefit and its drivers, particularly related to investment partnership performance Income Tax Expense (Benefit) (dollars in thousands): | Period | 2025 | 2024 | | :-------------------- | :----- | :----- | | Second Quarter | $14,171 | $(14,725) | | First Six Months | $6,263 | $(7,909) | - The variance in income taxes is primarily due to the shift from pre-tax losses to pre-tax gains in investment partnerships, resulting in income tax expense in 2025 compared to a benefit in 2024[159] Financial Condition This section provides an overview of the company's financial position, focusing on cash and investment balances Consolidated Cash and Investments (dollars in thousands): | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and Cash Equivalents | $32,766 | $30,709 | | Investments | $104,541 | $102,975 | | Fair Value of Interest in Investment Partnerships | $719,846 | $656,266 | | Total Cash and Investments | $857,153 | $789,950 | | Less: Portion of Company Stock Held by Investment Partnerships | $(516,953) | $(454,539) | | Carrying Value of Cash and Investments on Balance Sheet | $340,200 | $335,411 | - The company's consolidated cash and investments increased to $340,200 thousand at June 30, 2025, from $335,411 thousand at December 31, 2024, reflecting growth in the fair value of investment partnerships[161] Liquidity This section discusses the company's cash flow activities and overall liquidity position, including compliance with debt covenants Consolidated Cash Flow Activities (dollars in thousands): | Metric | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | | Net Cash Provided by Operating Activities | $57,942 | $20,910 | | Net Cash Used in Investing Activities | $(27,161) | $(19,586) | | Net Cash Used in Financing Activities | $(28,778) | $(2,691) | | Increase in Cash, Cash Equivalents and Restricted Cash | $2,045 | $(1,374) | - The company maintains significant liquidity, with net cash provided by operating activities increasing substantially in 2025, primarily due to $35,000 thousand in distributions from investment partnerships[162][163] - Cash used in financing activities increased significantly in 2025 due to payments on the company's line of credit. The company was in compliance with all covenants on its lines of credit as of June 30, 2025[164][165][166] Critical Accounting Policies This section highlights the significant accounting policies and estimates used in preparing the financial statements - Management's discussion is based on consolidated financial statements prepared in accordance with GAAP, requiring estimates and judgments for future transactions. No material changes to critical accounting policies were reported since the December 31, 2024, annual report[168] Recently Issued Accounting Pronouncements This section confirms the non-applicability of recently issued accounting pronouncements to the current report - No recently issued accounting pronouncements were applicable for this Quarterly Report on Form 10-Q[169] Cautionary Note Regarding Forward-Looking Statements This section advises caution regarding forward-looking statements, which are subject to inherent risks and uncertainties - The report contains forward-looking statements, which are estimates of future financial items and are subject to various risks and uncertainties, many beyond the company's control. Investors are cautioned not to place undue reliance on these statements[170] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section states that there are no applicable disclosures regarding quantitative and qualitative market risk for the company - The company has no applicable disclosures for quantitative and qualitative market risk[172] ITEM 4. CONTROLS AND PROCEDURES This section addresses the effectiveness of the company's disclosure controls and procedures and internal control over financial reporting. It notes that disclosure controls were not effective due to previously identified material weaknesses, and remediation efforts are ongoing - As of June 30, 2025, the company's disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting, as previously identified in the 2024 Annual Report on Form 10-K[173] - Remediation efforts are ongoing to address these material weaknesses, involving the implementation and documentation of policies, procedures, and internal controls. The weaknesses will not be considered remediated until controls have operated for a sufficient period and are tested effectively[174] - There have been no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect internal control over financial reporting[175] PART II – OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits ITEM 1. LEGAL PROCEEDINGS This section refers to Note 13 of the Consolidated Financial Statements for information regarding legal proceedings, indicating no new material disclosures in this part - Information regarding legal proceedings is incorporated by reference from Note 13 to the Consolidated Financial Statements[177] ITEM 1A. RISK FACTORS This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024[178] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section indicates that there were no unregistered sales of equity securities or use of proceeds to report - There were no unregistered sales of equity securities and use of proceeds to report[179] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section states that there were no defaults upon senior securities - There were no defaults upon senior securities[179] ITEM 4. MINE SAFETY DISCLOSURES This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[180] ITEM 5. OTHER INFORMATION This section states that there is no other information to report - There is no other information to report[181] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including certifications and interactive data files - The report includes certifications pursuant to the Sarbanes-Oxley Act (Sections 302 and 906) and Interactive Data Files (XBRL)[182] Signatures This section contains the required signatures for the Form 10-Q filing, confirming its submission by authorized personnel - The report is signed by Bruce Lewis, Controller, on behalf of Biglari Holdings Inc. on August 8, 2025[183][184]