Biglari Holdings Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Liquidity Our balance sheet continues to maintain significant liquidity. Consolidated cash flow activities are summarized below. First Quarter 2022 2021 Net cash provided by operating activities $ 21,092 $ 165,298 Net cash used in investing activities (16,077) (8,780) Net cash used in financing activities (1,564) (152,561) Effect of exchange rate changes on cash (23) (22) Increase in cash, cash equivalents and restricted cash $ 3,428 $ 3,935 Cash provided by operating activities was $21,092 during 2022 compared to $165,298 in 2021. The decrease in cash provided by operating activities is mainly attributable to distributions from investment partnerships of $4,500 f or 2022 and $150,570 for 2021. The distributions during 2021 were primarily used to repay Steak n Shake’s debt. Cash used in investing activities during 2022 was $16,077 compared to $8,780 in 2021. Capital expenditures were $1,846 higher in 2022 compared to 2021. The increase in capital expenditures relates to Steak n Shake’s continued transformation to counter service. Proceeds from property disposals were $2,640 higher during 2021 compared to 2022. Purchases of investments, net of maturities and sales, were $2,811 higher during 2022 compared to 2021. Cash used in financing activities was $150,997 higher in 2021 compared to 2022. The Company repaid Steak n Shake’s debt and made principal payments on direct financing lease obligations of $152,561 during 2021. We intend to meet the working capital needs of our operating subsidiaries principally through anticipated cash flows generated from operations and cash on hand. We continually review available financing alternatives. Steak n Shake Credit Facility On March 19, 2014, Steak n Shake and its subsidiaries entered into a credit agreement which provided for a senior secured term loan facility in an aggregate principal amount of $220,000. The term loan was scheduled to mature on March 19, 2021. The Company repaid the balance of Steak n Shake’s term facility on February 19, 2021. Critical Accounting Policies Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Certain accounting policies require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized in our consolidated financial statements from such estimates are necessarily based on numerous assumptions involving varying and potentially significant degrees of judgment and uncertainty. Accordingly, the amounts currently reflected in our consolidated financial statements will likely increase or decrease in the future as additional information becomes available. There have been no material changes to critical accounting policies previously disclosed in our annual report on Form 10-K for the year ended December 31, 2021. Recently Issued Accounting Pronouncements No recently issued accounting pronouncements were applicable for this Quarterly Report on Form 10-Q. 24 Table of Contents Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Cautionary Note Regarding Forward-Looking Statements This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In general, forward-looking statements include estimates of future revenues, cash flows, capital expenditures, or other financial items, and assumptions underlying any of the foregoing. Forward-looking statements reflect management’s current expectations regarding future events and use words such as “anticipate,” “believe,” “expect,” “may,” and other similar terminology. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. These forward-looking statements are all based on currently available operating, financial, and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially depending on a variety of factors, many beyond our control, including, but not limited to, the risks and uncertainties described in Item 1A, Risk Factors of our annual report on Form 10-K and Item 1A of this report. We undertake no obligation to publicly update or revise them, except as may be required by law.