What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-03 compared with 2024-02-26 · 253 added, 159 removed, 910 unchanged (31% of the section changed)

6 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2024 expressed an unqualified opinion on the Company’s internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2025 expressed an adverse opinion on the Company’s internal control over financial reporting because of material weaknesses.

Basis for Opinion

17 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Property and Equipment — Refer to Notes 1 and 6 to the financial statements

Oil and Gas properties - Determination of Impairment Indicators and Recoverability Test - Refer to Notes 1 and 6 to the financial statements

Critical Audit Matter Description

Company-operated restaurants and associated long-lived assets are evaluated for impairment on a restaurant-by-restaurant basis when events or circumstances indicate a possible impairment may have occurred.

The Company’s evaluation of potential impairment of long-lived assets involves the comparison of undiscounted future cash flows expected to be generated by the asset group, generally an individual restaurant, over the expected remaining useful life of that asset group, to the respective carrying amount.

The Company also applied a market analysis for certain properties.

The Company’s undiscounted future cash flows analysis requires management to make estimates and assumptions related to future revenues, labor costs and planned operating periods.

To the extent that the undiscounted cash flows are not sufficient to recover the related assets, the Company estimates the fair value of the related assets using a discounted cash flow model to assess the amount of any impairment.

We identified the impairment of company-operated restaurant long-lived assets as a critical audit matter because of the estimates and assumptions required by management to evaluate the potential impairment of these asset groups.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of certain assumptions, in management’s undiscounted and discounted future cash flows analyses, including revenue growth, food costs, labor costs, and planned operating periods of restaurants.

The successful efforts method is used for crude oil and natural gas exploration and production activities.

All costs for development wells, related plant and equipment, proved mineral interests in crude oil and natural gas properties, and related asset retirement obligation assets are capitalized.

Management tests property, plant and equipment, including oil and gas properties, for impairment whenever there are indicators that the carrying amount of property, plant and equipment might not be recoverable.

If there is an indication that the carrying amount of the Company’s oil and gas properties may not be recoverable, management compares the estimated undiscounted future cash flows from oil and gas properties to the carrying values of those properties.

Oil and gas properties that have carrying amounts in excess of estimated undiscounted cash flows are written down to fair value.

We have identified the determination of impairment indicators for oil and gas properties as a critical audit matter due to the significant judgments management makes when determining whether events or changes in circumstances have occurred indicating that the carrying amounts of the properties may not be recoverable.

We have also identified elements of the Company’s recoverability test for oil and gas properties as a critical audit matter due to the significant judgments management makes when determining future cash flows.

Auditing management’s judgements related to these matters involved especially challenging auditor judgment due to the nature and extent of audit effort required, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the undiscounted and discounted future cash flows analysis and the assessment of the expected remaining holding period included the following, among others:

• We tested the effectiveness of controls over management’s evaluation of the recoverability of long-lived assets, including those over revenue, food costs, labor costs and the planned operating period for the store.

• We evaluated the undiscounted future cash flows analysis, including estimates of revenue growth, labor costs and planned operating periods of restaurants by (1) evaluating the underlying source information and assumptions used by management (2) performing sensitivity analyses and (3) testing the mathematical accuracy of the undiscounted future cash flows analysis.

• We evaluated the reasonableness of management’s undiscounted future cash flows analysis by comparing management’s projections to the Company’s historical results and available market data.

• With the assistance of our fair value specialists, for the properties where management applied a market analysis, we evaluated the reasonableness of the valuation methodology and used comparable current market data to develop a range of independent estimates and compare our estimates to those used by management.

• We evaluated the discount rates used by management in the performance of discounted cash flow analyses by testing management’s calculation, performing sensitivity analyses, and assessed the mathematical accuracy of the Company’s calculations of potential impairment.

Our audit procedures related to management’s significant judgments and assumptions related to the determination of impairment indicators and elements of the Company’s recoverability analysis for oil and gas properties included the following, among others:

• We evaluated management’s analysis of impairment indicators by:

◦ Testing the effectiveness of the Company’s impairment indicator control.

◦ Assessing whether oil and gas properties having indicators of impairment were appropriately identified.

• We evaluated the recoverability test analysis, including the estimation of oil and gas properties reserves quantities, by:

◦ Testing the effectiveness of controls related to the Company’s recoverability test analysis, its estimation of oil and gas properties reserve quantities and prices.

◦ Assessing the reasonableness of the Company’s recoverability test analysis, including its estimation of oil and gas properties reserve quantities and prices.

• With the assistance of our fair value specialists, we assessed the key assumptions and estimates, including oil and gas prices and risk factors by:

◦ Understanding the methodology used by management for development of the oil and gas prices and comparing estimated prices to an independently determined range of prices, including published forward pricing indices and third-party industry sources.

◦ Evaluating the risk factors applied to the cash flows for probable and possible oil and gas reserves by comparing to industry surveys.

• We evaluated the experience, qualifications and objectivity of management's specialist, an independent reservoir engineering firm, including the methodologies and calculation procedures used to estimate oil and gas reserves and performing analytical procedures on the reserve quantities.

/s/ DELOITTE & TOUCHE LLP

Austin, Texas

February 24, 2024

March 1, 2025

We have served as the Company’s auditor since 2003.

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and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 24, 2024, expressed an unqualified opinion on those financial statements and included an emphasis of matter paragraph relating to the Company’s investment in related party investment partnerships.

In our opinion, because of the effect of the material weaknesses identified below on the achievement of objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated March 1, 2025, expressed an unqualified opinion on those financial statements and included an emphasis of matter paragraph relating to the Company's investment in related party investment partnerships.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

12 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s assessment:

The Company did not exercise sufficient oversight in order to design and operate effective internal controls based on the criteria established in the COSO framework.

The material weakness in the control environment led to the additional material weaknesses detailed below.

The Company did not design and implement an effective risk assessment based on the criteria established in the COSO framework.

The Company did not effectively design and implement control activities to support the operating effectiveness of controls to prevent and detect potential material errors based on the criteria established in the COSO framework.

As a result, the following control deficiencies constitute material weaknesses, individually and in the aggregate:

(i) ineffective general information technology controls for restricting access, processing transactions as well as adequate change management processes, and (ii) ineffective controls related to the review and approval of journal entries and reconciliations.

These material weaknesses resulted in insufficiently designed controls within the insurance and oil and gas subsidiaries.

These deficiencies result in material weaknesses, individually or in the aggregate, for the remaining control activities of these subsidiaries.

Additionally, the material weaknesses identified at these subsidiaries resulted in a material weakness, individually or in the aggregate, in the control activities supporting financial reporting at the holding company level as a result of its dependency on that information.

The Company did not effectively design or implement controls related to (i) internal communication of information, including objectives and responsibilities for internal control, necessary to support the functioning of internal control;

and (ii) communicating with the Board of Directors regarding matters affecting the functioning of internal control based on the criteria established in the COSO framework.

The Company did not maintain effective monitoring activities to determine whether the components of internal control over financial reporting were present and functioning based on the criteria established in the COSO framework.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the fiscal year ended December 31, 2024, of the Company, and this report does not affect our report on such financial statements.

/s/ DELOITTE & TOUCHE LLP

Austin, Texas

February 24, 2024

March 1, 2025

BIGLARI HOLDINGS INC.

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Lease obligations 90,739 86,389

Line of credit 10,000 —

Deferred taxes 29,393 37,939

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shareholders’ equity 572,961 599,330

Noncontrolling interests — 8,602

Total shareholders’ equity 599,330 555,568

Total liabilities and shareholders’ equity $ 866,133 $ 849,422

9 unchanged sentences

Licensing and media 1,029 2,118 4,577

Total revenue 365,318 368,231 366,106

Cost and expenses

Total revenues 362,114 365,318 368,231

Costs and expenses

Restaurant cost of sales 143,449 137,986 140,264

9 unchanged sentences

Total cost and expenses 329,545 322,122 331,912

Other income (expenses)

Investment gains (losses) 335 2,211 ( 3,393 )

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Foreign currency translation ( 354 ) 272 ( 883 )

Comprehensive income 55,811 ( 33,188 ) 35,102

Comprehensive income attributable to noncontrolling interest 591 ( 287 ) —

Total comprehensive income attributable to Biglari Holdings Inc.

Comprehensive income (loss) ( 4,113 ) 55,811 ( 33,188 )

Comprehensive income (loss) attributable to noncontrolling interest — 591 ( 287 )

Total comprehensive income (loss) attributable to Biglari Holdings Inc.

shareholders $ ( 4,113 ) $ 55,220 $ ( 32,901 )

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Proceeds from line of credit 61,050 31,600 30,000

Principal payments on long-term debt — — ( 149,952 )

Principal payments on direct financing lease obligations ( 5,516 ) ( 6,132 ) ( 6,140 )

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Adjustment for holdings in investment partnerships ( 7,829 ) ( 7,829 )

Transactions with noncontrolling interests 8,889 8,889

Balance at December 31, 2022 $ 1,138 $ 381,788 $ 576,510 $ ( 2,790 ) $ ( 409,680 ) $ 8,602 $ 555,568

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Adjustment for holdings in investment partnerships ( 6,662 ) ( 6,662 )

Transactions with noncontrolling interests 8,889 8,889

Purchases of noncontrolling interests 3,806 ( 9,193 ) ( 5,387 )

Balance at December 31, 2023 $ 1,138 $ 385,594 $ 631,458 $ ( 2,518 ) $ ( 416,342 ) $ — $ 599,330

2 unchanged sentences

Adjustment for holdings in investment partnerships ( 22,256 ) ( 22,256 )

Purchases of noncontrolling interests 3,806 ( 9,193 ) ( 5,387 )

Balance at December 31, 2024 $ 1,138 $ 385,594 $ 627,699 $ ( 2,872 ) $ ( 438,598 ) $ — $ 572,961

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Biglari Holdings Inc.

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

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.

The Company’s largest operating subsidiaries are involved in the franchising and operating of restaurants.

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As of December 31, 2024, Mr.

Biglari beneficially owns shares of the Company that represent approximately 66.8 % of the economic interest and approximately 71.0 % of the voting interest.

Biglari beneficially owns shares of the Company that represent approximately 74.3 % of the voting interest.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including Steak n Shake Inc., Western Sizzlin Corporation, First Guard Insurance Company, Maxim Inc., Southern Pioneer Property & Casualty Insurance Company, Southern Oil Company, and Abraxas Petroleum Corporation.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including Steak n Shake Inc., Western Sizzlin Corporation, First Guard Insurance Company, Maxim Inc., Southern Pioneer Property & Casualty Insurance Company, Biglari Reinsurance Ltd., Southern Oil Company, and Abraxas Petroleum Corporation.

Intercompany accounts and transactions have been eliminated in consolidation.

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All other exploratory wells and costs are expensed.

We did not have any property acquisition or exploration activities during 2023, and our development costs were nominal.

We did not have any property acquisition or exploration activities during 2024;

however, we did have $ 11,636 of development costs on a well.

We did not have any property acquisition or exploration activities during 2023, and development costs were nominal.

Asset Retirement Obligations

4 unchanged sentences

If an asset retirement obligation is settled for an amount other than the recorded amount, a gain or loss is recognized.

Summary of Significant Accounting Policies (continued)

Goodwill and Other Intangible Assets

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We perform reviews for impairment of intangible assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

An impairment loss is recognized when

Summary of Significant Accounting Policies (continued)

estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying value.

An impairment loss is recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying value.

When an impairment is identified, we reduce the carrying value of the asset to its estimated fair value.

During 2023, 2022 and 2021, no impairments were recorded to goodwill.

During 2023, we recorded impairments to indefinite life intangible assets of $ 20 .

During 2022 and 2021, no impairments were recorded to other intangible assets.

During 2024, $ 1,000 of impairment was recorded to goodwill at the Western Sizzlin reporting unit.

During 2023 and 2022, no impairment was recorded to goodwill.

During 2024, no impairment was recorded to other intangible assets.

During 2023, $ 20 of impairment was recorded to other intangible assets.

During 2022, no impairment was recorded to other intangible assets.

Refer to Note 8 for information regarding our goodwill and other intangible assets.

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Franchise royalties and fees from Steak n Shake and Western Sizzlin franchisees are based upon a percentage of sales of the franchise restaurant and are recognized as earned.

Franchise royalties are billed on a monthly basis.

Franchise royalties are billed on a weekly or monthly basis.

Initial franchise fees when a new restaurant opens or at the start of a new franchise term are recorded as deferred revenue when received and recognized as revenue over the term of the franchise agreement.

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Other Revenue

Restaurant operations sells gift cards to customers which can be redeemed for retail food sales within our stores.

Restaurant operations sells gift cards to customers which can be redeemed in our stores.

Gift cards are recorded as deferred revenue when issued and are subsequently recorded as net sales upon redemption.

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Revenue is recognized when the performance obligation is satisfied, which typically occurs at the point in time when control of the product transfers to the customer.

Payment is due within 30 days of delivery.

Payment is generally due within 30 days of delivery.

Summary of Significant Accounting Policies (continued)

35 unchanged sentences

The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

We are evaluating the impact of the new guidance on our disclosures.

The Company adopted this standard retrospectively with such disclosures included in Note 17 to the accompanying Consolidated Financial Statements.

The adoption of this standard did not have a material effect on our consolidated financial statements.

Summary of Significant Accounting Policies (continued)

In December 2023, the FASB issued authoritative guidance modifying the disclosure requirements for income tax.

2 unchanged sentences

We are evaluating the impact of the new guidance on our disclosures.

In November 2024, the FASB issued Accounting Standards Update 2024-03, “Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires detailed disclosure in the notes to the financial statements of specific categories underlying certain expense captions on the income statement.

ASU 2024-03 may be adopted on a prospective or retrospective basis and is effective for fiscal years beginning after December 15, 2027, with early adoption permitted.

Business Acquisitions

On September 14, 2022, the Company purchased Preferred Shares of Abraxas Petroleum for $ 80,000 .

On October 26, 2022, the Company converted the Preferred Shares to 90 % of the outstanding common stock of Abraxas Petroleum.

On June 14, 2023, the remaining 10 % of the outstanding common stock of Abraxas Petroleum was acquired for $ 5,387 .

We have concluded that Abraxas Petroleum is a consolidated entity and recorded noncontrolling interests attributable to the interest held by other shareholders.

The Company used working capital including its line of credit to fund the purchase of the Preferred Shares.

During 2022, the Company purchased 90 % of Abraxas Petroleum for $ 80,000 .

During 2023, the Company acquired the remaining 10 % of Abraxas Petroleum for $ 5,387 .

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

The Company’s financial results include the results of Abraxas Petroleum from the acquisition date.

The purchase price allocation is as follows.

September 14, 2022

Cash and cash equivalents $ 21,726

Receivables and other assets 6,518

Property and equipment 75,400

Total identifiable assets acquired 103,644

Accounts payable and accrued expenses ( 10,719 )

Asset retirement obligations ( 3,587 )

Deferred taxes ( 449 )

Total liabilities assumed ( 14,755 )

Noncontrolling interest ( 8,889 )

Total consideration $ 80,000

The purchase price allocation included $ 70,200 of oil and gas properties, cash of $ 21,726 , and liabilities, net of other assets of $ 11,926 .

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.

Investments were $ 102,975 and $ 91,879 as of December 31, 2024 and 2023, respectively.

4 unchanged sentences

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

Investment gains in 2023 were $ 2,211 .

Investment losses in 2022 were $ 3,393 .

Investment gains were $ 6,401 in 2021, which includes a $ 5,047 gain on the sale of real estate.

Investment gains in 2024 and 2023 were $ 335 and $ 2,211 , respectively.

Investment Partnerships

9 unchanged sentences

is solely owned by Mr.

Under the terms of their partnership agreements, each contribution made by the Company to the investment partnerships is subject to a rolling five-year lock-up period.

The lock-up period can be waived by the general partner in its sole discretion.

Investment Partnerships (continued)

7 unchanged sentences

Investment partnership gains (losses) 59,238 39,797 19,441

Distributions (net of contributions) ( 10,823 ) ( 10,823 )

Contributions (net of distributions) 30,530 30,530

Increase in proportionate share of Company stock held 6,662 ( 6,662 )

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Other current assets $ 7,716 $ 7,385

The assets classified as held for sale at December 31, 2023, include properties owned by Steak n Shake, which were previously company-operated restaurants.

The asset held for sale at December 31, 2022, is Abraxas Petroleum’s office building in San Antonio, Texas.

Abraxas Petroleum sold its office building for $ 4,719 with no gain or loss recorded.

The assets classified as held for sale at December 31, 2024 and 2023, include properties which were previously company-operated restaurants.

Property and Equipment

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The accretion expense of the Company’s asset retirement obligations was $ 771 , $ 695 , and $ 540 during 2024, 2023, and 2022, respectively.

Depletion and accretion expense are included in depreciation, depletion, and amortization expense within the consolidated statement of earnings.

Accretion expense is included in depreciation, depletion, and amortization expense within the consolidated statement of earnings.

Accumulated depreciation, depletion, and accretion on oil and gas properties was $ 54,838 and $ 44,716 as of December 31, 2024 and 2023, respectively.

1 unchanged sentence

The fair value of the long-lived assets was determined based on Level 3 inputs using a discounted cash flow model and quoted prices for the properties.

During 2023, Abraxas Petroleum entered into a royalty-based arrangement with an unaffiliated party to conduct development activities that will establish proved undeveloped reserves on its proportional share;

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

As a result of the transaction, a gain of $ 13,563 was recorded in 2023.

Also during 2023, Steak n Shake recognized a net gain of $ 7,918 in connection with property sales, lease terminations, and asset disposals.

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

However, if commodity prices fall below current levels, we may be required to record impairments in future periods and such impairments could be material.

Further, if commodity prices decrease, our production, proved reserves, and cash flows will be adversely impacted.

Abraxas Petroleum recorded gains of $ 16,700 and $ 13,563 during 2024 and 2023, respectively, as a result of selling undeveloped reserves.

On February 20, 2025, Abraxas Petroleum sold additional undeveloped reserves and a gain of $ 8,557 will be recorded in the first quarter of 2025.

Abraxas may receive future royalties for each of these transactions as the reserves are developed by the respective unaffiliated parties.

Also during 2024 and 2023, the Company recognized net gains of $ 6,394 and $ 7,918 , respectively, in connection with property sales, lease terminations, and asset disposals which are included in selling, general and administrative expenses in the consolidated statements of earnings.

The property and equipment cost related to finance obligations as of December 31, 2024, is as follows:

3 unchanged sentences

Beginning balance $ 15,046 $ 14,645

Acquired balance — 3,587

Liabilities settled ( 63 ) ( 294 )

1 unchanged sentence

Asset retirement obligation $ 15,754 $ 15,046

As of December 31, 2023 and 2022, $ 730 and $ 577 , respectively, is classified as current and is included in accounts payable and accrued expenses in the consolidated balance sheets.

As of December 31, 2024 and 2023, $ 536 and $ 730 , respectively, is classified as current asset retirement obligations and is included in accounts payable and accrued expenses in the consolidated balance sheets.

Goodwill and Other Intangible Assets

Goodwill consists of the excess of the purchase price over the fair value of the net assets acquired in connection with business acquisitions.

No goodwill was recorded with the acquisition of Southern Oil or Abraxas Petroleum.

A reconciliation of the change in the carrying value of goodwill is as follows.

6 unchanged sentences

Balance as of December 31, 2023 $ 27,817 $ 25,713 $ 53,530

Impairment losses during 2024 ( 1,000 ) — ( 1,000 )

Change in foreign exchange rates during 2024 ( 34 ) — ( 34 )

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For our 2024 annual goodwill impairment testing, we elected to perform qualitative assessments for our reporting units.

No indicators of impairment were noted.

No impairment was recorded for our reporting units in 2023 or 2022.

No indicators of impairment were noted in our insurance reporting units.

During the second quarter of 2024, we performed our annual assessment of our recoverability of goodwill related to the Western Sizzlin reporting unit and an impairment of $ 1,000 was recorded.

There was no impairment recorded by Steak n Shake.

No impairment was recorded for our reporting units in 2023.

Goodwill and Other Intangible Assets (continued)

Other Intangible Assets

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Balance as of December 31, 2023 $ 15,876 $ 7,354 $ 23,230

Impairment — ( 20 ) ( 20 )

Change in foreign exchange rates during 2024 — ( 410 ) ( 410 )

1 unchanged sentence

Intangible assets with indefinite lives consist of trade names and lease rights.

No impairment was recorded in 2024.

During 2023, $ 20 of impairment was recorded.

No impairment was recorded in 2022 or 2021.

Accounts Payable and Accrued Expenses

7 unchanged sentences

Oil and gas payable 1,912 3,560

Professional fees 3,052 620

Due to broker 3,517 —

Other 1,189 1,276

3 unchanged sentences

A reconciliation of the changes in claim liabilities, net of reinsurance, for each of the years ended December 31, 2024 and 2023 follows.

Balances at beginning of year:

Balance at beginning of year:

Gross liabilities $ 16,105 $ 17,520

9 unchanged sentences

Total 41,561 37,306

Balances at December 31:

Balance at December 31:

Net liabilities 17,250 15,168

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2023 35,450 34,695 3,577 3,283

2024 41,225 9,782 4,066

Cumulative Paid Losses and Loss Adjustment Expenses through December 31,

6 unchanged sentences

2022 24,775 28,738 29,788

2023 27,252 31,118

Paid losses and loss adjustment expenses 221,324

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The Company did not have a net tax expense or benefit on income from international operations.

Earnings before income taxes derived from domestic operations during 2023 were $ 67,736 , losses before income taxes derived from domestic operations during 2022 were $ 40,624 , and earnings before income taxes derived from domestic operations during 2021 were $ 43,886 .

Losses before income taxes derived from domestic operations during 2024 were $ 4,955 , earnings before income taxes derived from domestic operations during 2023 were $ 67,736 , and losses before income taxes derived from domestic operations during 2022 were $ 40,624 .

Losses before income taxes derived from international operations during 2024, 2023, and 2022 were $ 3,199 , $ 2,889 , and $ 2,403 , respectively.

28 unchanged sentences

Net deferred tax liability $ ( 29,393 ) $ ( 37,939 )

Accounts payable and accrued expenses include income taxes payable of $ 980 as of December 31, 2023, and $ 3,881 as of December 31, 2022.

Accounts payable and accrued expenses include income taxes receivable of $ 613 as of December 31, 2024, and income taxes payable of $ 980 as of December 31, 2023.

Lines of Credit

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 13, 2024.

Biglari Holdings Lines of Credit

Biglari Holdings’ line of credit dated September 13, 2022 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.

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

There was no balance of the line of credit on December 31, 2023.

There was a $ 35,000 balance of 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.

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

Our interest rate was 8.06 % and 6.53 % on December 31, 2023 and 2022, respectively, which is based on the 30-day Secured Overnight Financing Rate plus 2.73 %.

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

Western Sizzlin Revolver

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Interest on lease liabilities 318 345 422

Operating lease costs* 284 2,736 1,119

Operating and variable lease costs 11,531 12,158 14,186

Sublease income ( 11,895 ) ( 11,874 ) ( 11,450 )

Total lease costs $ 872 $ 1,578 $ 4,448

*Includes short-term leases, variable lease costs, and sublease income.

Lease Asset and Obligations (continued)

Lease Assets and Obligations (continued)

Supplemental cash flow information related to leases is as follows.

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Rent expense $ 12,292 $ 12,785 $ 14,438

Lease Asset and Obligations (continued)

Lease Assets and Obligations (continued)

The components of lease income are as follows.

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The services agreement has a rolling five-year term, with annual adjustments to the fixed fee.

The fixed fee increased from $ 700 per month to $ 800 per month in December 2023.

The fixed fee had not been adjusted since its inception in October 2017.

The fixed fee was $ 700 per month from its inception in October 2017 to November 2023.

The fixed fee was $ 800 per month from December 2023 to September 2024 and $ 900 per month from October 2024 to December 2024.

The Company paid Biglari Enterprises $ 9,900 in service fees during 2024 and $ 8,500 during 2023.

7 unchanged sentences

$ 65,938 $ 30,530 $ ( 10,823 )

The investments are subject to a rolling five-year lock-up period under the terms of the respective partnership agreements.

The lock-up period can be waived by the general partner in its sole discretion.

Related Party Transactions (continued)

As the general partner of the investment partnerships, Biglari Capital will earn an incentive reallocation fee, on December 31 of each year, for the Company’s investments equal to 25 % of the net profits above a hurdle rate of 6 % over the previous high-water mark.

1 unchanged sentence

Gains on the Company’s common stock and the related incentive reallocations are eliminated in our financial statements.

Related Party Transactions (continued)

Incentive Agreement

4 unchanged sentences

Biglari will receive 25 % of any incremental book value created above the high-water mark plus the hurdle rate.

Biglari earned an incentive fee of $ 7,271 .

Biglari earned incentive fees of $ 455 and $ 7,271 during 2024 and 2023, respectively.

The 2023 incentive fee was paid during 2024.

The 2024 incentive fee will be paid in 2025 and is recorded as accrued compensation within accounts payable and accrued expenses as of December 31, 2024.

No incentive fees were earned during 2022 or 2021.

Commitments and Contingencies

21 unchanged sentences

The Company’s investments in equity securities are classified within Level 1 of the fair value hierarchy.

The Company’s investments in bonds consist of both corporate and government debt.

Bonds are classified as Level 1 of the fair value hierarchy.

Fair Value of Financial Assets (continued)

Non-qualified deferred compensation plan investments:

The assets of the non-qualified plan are set up in a rabbi trust.

They represent mutual funds and publicly traded securities, each of which are classified within Level 1 of the fair value hierarchy.

The Company’s investments in bonds consist of both corporate and government debt.

Bonds may be classified as Level 1 or Level 2 of the fair value hierarchy.

As of December 31, 2024 and 2023, the fair values of financial assets were as follows.

6 unchanged sentences

Corporate — 750 — 750 3,199 — — 3,199

Non-qualified deferred compensation plan investments — — — — 699 — — 699

Total assets at fair value $ 109,287 $ 5,995 $ — $ 115,282 $ 96,940 $ — $ — $ 96,940

2 unchanged sentences

Our reportable business segments are organized in a manner that reflects how management views those business activities.

Biglari Holdings’ diverse businesses are managed on an unusually decentralized basis.

Our restaurant operations include Steak n Shake and Western Sizzlin.

Our insurance operations include First Guard and Southern Pioneer.

Our insurance operations include First Guard, Southern Pioneer, and Biglari Reinsurance.

Our oil and gas operations include Southern Oil and Abraxas Petroleum.

1 unchanged sentence

Other business activities not specifically identified with reportable business segments are presented under corporate and other.

We report our earnings from investment partnerships separate from our corporate expenses.

We assess and measure segment operating results based on segment earnings as disclosed below.

Segment earnings from operations are neither necessarily indicative of cash available to fund cash requirements nor synonymous with cash flow from operations.

The tabular information that follows shows data of our reportable segments reconciled to amounts reflected in the consolidated financial statements.

We report our earnings from investment partnerships separately.

The Company’s chief operating decision maker is the Chief Executive Officer who is ultimately responsible for significant capital allocation decisions, evaluating operating performance and selecting the chief executive to head each of the operating segments.

The cost and expense information provided is based on the information regularly provided to the chief operating decision maker.

Given the varied operating segments and differences in revenue streams and cost structures, there are wide variances in the form, content, and levels of such expense information significant to the business.

With respect to insurance underwriting, the chief operating decision maker considers pre-tax underwriting earnings.

Typically, there are no budgeted or forecasted premiums.

For most non-insurance businesses, pre-tax earnings are considered in allocating resources and capital.

Business Segment Reporting (continued)

A disaggregation of our consolidated data for each of the three most recent years is presented in the tables which follow.

2023 2022 2021

Operating Businesses:

Restaurant Operations:

Steak n Shake $ 239,956 $ 231,820 $ 263,135

Western Sizzlin 10,901 9,748 8,155

Total Restaurant Operations 250,857 241,568 271,290

Insurance Operations:

Underwriting:

First Guard 36,917 35,914 33,521

Southern Pioneer 24,308 24,035 21,890

Investment income and other 6,047 4,591 3,198

Total Insurance Operations 67,272 64,540 58,609

Oil and Gas Operations:

Abraxas Petroleum 27,576 11,455 —

Southern Oil 17,495 46,091 33,004

Total Oil and Gas Operations 45,071 57,546 33,004

Maxim 2,118 4,577 3,203

$ 365,318 $ 368,231 $ 366,106

First Guard Southern Pioneer Total Underwriting Investment Income Other Total Insurance

Revenue $ 37,691 $ 28,118 $ 65,809 $ 3,928 $ 2,956 $ 72,693

Cost and expenses:

Insurance losses 27,236 16,407 43,643 — — 43,643

Underwriting expenses 6,417 11,311 17,728 — — 17,728

Other segment items — — — — 2,232 2,232

Total costs and expenses 33,653 27,718 61,371 — 2,232 63,603

Earnings before income taxes $ 4,038 $ 400 $ 4,438 $ 3,928 $ 724 $ 9,090

First Guard Southern Pioneer Total Underwriting Investment Income Other Total Insurance

Revenue $ 36,917 $ 24,308 $ 61,225 $ 3,074 $ 2,973 $ 67,272

Cost and expenses:

Insurance losses 20,861 14,807 35,668 — — 35,668

Underwriting expenses 6,564 10,539 17,103 — — 17,103

Other segment items — — — — 1,418 1,418

Total costs and expenses 27,425 25,346 52,771 — 1,418 54,189

Earnings before income taxes $ 9,492 $ ( 1,038 ) $ 8,454 $ 3,074 $ 1,555 $ 13,083

First Guard Southern Pioneer Total Underwriting Investment Income Other Total Insurance

Revenue $ 35,914 $ 24,035 $ 59,949 $ 1,380 $ 3,211 $ 64,540

Cost and expenses:

Insurance losses 22,299 14,888 37,187 — — 37,187

Underwriting expenses 7,037 10,424 17,461 — — 17,461

Other segment items — — — ( 12 ) ( 12 )

Total costs and expenses 29,336 25,312 54,648 — ( 12 ) 54,636

Earnings before income taxes $ 6,578 $ ( 1,277 ) $ 5,301 $ 1,380 $ 3,223 $ 9,904

Other segment items include general and administrative costs, depreciation, and other income.

Business Segment Reporting (continued)

Earnings (Loss) Before Income Taxes

2023 2022 2021

Operating Businesses:

Restaurant Operations:

Steak n Shake $ 26,170 $ 11,478 $ 13,524

Western Sizzlin 1,793 1,484 931

Total Restaurant Operations 27,963 12,962 14,455

Insurance Operations:

Underwriting:

First Guard 9,492 6,578 10,573

Southern Pioneer ( 1,038 ) ( 1,277 ) 1,744

Investment income and other 4,629 4,603 2,118

Total Insurance Operations 13,083 9,904 14,435

Oil and Gas Operations:

Abraxas Petroleum 22,410 652 —

Southern Oil 3,356 24,539 9,713

Total Oil and Gas Operations 25,766 25,191 9,713

Maxim 11 1,760 814

Interest expense not allocated to segments ( 681 ) ( 399 ) ( 1,121 )

Operating Businesses 66,142 49,418 38,296

Corporate and other ( 22,946 ) ( 13,099 ) ( 13,383 )

Investment gains (losses) 2,211 ( 3,393 ) 6,401

Investment partnership gains (losses) 19,440 ( 75,953 ) 10,953

Steak n Shake Western Sizzlin Total Restaurants

Revenue $ 240,846 $ 10,601 $ 251,447

Cost and expenses:

Cost of food 44,440 3,451 47,891

Labor costs 47,884 2,547 50,431

Occupancy and other 47,511 2,977 50,488

Selling, general and administrative 53,870 44 53,914

Depreciation, amortization and impairment 27,042 67 27,109

Total costs and expenses 220,747 9,086 229,833

Earnings before income taxes $ 20,099 $ 1,515 $ 21,614

Steak n Shake Western Sizzlin Total Restaurants

Revenue $ 239,956 $ 10,901 $ 250,857

Cost and expenses:

Cost of food 41,562 3,431 44,993

Labor costs 44,663 2,427 47,090

Occupancy and other 48,092 2,925 51,017

Selling, general and administrative 48,558 258 48,816

Depreciation, amortization and impairment 30,911 67 30,978

Total costs and expenses 213,786 9,108 222,894

Earnings before income taxes $ 26,170 $ 1,793 $ 27,963

Steak n Shake Western Sizzlin Total Restaurants

Revenue $ 231,820 $ 9,748 $ 241,568

Cost and expenses:

Cost of food 41,246 3,215 44,461

Labor costs 48,354 2,170 50,524

Occupancy and other 48,140 2,632 50,772

Selling, general and administrative 51,658 175 51,833

Depreciation, amortization and impairment 30,944 72 31,016

Total costs and expenses 220,342 8,264 228,606

Earnings before income taxes $ 11,478 $ 1,484 $ 12,962

Business Segment Reporting (continued)

Abraxas Petroleum Southern Oil Total

Revenue $ 22,590 $ 14,355 $ 36,945

Cost and expenses:

Production costs 9,517 7,119 16,636

Depreciation and depletion 6,202 4,900 11,102

General and administrative 3,718 2,417 6,135

Total costs and expenses 19,437 14,436 33,873

Gains on sales of properties 16,700 — 16,700

Earnings before income taxes $ 19,853 $ ( 81 ) $ 19,772

Abraxas Petroleum Southern Oil Total

Revenue $ 27,576 $ 17,495 $ 45,071

Cost and expenses:

Production costs 9,605 7,760 17,365

Depreciation and depletion 6,359 3,980 10,339

General and administrative 2,765 2,399 5,164

Total costs and expenses 18,729 14,139 32,868

Gains on sales of properties 13,563 — 13,563

Earnings before income taxes $ 22,410 $ 3,356 $ 25,766

Abraxas Petroleum Southern Oil Total

Revenue $ 11,455 $ 46,091 $ 57,546

Cost and expenses:

Production costs 4,487 13,355 17,842

Depreciation and depletion 2,510 5,503 8,013

General and administrative 3,806 2,694 6,500

Total costs and expenses 10,803 21,552 32,355

Gains on sales of properties — — —

Earnings before income taxes $ 652 $ 24,539 $ 25,191

Business Segment Reporting (continued)

2024 2023 2022

Revenue $ 1,029 $ 2,118 $ 4,577

Cost and expenses:

Licensing and media cost 2,036 1,840 2,695

General and administrative 173 267 122

Total costs and expenses 2,209 2,107 2,817

Earnings before income taxes $ ( 1,180 ) $ 11 $ 1,760

Capital Expenditures

7 unchanged sentences

$ 33,783 $ 23,405 $ 29,746

Business Segment Reporting (continued)

Depreciation, Depletion, and Amortization

7 unchanged sentences

$ 39,843 $ 38,979 $ 36,443

Business Segment Reporting (continued)

Reconciliation of revenues and earnings (loss) before income taxes of our business segments to the consolidated amounts for each of the three years ended December 31 follows.

2024 2023 2022

Total operating businesses $ 362,114 $ 365,318 $ 368,231

Investment partnership gains (losses) — — —

Investment gains (losses) — — —

Interest expenses not allocated to segments — — —

Corporate and other — — —

Revenues $ 362,114 $ 365,318 $ 368,231

Earnings (losses) before income taxes

2024 2023 2022

Total operating businesses $ 49,296 $ 66,823 $ 49,817

Investment partnership gains (losses) ( 41,058 ) 19,440 ( 75,953 )

Investment gains (losses) 335 2,211 ( 3,393 )

Interest expenses not allocated to segments ( 771 ) ( 681 ) ( 399 )

Corporate and other ( 15,956 ) ( 22,946 ) ( 13,099 )

Earnings before income taxes $ ( 8,154 ) $ 64,847 $ ( 43,027 )

A disaggregation of our consolidated assets is presented in the table that follows.

8 unchanged sentences

Southern Pioneer 67,808 76,324

Biglari Reinsurance 9,042 —

Total Insurance Operations 129,576 143,528

17 unchanged sentences

Finance lease additions 383 694 —

Finance lease retirements — — 1,216

Subsequent Events

On December 26, 2024, Abraxas Petroleum entered into an agreement to sell undeveloped reserves.

The transaction closed on February 20, 2025.

As a result of the transaction, a gain of $ 8,557 will be recorded in the first quarter of 2025.

Abraxas Petroleum may receive future royalties as a result of this transaction.

Supplemental Oil and Gas Disclosures (Unaudited)

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Due to the inherent uncertainties and the limited nature of reservoir data, estimates of reserves are subject to change as additional information becomes available.

We engaged Netherland, Sewell & Associates, Inc.

(“NSAI”), to prepare our reserve estimates for all of our estimated proved reserves at December 31, 2023.

All proved oil and natural gas reserves are located in the United States, primarily offshore in the shallow waters of the Gulf of Mexico and in the Permian Basin.

We engaged Netherland, Sewell & Associates, Inc., to prepare our reserve estimates for all of our estimated proved reserves at December 31, 2024.

All proved oil and natural gas reserves are located in the United States, primarily offshore in Louisiana state waters and in the Permian Basin.

Supplemental Oil and Gas Disclosures (Unaudited) (continued)

47 unchanged sentences

Sales of oil and natural gas, net of production expenses ( 27,706 )

Acquisition of reserves 141,051

Extensions 8,836

Revisions of previous quantity estimates ( 59,164 )

6 unchanged sentences

Sales of oil and natural gas, net of production expenses ( 20,290 )

Extensions 8,836

Revisions of previous quantity estimates ( 7,529 )

Previously estimated development costs incurred 10,343

Net change in taxes 2,738

5 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-K

Item 8. Financial Statements and Supplementary Data