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Item 2. Management’s Discussion and Analysis

2026-08-07 compared with 2026-05-08 · 80 added, 140 removed, 175 unchanged (56% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(dollars in thousands)

Biglari Holdings Inc.

is a holding company owning subsidiaries engaged in a number of diverse business activities, including property and casualty insurance and reinsurance, licensing and media, restaurants, and oil and gas.

Biglari Holdings is founded and led by Sardar Biglari, Chairman and Chief Executive Officer of the Company.

Biglari Holdings’ management system combines decentralized operations with centralized financial decision-making.

Operating decisions for the various business units are made by their respective managers.

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

Net earnings (loss) are disaggregated in the table that follows.

Amounts are recorded after deducting income taxes.

First Quarter

Operating businesses:

Restaurant $ 2,038 $ 2,189

Insurance 2,885 1,201

Oil and gas 907 8,298

Brand licensing 116 (267)

Interest expense (4,281) (693)

Corporate and other (4,548) (3,289)

Total operating businesses (2,883) 7,439

Investment partnership gains (losses) (10,251) (39,426)

Investment gains (losses) (1,397) (1,288)

Net earnings (loss) $ (14,531) $ (33,275)

Our restaurant businesses, which include Steak n Shake and Western Sizzlin, comprise 437 company-operated and franchise restaurants as of March 31, 2026.

Steak n Shake Western Sizzlin

operated Franchise

Partner Traditional

Franchise Company-

operated Franchise Total

Total stores as of December 31, 2025

131 179 94 3 28 435

Corporate stores transitioned (3) 3 — — — —

Net restaurants opened (closed) — 2 — — 2

Total stores as of March 31, 2026

128 182 96 3 28 437

Total stores as of December 31, 2024

146 173 107 3 29 458

Corporate stores transitioned — — — — — —

Net restaurants opened (closed) — (1) (3) — — (4)

Total stores as of March 31, 2025

146 172 104 3 29 454

As of March 31, 2026, seven of the 128 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 of Financial Condition and Results of Operations (continued)

Restaurant operations are summarized below.

First Quarter

Net sales $ 40,347 $ 41,615

Franchise partner fees 20,541 17,139

Franchise royalties and fees 3,126 3,489

Other revenue 2,132 2,106

Total revenue 66,146 64,349

Restaurant cost of sales

Cost of food 12,665 31.4 % 12,464 30.0 %

Labor costs 12,858 31.9 % 13,439 32.3 %

Occupancy and other 11,942 29.6 % 11,855 28.5 %

Total cost of sales 37,465 37,758

Selling, general and administrative

General and administrative 11,836 17.9 % 11,928 18.5 %

Marketing 5,427 8.2 % 3,232 5.0 %

Other expenses (income) 155 0.2 % 294 0.5 %

Total selling, general and administrative 17,418 26.3 % 15,454 24.0 %

Depreciation and amortization 7,030 10.6 % 6,490 10.1 %

Interest on finance leases and obligations 1,357 1,333

Earnings before income taxes 2,876 3,314

Income tax expense 838 1,125

Contribution to net earnings $ 2,038 $ 2,189

Cost of food, labor costs, and occupancy and other costs are expressed as a percentage of net sales.

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

Net sales for the first quarter of 2026 were $40,347 as compared to $41,615 during the first quarter of 2025.

Steak n Shake’s domestic same-store sales increased 10.0%.

Total revenue decreased due to fewer company-operated units in 2026 compared to 2025.

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

Because we derive most of our revenue from our share of the profits, revenue will decline as we transition from company-operated units to franchise partner units.

Fees generated by our franchise partners were $20,541 during the first quarter of 2026, as compared to $17,139 during the first quarter of 2025.

Franchise partner same-store sales increased approximately 13%.

The franchise royalties and fees generated by the traditional franchising business were $3,126 during the first quarter of 2026, as compared to $3,489 during the first quarter of 2025.

There were 96 Steak n Shake traditional units open on March 31, 2026, as compared to 104 units open on March 31, 2025.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The cost of food at company-operated units during the first quarter of 2026 was $12,665 or 31.4% of net sales, as compared to $12,464 or 30.0% of net sales during the first quarter of 2025.

The increase was primarily due to Steak n Shake changing its frying oil to 100% beef tallow.

The labor costs at company-operated restaurants during the first quarter of 2026 were $12,858 or 31.9% of net sales, as compared to $13,439 or 32.3% of net sales during the first quarter of 2025.

The decrease as a percentage of net sales was primarily due to a decrease in management labor costs.

General and administrative expenses during the first quarter of 2026 were $11,836 or 17.9% of total revenue, as compared to $11,928 or 18.5% of total revenue during the first quarter of 2025.

The franchise royalties and fees generated by the traditional franchising business were $3,350 during the second quarter of 2026, as compared to $3,128 during the second quarter of 2025.

Franchise royalties and fees during the first six months of 2026 were $6,476 as compared to $6,617 during the first six months of 2025.

There were 90 Steak n Shake traditional units open on June 30, 2026, as compared to 100 units open on June 30, 2025.

The cost of food at company-operated units during the second quarter of 2026 was $15,203 or 33.3% of net sales, as compared to $14,167 or 30.2% of net sales during the second quarter of 2025.

The cost of food at company-operated units during the first six months of 2026 was $27,868 or 32.4% of net sales, as compared to $26,631 or 30.1% of net sales during the first six months of 2025.

The increase was primarily because of Steak n Shake materially enhancing the quality of its food ingredients.

The labor costs at company-operated restaurants during the second quarter of 2026 were $13,749 or 30.1% of net sales, as compared to $14,020 or 29.9% of net sales in the second quarter of 2025.

Labor costs at company-operated restaurants during the first six months of 2026 were $26,607 or 30.9% of net sales, as compared to $27,460 or 31.0% of net sales in 2025.

Labor costs expressed as a percentage of net sales remained consistent with 2025.

General and administrative expenses during the second quarter of 2026 were $12,348 or 16.5% of total revenue, as compared to $12,776 or 17.7% of total revenue in the second quarter of 2025.

General and administrative expenses during the first six months of 2026 were $24,184 or 17.2% of total revenue, as compared to $24,704 or 18.1% of total revenue in the first six months of 2025.

General and administrative expenses in 2026 remained consistent with 2025.

Interest on obligations under leases was $1,357 during the first quarter of 2026 versus $1,333 during the first quarter of 2025.

The Company recorded no impairment charges in the second quarter and first six months of 2026 and recorded $1,251 in the first six months of 2025 related to underperforming stores.

Interest on obligations under leases was $2,757 during 2026 versus $2,573 during 2025.

To better convey the performance of the franchise partnership model, the table below shows the underlying sales, cost of food, labor costs, and other restaurant costs of the franchise partners.

We believe the unaudited franchise partner information is useful to readers, as they have a direct effect on Steak n Shake’s profitability.

First Quarter

Second Quarter First Six Months

2026 2025 2026 2025

Net sales and other $ 107,214 $ 89,856 $ 203,238 $ 170,173

6 unchanged sentences

Figures are shown for information purposes only.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

We view our insurance businesses as possessing two activities:

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Biglari Holdings’ insurance operations consist of First Guard, Southern Pioneer, and Biglari Reinsurance.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Underwriting results of our insurance operations are summarized below.

First Quarter

Second Quarter First Six Months

2026 2025 2026 2025

Underwriting gain attributable to:

1 unchanged sentence

Southern Pioneer 943 (857) 2,255 (1,359)

Other — — 96 —

Pre-tax underwriting gain 2,560 1,234 5,539 1,947

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Earnings of our insurance operations are summarized below.

First Quarter

Second Quarter First Six Months

2026 2025 2026 2025

Premiums written $ 17,524 $ 17,403 $ 36,032 $ 36,425

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Investment income 717 839 1,368 1,676

Other income and expenses (389) (13)

Other income (expenses) (301) (280) (690) (293)

Total other income 416 559 678 1,383

4 unchanged sentences

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

First Guard is a direct underwriter of commercial truck insurance, selling physical damage and nontrucking liability insurance to truckers.

First Guard is a direct underwriter of commercial truck insurance, primarily selling physical damage and nontrucking liability insurance to truckers.

First Guard’s insurance products are marketed primarily through direct response methods via the Internet or by telephone.

1 unchanged sentence

A summary of First Guard’s underwriting results follows.

First Quarter

Amount % Amount %

Second Quarter First Six Months

2026 2025 2026 2025

Amount % Amount % Amount % Amount %

Premiums written $ 9,195 $ 9,098 $ 18,241 $ 18,307

4 unchanged sentences

Pre-tax underwriting gain $ 1,617 $ 2,091 $ 3,188 $ 3,306

First Guard produced an underwriting gain in 2026 of $1,571, representing an increase of $356, or 29.3% compared to 2025.

First Guard produced an underwriting gain in the second quarter and first six months of 2026.

Its underwriting gain decreased $474 in the second quarter of 2026 compared to 2025.

Southern Pioneer

1 unchanged sentence

A summary of Southern Pioneer’s underwriting results follows.

First Quarter

Amount % Amount %

Second Quarter First Six Months

2026 2025 2026 2025

Amount % Amount % Amount % Amount %

Premiums written $ 8,329 $ 8,305 $ 17,791 $ 18,118

4 unchanged sentences

Pre-tax underwriting gain (loss) $ 943 $ (857) $ 2,255 $ (1,359)

Southern Pioneer produced an underwriting gain in 2026 of $1,312, representing an increase of $1,814 compared to 2025.

Southern Pioneer produced an underwriting gain in the first six months of 2026 of $2,255, representing an increase of $3,614 compared to 2025.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

A summary of net investment income attributable to our insurance operations follows.

First Quarter

Second Quarter First Six Months

2026 2025 2026 2025

Interest, dividends and other investment income:

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A summary of revenues and earnings of our oil and gas operations follows.

First Quarter

Second Quarter First Six Months

2026 2025 2026 2025

Oil and gas revenues $ 11,260 $ 7,498 $ 20,396 $ 17,428

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Earnings for Abraxas Petroleum are summarized below.

First Quarter

Second Quarter First Six Months

2026 2025 2026 2025

Oil and gas revenues $ 7,296 $ 4,161 $ 13,422 $ 10,051

2 unchanged sentences

General and administrative expenses 1,788 716 2,376 1,365

Total cost and expenses 4,930 4,588 9,551 9,616

Gain on sale of properties 4,803 794 4,803 10,117

2 unchanged sentences

Contribution to net earnings $ 5,771 $ 279 $ 7,038 $ 8,084

Abraxas Petroleum’s revenue increased $236, or 4.0% during the first quarter of 2026 compared to 2025, primarily due to an increase in oil production during 2026 compared to 2025.

In the first quarter of 2025, Abraxas Petroleum recorded a gain of $9,323 from selling undeveloped reserves to an unaffiliated party to conduct development activities;

however, Abraxas Petroleum was not required to fund any exploration expenditures on the undeveloped properties.

No gain was recorded in the first quarter of 2026.

Abraxas Petroleum’s revenue increased $3,371, or 33.5% during the first six months of 2026 compared to 2025, primarily due to an increase in prices.

During the first six months of 2026 and 2025, Abraxas Petroleum recorded a gain of $4,803 and $10,117, respectively, from selling undeveloped reserves to an unaffiliated party to conduct development activities;

however, Abraxas Petroleum will not be required to fund any exploration expenditures on the undeveloped properties.

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

Earnings for Southern Oil are summarized below.

First Quarter

Second Quarter First Six Months

2026 2025 2026 2025

Oil and gas revenues $ 3,964 $ 3,337 $ 6,974 $ 7,377

2 unchanged sentences

General and administrative expenses 659 468 1,396 1,122

Earnings before income taxes (492) 463

Income tax benefit (132) (30)

Total cost and expenses 4,055 2,587 7,557 6,164

Earnings (loss) before income taxes (91) 750 (583) 1,213

Income tax expense (benefit) (34) 180 (166) 150

Contribution to net earnings $ (57) $ 570 $ (417) $ 1,063

Southern Oil’s revenue decreased $1,030, or 25.5% during the first quarter of 2026 compared to 2025.

Southern Oil’s revenue decreased $403, or 5.5% during the first six months of 2026 compared to 2025.

The revenue decline was primarily due to reduced production during 2026 compared to 2025.

3 unchanged sentences

Earnings of operations are summarized below.

First Quarter

Licensing and media revenues $ 3,261 $ 1,407

Second Quarter First Six Months

2026 2025 2026 2025

Licensing and media revenue $ 3,507 $ 2,287 $ 6,768 $ 3,694

Licensing and media costs 3,335 2,421 6,209 4,072

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Income tax expense (benefit) (22) (69) 19 (159)

Contribution to net earnings $ 116 $ (267)

Maxim’s revenue increased during the first quarter of 2026 compared to 2025 primarily due to digital contests.

Contribution to net earnings (loss) $ (62) $ (198) $ 54 $ (465)

Maxim’s revenue increased during the first half of 2026 as compared to the same period in 2025 primarily because of its digital contest business.

Investment Gains and Investment Partnership Gains

Investment losses net of tax for the first quarter of 2026 and 2025 were $1,397 and $1,288, respectively.

Dividends and interest earned on investments are reported as investment income by our insurance companies.

Investment gains net of tax for the second quarter of 2026 were $7,394 as compared to $2,318 for the second quarter of 2025.

Investment gains net of tax for the first six months of 2026 were $5,997 as compared to $1,030 for the first six months of 2025.

Dividends earned on investments are reported as investment income by our insurance companies.

We consider investment income as a component of our aggregate insurance operating results.

However, we consider investment gains and losses, whether realized or unrealized, as non-operating.

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

First Quarter

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

Second Quarter First Six Months

2026 2025 2026 2025

Investment partnership gains (losses) $ 35,637 $ 58,504 $ 22,183 $ 8,912

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Investment gains and losses in 2026 and 2025 were mainly derived from our investments in equity securities and included unrealized gains and losses from market price changes during the period.

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

These gains and losses have caused and will continue to cause significant volatility in our periodic earnings.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

1 unchanged sentence

The Company’s interest expense is summarized below.

First Quarter

Interest expense on note payable and other borrowings $ (5,651) $ (900)

Second Quarter First Six Months

2026 2025 2026 2025

Interest expense on notes payable and other borrowings $ 5,532 $ 852 $ 11,183 $ 1,752

Tax benefit 1,340 196 2,710 403

Interest expense net of tax $ 4,192 $ 656 $ 8,473 $ 1,349

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 $221,625 on March 31, 2026.

The interest rate on Steak n Shake’s note payable is fixed at 8.8%.

Corporate and Other

Corporate expenses exclude the activities of the restaurant, insurance, brand licensing, and oil and gas businesses.

Corporate and other net losses during the first quarter of 2026 were $4,548 compared to $3,289 in the first quarter of 2025.

The higher loss in 2026 was primarily due to higher legal and professional fees.

The income tax benefit for the first quarter of 2026 was $4,351 compared to an income tax benefit of $7,908 for the first quarter of 2025.

The decreased income tax benefit between 2026 and 2025 is primarily attributable to lower tax benefits on pre-tax losses generated by the investment partnerships.

Corporate and other net losses during the second quarter and first six months of 2026 were $5,090 and $9,638, respectively, compared to $3,530 and $6,819 in the second quarter and first six months of 2025, respectively.

The higher corporate expenses in 2026 were primarily due to increased legal-related costs.

Income tax expense for the second quarter of 2026 was $11,693 compared to income tax expense of $14,171 for the second quarter of 2025.

Income tax expense for the first six months of 2026 was $7,342 compared to income tax expense of $6,263 for the first six months of 2025.

The change in income tax expense between 2026 and 2025 is attributable to taxes on income generated by the investment partnerships.

Financial Condition

Consolidated cash and investments are summarized below.

March 31, 2026 December 31,

2026 December 31, 2025

Cash and cash equivalents $ 68,394 $ 268,782

8 unchanged sentences

Consolidated cash flow activities are summarized below.

First Quarter

First Six Months

Net cash provided by operating activities $ 35,280 $ 57,942

Net cash used in investing activities (238,366) (27,161)

Net cash provided by financing activities 6,057 2,002

Net cash provided by (used in) financing activities 2,716 (28,778)

Effect of exchange rate changes on cash (18) 42

Increase (decrease) in cash, cash equivalents and restricted cash $ (200,388) $ 2,045

Cash provided by operating activities increased during the first quarter of 2026 by $4,537 as compared to the first quarter of 2025.

The change was primarily attributable to $13,020 of distributions from the investment partnerships during 2026.

Cash used in investing activities increased during the first quarter of 2026 by $75,249 compared to the first quarter of 2025.

The change was primarily attributable to purchases of limited partnership interests, which were $24,810 higher, and purchases of investments, which were $34,970 higher.

Cash provided by financing activities increased during the first quarter of 2026 by $4,055 compared to the first quarter of 2025.

The Company had net payments on its line of credit and note payable of $7,000 offset by proceeds from the issuance of common stock of $14,920 compared to net borrowings of $3,400 on its lines of credit in the first quarter of 2025.

On January 16, 2026, we entered into an At the Market Offering Agreement with a third party providing for the sale of up to $500,000 in shares of our common stock.

Through May 8, 2026, the Company sold 4,312 shares of Class A Common Stock for $9,080 and 14,500 shares of Class B Common Stock for $5,993.

We intend to use the net proceeds from these offerings to support our business and investment activities and build a stronger capital position at the holding company for the acquisition of businesses, for augmenting the capital of insurance subsidiaries, or for other general corporate purposes.

Cash provided by operating activities decreased by $22,662 as compared to 2025.

The change was primarily attributable to lower returns on partnership investments during 2026.

Cash used in investing activities increased during 2026 by $211,205 as compared to 2025 primarily due to purchases of investments which were $222,793 higher in 2026.

Cash provided by financing activities increased during 2026 by $31,494 as compared to 2025.

The Company had net payments on its line of credit and note payable of $8,688 offset by proceeds from the issuance of common stock of $14,920 compared to net payments on the Company’s line of credit of $26,000 in 2025.

Biglari Holdings Line of Credit

1 unchanged sentence

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

As of March 31, 2026, we were in compliance with all covenants.

The balance on the line of credit was $22,500 and $27,250 on March 31, 2026 and December 31, 2025, respectively.

As of June 30, 2026, we were in compliance with all covenants.

The balance on the line of credit was $22,500 and $27,250 on June 30, 2026 and December 31, 2025, respectively.

Steak n Shake Note Payable

2 unchanged sentences

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

As of March 31, 2026, Steak n Shake was in compliance with all covenants.

As of June 30, 2026, Steak n Shake was in compliance with all covenants.

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

2 unchanged sentences

Western Sizzlin’s available line of credit is $500.

As of March 31, 2026 and December 31, 2025, Western Sizzlin had no debt outstanding on its revolver.

As of June 30, 2026 and December 31, 2025, Western Sizzlin had no debt outstanding on its revolver.

Critical Accounting Policies

19 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis