Biglari Holdings Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued) Financial Condition Consolidated cash and investments are summarized below. September 30, 2023 December 31, 2022 Cash and cash equivalents $ 33,993 $ 37,467 Investments 84,365 69,466 Fair value of interest in investment partnerships 445,675 383,004 Total cash and investments 564,033 489,937 Less: portion of Company stock held by investment partnerships (276,258) (227,210) Carrying value of cash and investments on balance sheet $ 287,775 $ 262,727 Unrealized gains/losses of Biglari Holdings’ stock held by the investment partnerships are eliminated in the Company’s consolidated financial results. Liquidity Our balance sheet continues to maintain significant liquidity. Consolidated cash flow activities are summarized below. First Nine Months 2023 2022 Net cash provided by operating activities $ 48,676 $ 99,754 Net cash used in investing activities (56,226) (102,464) Net cash provided by financing activities 4,382 25,353 Effect of exchange rate changes on cash (56) (150) Increase (decrease) in cash, cash equivalents and restricted cash $ (3,224) $ 22,493 In 2023, cash from operating activities decreased by $51,078 as compared to 2022. The change was primarily attributable to distributions from investment partnerships of $51,200 that occurred in 2022. Net cash used in investing activities was $46,238 lower during 2023 as compared to 2022. Capital expenditures were $6,527 higher in 2022 primarily due to Steak n Shake’s implementation of a self-service model. Proceeds from sales of property and equipment were $18,202 higher in 2023 primarily due to the sale of oil & gas properties for $13,563. During 2022, the Company acquired 90% of Abraxas Petroleum for $80,000 but also assumed $25,101 of cash in the transaction. In 2023 the Company acquired the remaining 10% of Abraxas Petroleum for $5,387. Cash provided by financing activities decreased $20,971 during 2023 as compared to 2022. The decrease was primarily due to net borrowings on the Company’s line of credit. In 2022 the Company borrowed $30,000 and in 2023 the Company borrowed $9,000. Biglari Holdings Line of Credit On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000. The line of credit will be available on a revolving basis until September 12, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants. As of September 30, 2023, we were in compliance with all covenants. The balance of the line of credit was $19,000 and $10,000 on September 30, 2023 and December 31, 2022, respectively. On September 30, 2023, the interest rate was 8.0%. Western Sizzlin Revolver Western Sizzlin’s available line of credit is $500. As of September 30, 2023 and December 31, 2022, Western Sizzlin had no debt outstanding on its revolver. 29 Table of Contents 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, 2022. Recently Issued Accounting Pronouncements No recently issued accounting pronouncements were applicable for this Quarterly Report on Form 10-Q. 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable.