What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-02 compared with 2025-03-03 · 60 added, 65 removed, 312 unchanged (29% of the section changed)

8 unchanged sentences

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

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.

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.

Discussion of Operations

11 unchanged sentences

Investment partnership gains (losses) (51,996) (28,119) 14,646

Investment gains (losses) 239 1,731 (2,682)

Investment gains 355 239 1,731

Net earnings (loss) (37,488) (3,759) 55,539

4 unchanged sentences

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.

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.

Our Management’s Discussion and Analysis generally discusses 2025 and 2024 items.

Discussions of 2023 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, 2024, filed with the SEC on March 1, 2025.

Investment gains and losses in 2025 and 2024 were mainly derived from our investments in equity securities and included unrealized gains and losses from market price changes during the period.

4 unchanged sentences

The business segment data (Note 16 to the accompanying Consolidated Financial Statements) should be read in conjunction with this discussion.

Management’s Discussion and Analysis (continued)

Our restaurant businesses, which include Steak n Shake and Western Sizzlin, comprise 435 company-operated and franchise restaurants as of December 31, 2025.

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Stores on December 31, 2025 131 179 94 3 28 435

As of December 31, 2024, 10 of the 146 company-operated Steak n Shake stores were closed.

Steak n Shake plans to sell or lease six of the 10 locations and refranchise the balance.

As of December 31, 2025, seven of the 131 company-operated Steak n Shake stores were closed.

Of the seven locations, Steak n Shake plans to reopen two locations and sell or lease five locations.

Management’s Discussion and Analysis (continued)

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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.

For company-operated units, sales to the end customer are recorded as revenue generated by the Company, but for franchise partner units, only our share of the restaurants’ profits, along with certain fees, are recorded as revenue.

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.

Net sales for 2025 were $181,884, representing an increase of $22,671, or 14.2% compared to 2024.

The increase in net sales was primarily due to an increase of 10.5% in Steak n Shake’s same-store sales for company-operated units.

The same-store sales performance was 10.2% for company-operated and franchise partner units combined.

For company-operated units, sales to the end customer are recorded as revenue generated by the Company, but for franchise partner units, only our share of the restaurant’s profits, along with certain fees, are recorded as revenue.

Management’s Discussion and Analysis (continued)

1 unchanged sentence

As of December 31, 2025, there were 179 franchise partner units as compared to 173 franchise partner units as of December 31, 2024.

Franchise partner fees were higher primarily because franchise partner same-store sales increased 10.1% during 2025 compared to 2024.

Included in the franchise partner fees were $23,428 and $22,884 of rental income during 2025 and 2024, respectively.

Franchise partners rent buildings and equipment from Steak n Shake.

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.

The franchise royalties and fees generated by the traditional franchising business were $13,587 during 2025 as compared to $13,632 during 2024.

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The cost of food at company-operated units in 2025 was $56,205, or 30.9% of net sales as compared to $47,891, or 30.1% of net sales in 2024.

The increase was primarily due to cost inflation.

The cost of food as a percentage of net sales increased during 2025 compared to 2024 primarily due to inflation and improvements in the quality of various products.

The labor costs at company-operated restaurants during 2025 were $56,175, or 30.9% of net sales as compared to $50,431, or 31.7% of net sales in 2024.

Labor costs expressed as a percentage of net sales increased during 2024 compared to 2023 primarily due to an increase in store-level managers.

Labor costs expressed as a percentage of net sales decreased during 2025 compared to 2024 primarily due to the benefit from higher sales in relation to fixed management labor.

General and administrative expenses during 2025 were $48,969, or 17.4% of total revenue as compared to $47,130, or 18.7% of total revenue during 2024.

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).

The increase in general and administrative expenses was mainly attributable to higher salary expenses at Steak n Shake.

Marketing expenses during 2025 were $17,951 or 6.4% of total revenue, as compared to $12,584 or 5.0% of total revenue during 2024.

Marketing expenses increased during 2025 compared to 2024 primarily due to the promotion of new, enhanced products.

Other income decreased during 2025 compared to 2024, primarily because of fewer real estate transactions.

31 unchanged sentences

Pre-tax underwriting gain 7,210 4,438 8,454

Other income and expenses

Investment income and other income and expenses

Investment income 3,339 3,928 3,074

Other income 724 1,555 3,223

Total other income 4,652 4,629 4,603

Other income and expenses 2,167 724 1,555

Total investment income and other income and expenses 5,506 4,652 4,629

Earnings before income taxes 12,716 9,090 13,083

2 unchanged sentences

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

Commissions are in other income in the above table.

Commissions are in other income and expenses in the above table.

Management’s Discussion and Analysis (continued)

11 unchanged sentences

Pre-tax underwriting gain $ 6,015 $ 4,038 $ 9,492

First Guard produced an underwriting gain in 2024.

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.

First Guard produced an underwriting gain in 2025 of $6,015, representing an increase of $1,977, or 49.0% compared to 2024.

Southern Pioneer

9 unchanged sentences

Pre-tax underwriting gain (loss) $ 1,195 $ 400 $ (1,038)

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.

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.

Premiums earned increased $5,355, or 19.0% in 2025 compared to 2024, primarily because of higher average earned premium per policy.

The loss ratio increased from higher claims frequencies, average claims severities, and adverse development of prior accident years’ claims.

Management’s Discussion and Analysis (continued)

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Our oil and gas business is highly dependent on oil and natural gas prices.

We did not record any impairments to our oil and gas assets during 2024.

We did not record any impairments to our oil and gas assets during 2025, 2024, or 2023.

However, we may be required to record impairments of our oil and gas properties resulting from prolonged declines in oil and gas prices.

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Abraxas Petroleum operates oil and natural gas properties in the Permian Basin.

Earnings for Abraxas Petroleum from the date of acquisition, September 14, 2022, are summarized below.

Earnings for Abraxas Petroleum are summarized below.

2025 2024 2023

9 unchanged sentences

Abraxas Petroleum’s revenue decreased $5,592, or 24.8% during 2025 compared to 2024.

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;

The revenue decline was primarily due to lower crude oil prices.

During 2025, Abraxas Petroleum recorded a gain of $11,877 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.

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.

The costs relate to wells that Abraxas used prior to our acquisition of Abraxas Petroleum.

Management’s Discussion and Analysis (continued)

During 2024 and 2023, Abraxas Petroleum entered into similar royalty-based arrangements on its undeveloped properties.

Southern Oil primarily operates oil and natural gas properties offshore in Louisiana state waters.

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Southern Oil’s revenue decreased $1,142, or 8.0% during 2025 compared to 2024.

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.

Southern Oil repaired several nonperforming wells throughout 2024, which increased production during 2025.

However, the lower sales prices of crude oil during 2025 compared to 2024 resulted in a $1,909 decrease in revenue.

Management’s Discussion and Analysis (continued)

Brand Licensing

6 unchanged sentences

Earnings (loss) before income taxes (1,921) (1,180) 11

Income tax expense (296) 3 447

Income tax expense (benefit) (479) (296) 3

Contribution to net earnings $ (1,442) $ (884) $ 8

Licensing and media revenue decreased $1,089 in 2024 compared to 2023 primarily due to the poor performance of an important licensing arrangement.

Management’s Discussion and Analysis (continued)

Maxim’s revenue increased during 2025 as compared to 2024 due to a new venture in the digital contest business, which increased the loss for the year.

Investment Gains and Investment Partnership Gains

16 unchanged sentences

We believe that investment gains/losses are generally meaningless for analytical purposes in understanding our reported quarterly or annual results.

Management’s Discussion and Analysis (continued)

Interest Expense

4 unchanged sentences

Interest expense net of tax $ (6,166) $ (589) $ (531)

The consolidated income tax benefit was $4,395 in 2024 versus the tax expense of $9,308 in 2023.

The increase in interest expense is due to interest on Steak n Shake’s note payable obtained on September 30, 2025.

The outstanding balance on Steak n Shake’s note payable was $223,875 on December 31, 2025.

The interest rate was 8.8% on December 31, 2025.

The outstanding balance on Biglari Holdings’ lines of credit was $27,250 on December 31, 2025, compared to $45,000 on December 31, 2024.

The interest rate was 6.7% on December 31, 2025.

The consolidated income tax benefit was $10,203 in 2025 versus $4,395 in 2024.

The variance in income taxes between 2025 and 2024 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.

Excluding investment partnership activities, pre-tax income was $19,310 and $32,904 and tax expense was $4,802 and $8,544 during 2025 and 2024, respectively.

The effective tax rate for the Company (excluding investment partnership activities) was 24.9% during 2025 compared to 26.0% during 2024.

The increase in the effective tax rates is primarily attributable to certain tax benefits recognized by Abraxas Petroleum during 2023.

Corporate and Other

1 unchanged sentence

Net losses for Corporate and other were $16,000 during 2025 and $12,503 during 2024.

The decrease in net losses was primarily due to a decrease in accrued incentive fees.

Management’s Discussion and Analysis (continued)

The increase in net losses was primarily due to an increase in professional fees.

Financial Condition

9 unchanged sentences

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

Management’s Discussion and Analysis (continued)

Our balance sheet continues to maintain significant liquidity.

6 unchanged sentences

Increase (decrease) in cash, cash equivalents, and restricted cash $ 238,061 $ 1,778 $ (9,151)

In 2024, cash provided by operating activities decreased by $23,342 as compared to 2023.

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.

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.

Cash provided by operating activities increased during 2025 by $57,299 as compared to 2024.

The change was primarily attributable to $56,000 of distributions from the investment partnerships during 2025.

Cash used in investing activities decreased during 2025 by $21,918 as compared to 2024 primarily due to an increase of $33,411 in sales of investments and redemptions of fixed maturity securities.

Cash provided by financing activities increased during 2025 by $157,049 as compared to 2024 primarily due to Steak n Shake’s note payable of $225,000 on September 30, 2025.

During 2025, the Company had net payments on its revolving lines of credit of $17,750 compared to net borrowings of $45,000 during 2024.

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 line of credit matures on September 13, 2026.

Biglari Holdings ’ Line of Credit

Biglari Holdings’ line of credit is $35,000 and matures on September 13, 2026.

The line of credit includes customary covenants as well as financial maintenance covenants.

As of December 31, 2025, we were in compliance with all covenants.

There was a $35,000 balance on the line of credit on December 31, 2024.

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.

Management’s Discussion and Analysis (continued)

The balance on the line of credit was $27,250 and $35,000 on December 31, 2025 and 2024, respectively.

Our interest rate was 6.7% and 7.1% on December 31, 2025 and 2024, respectively.

On November 8, 2024, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $75,000.

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.

The line of credit was terminated on September 29, 2025.

Steak n Shake Note Payable

On September 30, 2025, Steak n Shake obtained a loan of $225,000.

The term of the loan is five years, with an interest rate fixed at 8.8% per annum, and the loan will be amortized at a rate of 3.0% per annum.

The loan includes customary covenants as well as financial maintenance covenants and customary events of default.

As of December 31, 2025, we were in compliance with all covenants.

The balance of the line of credit was $10,000 on December 31, 2024.

Our interest rate was 7.8% on December 31, 2024.

The debt is an obligation of Steak n Shake and the proceeds from the loan were distributed to Biglari Holdings.

All of the debt is secured by real estate owned by Steak n Shake.

Western Sizzlin Revolver

6 unchanged sentences

A discussion of our principal accounting policies that required the application of significant judgments as of December 31, 2025, follows.

Management’s Discussion and Analysis (continued)

Impairment of Restaurant Long-lived Assets

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We may also elect not to perform the qualitative assessment for the reporting unit or intangible assets and perform a quantitative impairment test instead.

Management’s Discussion and Analysis (continued)

Recently Issued Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis