Biglari Holdings Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS BIGLARI HOLDINGS INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands) March 31, 2025 December 31, 2024 (Unaudited) Assets Current assets: Cash and cash equivalents $ 28,664 $ 30,709 Investments 106,667 102,975 Receivables 22,506 25,184 Inventories 4,233 4,031 Other current assets 9,462 7,716 Total current assets 171,532 170,615 Property and equipment 370,394 376,155 Operating lease assets 33,758 34,011 Goodwill and other intangible assets 75,613 75,316 Investment partnerships 169,135 201,727 Other assets 8,628 8,309 Total assets $ 829,060 $ 866,133 Liabilities and shareholders’ equity Liabilities Current liabilities: Accounts payable and accrued expenses $ 64,085 $ 63,381 Loss and loss adjustment expenses 17,982 17,250 Unearned premiums 18,176 17,236 Current portion of lease obligations 15,071 14,449 Line of credit 35,000 35,000 Total current liabilities 150,314 147,316 Lease obligations 89,361 90,739 Line of credit 13,400 10,000 Deferred taxes 20,276 29,393 Asset retirement obligations 15,368 15,218 Other liabilities 505 506 Total liabilities 289,224 293,172 Shareholders’ equity Common stock 1,138 1,138 Additional paid-in capital 385,594 385,594 Retained earnings 594,424 627,699 Accumulated other comprehensive loss ( 2,402 ) ( 2,872 ) Treasury stock, at cost ( 438,918 ) ( 438,598 ) Biglari Holdings Inc. shareholders’ equity 539,836 572,961 Total liabilities and shareholders’ equity $ 829,060 $ 866,133 See accompanying Notes to Consolidated Financial Statements. 1 Table of Contents BIGLARI HOLDINGS INC. CONSOLIDATED STATEMENTS OF EARNINGS (dollars in thousands except per share amounts) First Quarter 2025 2024 (Unaudited) Revenues Restaurant operations $ 64,349 $ 61,996 Insurance premiums and other 19,349 17,733 Oil and gas 9,930 9,510 Licensing and media 1,407 212 Total revenues 95,035 89,451 Costs and expenses Restaurant cost of sales 37,758 34,421 Insurance losses and underwriting expenses 17,052 15,063 Oil and gas production costs 4,046 4,499 Licensing and media costs 1,651 503 Selling, general and administrative 21,367 18,275 Gain on sale of oil and gas properties ( 9,323 ) ( 481 ) Impairments — 107 Depreciation, depletion, and amortization 10,257 10,053 Interest expense on leases 1,333 1,314 Interest expense on debt 900 — Total costs and expenses 85,041 83,754 Other income Investment gains (losses) ( 1,585 ) 1,713 Investment partnership gains (losses) ( 49,592 ) 21,985 Total other income (expense) ( 51,177 ) 23,698 Earnings (loss) before income taxes ( 41,183 ) 29,395 Income tax expense (benefit) ( 7,908 ) 6,816 Net earnings (loss) $ ( 33,275 ) $ 22,579 Net earnings (loss) per average equivalent Class A share* $ ( 126.40 ) $ 79.56 * Net earnings (loss) per average equivalent Class B share outstanding are one-fifth of the average equivalent Class A share or $( 25.28 ) for the first quarter of 2025 and $ 15.91 for the first quarter of 2024. See accompanying Notes to Consolidated Financial Statements. 2 Table of Contents BIGLARI HOLDINGS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (dollars in thousands) First Quarter 2025 2024 (Unaudited) Net earnings (loss) $ ( 33,275 ) $ 22,579 Foreign currency translation 470 ( 31 ) Total comprehensive income (loss) $ ( 32,805 ) $ 22,548 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (dollars in thousands) (Unaudited) Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total For the first quarter of 2025 Balance at December 31, 2024 $ 1,138 $ 385,594 $ 627,699 $ ( 2,872 ) $ ( 438,598 ) $ 572,961 Net earnings (loss) ( 33,275 ) ( 33,275 ) Other comprehensive income (loss) 470 470 Adjustment for holdings in investment partnerships ( 320 ) ( 320 ) Balance at March 31, 2025 $ 1,138 $ 385,594 $ 594,424 $ ( 2,402 ) $ ( 438,918 ) $ 539,836 For the first quarter of 2024 Balance at December 31, 2023 $ 1,138 $ 385,594 $ 631,458 $ ( 2,518 ) $ ( 416,342 ) $ 599,330 Net earnings 22,579 22,579 Other comprehensive income (loss) ( 31 ) ( 31 ) Adjustment for holdings in investment partnerships ( 3,306 ) ( 3,306 ) Balance at March 31, 2024 $ 1,138 $ 385,594 $ 654,037 $ ( 2,549 ) $ ( 419,648 ) $ 618,572 See accompanying Notes to Consolidated Financial Statements. 3 Table of Contents BIGLARI HOLDINGS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) First Quarter 2025 2024 (Unaudited) Operating activities Net earnings (loss) $ ( 33,275 ) $ 22,579 Adjustments to reconcile net earnings (loss) to operating cash flows: Depreciation and amortization 10,257 10,053 Provision for deferred income taxes ( 9,156 ) 3,877 Asset impairments — 107 Gains on sale of assets ( 9,060 ) ( 1,431 ) Investment and investment partnerships (gains) losses 51,177 ( 23,698 ) Distributions from investment partnerships — 1,000 Changes in receivables and inventories 1,606 ( 2,249 ) Changes in accounts payable and accrued expenses 4,246 8,887 Net cash provided by operating activities 15,795 19,125 Investing activities Capital expenditures ( 7,300 ) ( 4,596 ) Proceeds from property and equipment disposals 9,559 920 Purchases of interests in limited partnerships ( 17,320 ) ( 3,975 ) Purchases of investments ( 18,444 ) ( 20,856 ) Sales of investments and redemptions of fixed maturity securities 13,611 17,265 Net cash used in investing activities ( 19,894 ) ( 11,242 ) Financing activities Payments on line of credit ( 9,600 ) — Proceeds from line of credit 13,000 — Principal payments on direct financing lease obligations ( 1,398 ) ( 1,403 ) Net cash provided by (used in) financing activities 2,002 ( 1,403 ) Effects of foreign currency exchange rate changes 40 ( 10 ) Increase (decrease) in cash, cash equivalents and restricted cash ( 2,057 ) 6,470 Cash, cash equivalents and restricted cash at beginning of year 31,432 29,654 Cash, cash equivalents and restricted cash at end of first quarter $ 29,375 $ 36,124 First Quarter 2025 2024 (Unaudited) Cash and cash equivalents $ 28,664 $ 34,536 Restricted cash in other long-term assets 711 1,588 Cash, cash equivalents and restricted cash at end of first quarter $ 29,375 $ 36,124 See accompanying Notes to Consolidated Financial Statements. 4 Table of Contents BIGLARI HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2025 (dollars in thousands, except share and per share data) Note 1. Summary of Significant Accounting Policies Description of Business The accompanying unaudited consolidated financial statements of Biglari Holdings Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In our opinion, all adjustments considered necessary to present fairly the results of the interim periods have been included and consist only of normal recurring adjustments. The results for the interim periods shown are not necessarily indicative of results for the year. The financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2024. 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. The Company’s largest operating subsidiaries are involved in the franchising and operating of restaurants. 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. Biglari. As of March 31, 2025, Mr. 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, Biglari Reinsurance Ltd., Southern Oil Company, and Abraxas Petroleum Corporation. Intercompany accounts and transactions have been eliminated in consolidation. Note 2. Earnings Per Share Earnings per share of common stock is based on the weighted-average number of shares outstanding during the year. The shares of Company stock attributable to our limited partner interest in The Lion Fund, L.P., and The Lion Fund II, L.P. (collectively, the “investment partnerships”) — based on our proportional ownership during this period — are considered treasury stock on the consolidated balance sheet and thereby deemed not to be included in the calculation of weighted-average common shares outstanding. However, these shares are legally outstanding. The following table presents shares authorized, issued, and outstanding on March 31, 2025 and December 31, 2024. March 31, 2025 December 31, 2024 Class A Class B Class A Class B Common stock authorized 500,000 10,000,000 500,000 10,000,000 Common stock issued and outstanding 206,864 2,068,640 206,864 2,068,640 5 Table of Contents Note 2. Earnings Per Share (continued) The Company has applied the “two-class method” of computing earnings per share as prescribed in Accounting Standards Codification (“ASC”) 260, “ Earnings Per Share ”. (Class B shares are economically equivalent to one-fifth of a Class A share.) The equivalent Class A common stock applied for computing earnings per share excludes the proportional shares of Biglari Holdings’ stock held by the investment partnerships. In the tabulation below is the weighted-average equivalent Class A common stock for earnings per share. March 31, 2025 March 31, 2024 Equivalent Class A common stock outstanding 620,592 620,592 Proportional ownership of Company stock held by investment partnerships 357,335 336,804 Equivalent Class A common stock for earnings per share 263,257 283,788 Note 3. Investments We classify investments in fixed maturity securities at the acquisition date as available-for-sale. Realized gains and losses on disposals of investments are determined on a specific identification basis. Dividends and interest 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. Investment losses for the first quarter of 2025 were $ 1,585 and investment gains for the first quarter of 2024 were $ 1,713 . Note 4. Investment Partnerships The Company reports on the limited partnership interests in investment partnerships under the equity method of accounting. We record our proportional share of equity in the investment partnerships but exclude Company common stock held by said partnerships. The Company’s pro-rata share of its common stock held by the investment partnerships is recorded as treasury stock even though these shares are legally outstanding. The Company records gains/losses from investment partnerships (inclusive of the investment partnerships’ unrealized gains and losses on their securities) in the consolidated statements of earnings based on our carrying value of these partnerships. The fair value is calculated net of the general partner’s accrued incentive fees. Gains and losses on Company common stock included in the earnings of these partnerships are eliminated because they are recorded as treasury stock. Biglari Capital Corp. is the general partner of the investment partnerships. Biglari Capital Corp. is solely owned by Mr. Biglari. 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. The fair value and adjustment for Company common stock held by the investment partnerships to determine the carrying value of our partnership interest are presented below. Fair Value Company Common Stock Carrying Value Partnership interest at December 31, 2024 $ 656,266 $ 454,539 $ 201,727 Investment partnership gains (losses) ( 115,439 ) ( 65,847 ) ( 49,592 ) Contributions (net of distributions) 17,320 17,320 Changes in proportionate share of Company stock held 320 ( 320 ) Partnership interest at March 31, 2025 $ 558,147 $ 389,012 $ 169,135 6 Table of Contents Note 4. Investment Partnerships (continued) Fair Value Company Common Stock Carrying Value Partnership interest at December 31, 2023 $ 472,772 $ 273,669 $ 199,103 Investment partnership gains (losses) 69,162 47,177 21,985 Contributions (net of distributions) 2,975 2,975 Changes in proportionate share of Company stock held 3,306 ( 3,306 ) Partnership interest at March 31, 2024 $ 544,909 $ 324,152 $ 220,757 The carrying value of the investment partnerships net of deferred taxes is presented below. March 31, 2025 December 31, 2024 Carrying value of investment partnerships $ 169,135 $ 201,727 Deferred tax liability related to investment partnerships ( 9,564 ) ( 17,255 ) Carrying value of investment partnerships net of deferred taxes $ 159,571 $ 184,472 We expect that a majority of the $ 9,564 and $ 17,255 deferred tax liabilities enumerated above will not become due until the dissolution of the investment partnerships. The Company’s proportionate share of Company stock held by investment partnerships at cost was $ 438,918 and $ 438,598 as of March 31, 2025, and December 31, 2024, respectively. The carrying value of the partnership interest approximates fair value adjusted by the value of held Company stock. Fair value of our partnership interest is assessed according to our proportional ownership interest of the fair value of investments held by the investment partnerships. Unrealized gains and losses on marketable securities held by the investment partnerships affect our net earnings. Gains/losses from investment partnerships recorded in the Company’s consolidated statements of earnings are presented below. First Quarter 2025 2024 Gains (losses) from investment partnerships $ ( 49,592 ) $ 21,985 Tax expense (benefit) ( 10,166 ) 4,837 Contribution to net earnings $ ( 39,426 ) $ 17,148 On December 31 of each year, the general partner of the investment partnerships, Biglari Capital Corp., will earn an incentive reallocation fee for the Company’s investments equal to 25 % of the net profits above an annual hurdle rate of 6 % over the previous high-water mark. Our policy is to accrue an estimated incentive fee throughout the year. The total incentive reallocation from Biglari Holdings to Biglari Capital Corp. includes gains on the Company’s common stock. Gains and losses on the Company’s common stock and the related incentive reallocations are eliminated in our financial statements. There were no incentive reallocations accrued during the first quarters of 2025 and 2024. 7 Table of Contents Note 4. Investment Partnerships (continued) Summarized financial information for The Lion Fund, L.P., and The Lion Fund II, L.P., is presented below. Equity in Investment Partnerships Lion Fund Lion Fund II Total assets as of March 31, 2025 $ 481,961 $ 326,220 Total liabilities as of March 31, 2025 $ 18,613 $ 182,666 Revenue for the first quarter of 2025 $ ( 84,132 ) $ ( 40,875 ) Earnings for the first quarter of 2025 $ ( 84,439 ) $ ( 43,373 ) Biglari Holdings’ ownership interest as of March 31, 2025 91.1 % 89.5 % Total assets as of December 31, 2024 $ 567,387 $ 367,630 Total liabilities as of December 31, 2024 $ 20,609 $ 188,202 Revenue for the first quarter of 2024 $ 50,262 $ 31,118 Earnings for the first quarter of 2024 $ 49,820 $ 28,237 Biglari Holdings’ ownership interest as of March 31, 2024 89.9 % 86.3 % Revenue in the financial information of the investment partnerships, summarized above, includes investment income and unrealized gains and losses on investments. Note 5. Property and Equipment Property and equipment is composed of the following. March 31, 2025 December 31, 2024 Land $ 133,119 $ 134,738 Buildings 161,799 160,282 Land and leasehold improvements 152,269 152,091 Equipment 212,327 213,800 Oil and gas properties 156,961 156,849 Construction in progress 940 672 817,415 818,432 Less accumulated depreciation, depletion, and amortization ( 447,021 ) ( 442,277 ) Property and equipment, net $ 370,394 $ 376,155 Depletion expense related to oil and gas properties was $ 3,058 and $ 2,568 during the first quarter of 2025 and 2024, respectively. The Company recorded no impairment to restaurant long-lived assets in the first quarter of 2025 and $ 107 in the first quarter of 2024 related to underperforming stores. We did not record any impairments to our oil and gas assets during the first quarter of 2025 and 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 $ 9,323 and $ 481 during the first quarter of 2025 and 2024, respectively, as result of selling undeveloped reserves. Abraxas may receive future royalties for each of these transactions as the reserves are developed by the respective unaffiliated parties. 8 Table of Contents Note 5. Property and Equipment (continued) Property and equipment held for sale of $ 2,428 and $ 1,081 are recorded in other current assets as of March 31, 2025 and December 31, 2024, respectively. The assets classified as held for sale include properties which were previously company-operated restaurants. During the first quarter of 2025 and 2024, the Company recognized net gains of $ 262 and $ 767 , 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. Note 6. Goodwill and Other Intangible Assets Goodwill Goodwill consists of the excess of the purchase price over the fair value of the net assets acquired in connection with business acquisitions. A reconciliation of the change in the carrying value of goodwill is as follows. Goodwill Goodwill at December 31, 2024 Goodwill $ 53,796 Accumulated impairment losses ( 1,300 ) $ 52,496 Change in foreign exchange rates during the first quarter of 2025 23 Goodwill at March 31, 2025 $ 52,519 Goodwill and indefinite-lived intangible asset impairment reviews include determining the estimated fair values of our reporting units and indefinite-lived intangible assets. The key assumptions and inputs used in such determinations may include forecasting revenues and expenses, cash flows and capital expenditures, as well as an appropriate discount rate and other inputs. Significant judgment by management is required in estimating the fair value of a reporting unit and in performing impairment reviews. Due to the inherent subjectivity and uncertainty in forecasting future cash flows and earnings over long periods of time, actual results may differ materially from the forecasts. If the carrying value of the indefinite-lived intangible asset exceeds fair value, the excess is charged to earnings as an impairment loss. If the carrying value of a reporting unit exceeds the estimated fair value of the reporting unit, then the excess, limited to the carrying amount of goodwill, will be charged to earnings as an impairment loss. There was no impairment recorded for goodwill during the first quarters of 2025 or 2024. Other Intangible Assets Intangible assets with indefinite lives are composed of the following. Trade Names Lease Rights Total Balance at December 31, 2024 Intangibles $ 15,876 $ 10,692 $ 26,568 Accumulated impairment losses — ( 3,748 ) ( 3,748 ) $ 15,876 $ 6,944 $ 22,820 Change in foreign exchange rates during the first quarter of 2025 — 274 274 Balance at March 31, 2025 $ 15,876 $ 7,218 $ 23,094 9 Table of Contents Note 7. Restaurant Operations Revenues Restaurant operations revenues were as follows. First Quarter 2025 2024 Net sales $ 41,615 $ 38,735 Franchise partner fees 17,139 17,758 Franchise royalties and fees 3,489 3,477 Other 2,106 2,026 $ 64,349 $ 61,996 Net Sales Net sales are composed of retail sales of food through company-operated stores. Company-operated store revenues are recognized, net of discounts and sales taxes, when our obligation to perform is satisfied at the point of sale. Sales taxes related to these sales are collected from customers and remitted to the appropriate taxing authority and are not reflected in the Company’s consolidated statements of earnings as revenue. Franchise Partner Fees Franchise partner fees are composed of up to 15 % of sales as well as 50 % of profits. We are therefore fully affected by the operating results of the business, unlike in a traditional franchising arrangement, where the franchisor obtains a royalty fee based on sales only. We generate most of our revenue from our share of the franchise partners’ profits. An initial franchise fee of ten thousand dollars is recognized when the operator becomes a franchise partner. The Company recognizes franchise partner fees monthly as underlying restaurant sales occur. The Company leases or subleases property and equipment to franchise partners under lease arrangements. Both real estate and equipment rental payments are charged to franchise partners and are recognized in accordance with ASC 842, “ Leases ”. During the first quarter of 2025 and 2024, restaurant operations recognized $ 5,553 and $ 5,705 , respectively, in franchise partner fees related to rental income. Franchise Royalties and Fees 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. 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. Other Revenue Restaurant operations sell gift cards to customers which can be redeemed for retail food sales within our stores. Gift cards are recorded as deferred revenue when issued and are subsequently recorded as net sales upon redemption. Restaurant operations estimate breakage related to gift cards when the likelihood of redemption is remote. This estimate utilizes historical trends based on the vintage of the gift card. Breakage on gift cards is recorded as other revenue in proportion to the rate of gift card redemptions by vintage. 10 Table of Contents Note 8. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses include the following. March 31, 2025 December 31, 2024 Accounts payable $ 27,846 $ 28,542 Gift cards and other marketing 4,927 6,655 Insurance accruals 1,754 1,746 Compensation 6,720 4,911 Deferred revenue 3,396 3,723 Taxes payable 10,957 8,134 Oil and gas payable 1,996 1,912 Professional fees 2,155 3,052 Due to broker 3,669 3,517 Other 665 1,189 Accounts payable and accrued expenses $ 64,085 $ 63,381 Note 9. Lines of Credit 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 is $ 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 a $ 35,000 balance on the line of credit on March 31, 2025 and December 31, 2024. Our interest rate was 7.1 % on March 31, 2025 and December 31, 2024. 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. There was a $ 13,400 and $ 10,000 balance on the line of credit on March 31, 2025 and December 31, 2024, respectively. Our interest rate was 7.5 % and 7.8 % on March 31, 2025 and December 31, 2024, respectively. Western Sizzlin Revolver Western Sizzlin’s available line of credit is $ 500 . As of March 31, 2025 and December 31, 2024, Western Sizzlin had no debt outstanding under its revolver. 11 Table of Contents Note 10. Unpaid Loss and Loss Adjustment Expenses Our liabilities for unpaid losses and loss adjustment expenses (also referred to as “claim liabilities”) under insurance contracts are based upon estimates of the ultimate claim costs associated with claim occurrences as of the balance sheet date and include estimates for incurred-but-not-reported (“IBNR”) claims. A reconciliation of the changes in claim liabilities, net of reinsurance, for each of the three-month periods ended March 31, 2025 and 2024 follows. March 31, March 31, 2025 2024 Balances at beginning of year: Gross liabilities $ 18,028 $ 16,105 Reinsurance recoverable on unpaid losses ( 778 ) ( 937 ) Net liabilities 17,250 15,168 Incurred losses and loss adjustment expenses: Current accident year 11,816 14,197 Prior accident years 189 ( 3,319 ) Total 12,005 10,878 Paid losses and loss adjustment expenses: Current accident year 7,559 7,031 Prior accident years 3,714 3,002 Total 11,273 10,033 Balances at March 31: Net liabilities 17,982 16,013 Reinsurance recoverable on unpaid losses 673 687 Gross liabilities $ 18,655 $ 16,700 We recorded net increases of estimated ultimate liabilities for prior accident years of $ 189 in the first quarter of 2025 and net reductions of estimated ultimate liabilities for prior accident years of $ 3,319 in the first quarter of 2024, which produced corresponding changes in incurred losses and loss adjustment expenses in those periods. These changes, as a percentage of the net liabilities at the beginning of each year, were 1.1 % in 2025 and 21.9 % in 2024. Note 11. Lease Assets and Obligations Lease obligations include the following. Current portion of lease obligations March 31, 2025 December 31, 2024 Finance lease liabilities $ 1,351 $ 1,250 Finance obligations 4,709 4,664 Operating lease liabilities 9,011 8,535 Total current portion of lease obligations $ 15,071 $ 14,449 Long-term lease obligations Finance lease liabilities $ 2,908 $ 2,747 Finance obligations 59,782 60,386 Operating lease liabilities 26,671 27,606 Total long-term lease obligations $ 89,361 $ 90,739 12 Table of Contents Note 11. Lease Assets and Obligations (continued) Nature of Leases Steak n Shake and Western Sizzlin operate restaurants that are located on sites owned by us or leased from third parties. In addition, they own sites and lease sites from third parties that are leased and/or subleased to franchisees. Lease Costs A significant portion of our operating and finance lease portfolio includes restaurant locations. We recognize fixed lease expense for operating leases on a straight-line basis over the lease term. For finance leases, we recognize amortization expense on the right-of-use asset and interest expense on the lease liability over the lease term. Total lease cost consists of the following. First Quarter 2025 2024 Finance lease costs: Amortization of right-of-use assets $ 213 $ 226 Interest on lease liabilities 74 84 Operating and variable lease costs 2,935 2,829 Sublease income ( 2,608 ) ( 2,989 ) Total lease costs $ 614 $ 150 Supplemental cash flow information related to leases is as follows. First Quarter 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases $ 335 $ 326 Operating cash flows from finance leases $ 74 $ 84 Operating cash flows from operating leases $ 2,728 $ 2,666 Supplemental balance sheet information related to leases is as follows. March 31, 2025 December 31, 2024 Finance leases: Property and equipment, net $ 3,346 $ 2,980 Weighted-average lease terms and discount rates are as follows. March 31, 2025 Weighted-average remaining lease terms: Finance leases 4.49 years Operating leases 6.34 years Weighted-average discount rates: Finance leases 7.0 % Operating leases 7.0 % 13 Table of Contents Note 11. Lease Assets and Obligations (continued) Maturities of lease liabilities as of March 31, 2025 are as follows. Year Operating Leases Finance Leases Remainder of 2025 $ 8,068 $ 1,120 2026 8,555 1,313 2027 6,280 978 2028 5,385 587 2029 4,318 355 After 2029 11,189 622 Total lease payments 43,795 4,975 Less interest 8,113 716 Total lease liabilities $ 35,682 $ 4,259 Lease Income The components of lease income are as follows. First Quarter 2025 2024 Operating lease income $ 3,932 $ 4,181 Variable lease income 1,900 1,799 Total lease income $ 5,832 $ 5,980 The following table displays the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2025. Franchise partner leases and subleases are short-term leases and have been excluded from the table. Operating Leases Year Subleases Owned Properties Remainder of 2025 $ 457 $ 442 2026 225 639 2027 206 651 2028 85 662 2029 — 678 After 2029 — 3,413 Total future minimum receipts $ 973 $ 6,485 Note 12. Income Taxes In determining the quarterly provision for income taxes, the Company used an estimated annual effective tax rate for the first quarter of 2025 and 2024. Our periodic effective income tax rate is affected by the relative mix of pre-tax earnings or losses and underlying income tax rates applicable to the various taxing jurisdictions. Income tax benefit for the first quarter of 2025 was $ 7,908 compared to income tax expense of $ 6,816 for the first quarter of 2024. The variance in income taxes between 2025 and 2024 is primarily attributable to taxes on income generated by the investment partnerships. Investment partnership pre-tax losses were $ 49,592 during the first quarter of 2025 compared to pre-tax gains of $ 21,985 during the first quarter of 2024. 14 Table of Contents Note 13. Commitments and Contingencies We are involved in various legal proceedings and have certain unresolved claims pending. We believe, based on examination of these matters and experiences to date, that the ultimate liability, if any, in excess of amounts already provided in our consolidated financial statements, is not likely to have a material effect on our results of operations, financial position or cash flow. Note 14. Fair Value of Financial Assets The fair values of substantially all of our financial instruments were measured using market or income approaches. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, the fair values presented are not necessarily indicative of the amounts that could be realized in an actual current market exchange. The use of alternative market assumptions and/or estimation methodologies may have a material effect on the estimated fair value. The hierarchy for measuring fair value consists of Levels 1 through 3, which are described below. • Level 1 – Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets. • Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Pricing evaluations generally reflect discounted expected future cash flows, which incorporate yield curves for instruments with similar characteristics, such as credit ratings, estimated durations, and yields for other instruments of the issuer or entities in the same industry sector. • Level 3 – Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities and we may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities. The following methods and assumptions were used to determine the fair value of each class of the following assets recorded at fair value in the consolidated balance sheets: Cash equivalents: Cash equivalents primarily consist of money market funds which are classified as Level 1 of the fair value hierarchy. Equity securities: The Company’s investments in equity securities are classified as Level 1 of the fair value hierarchy. Bonds: The Company’s investments in bonds consist of both corporate and government debt. Bonds may be classified as Level l or Level 2 of the fair value hierarchy. 15 Table of Contents Note 14. Fair Value of Financial Assets (continued) As of March 31, 2025, and December 31, 2024, the fair values of financial assets were as follows. March 31, 2025 December 31, 2024 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Cash equivalents $ 9,555 $ — $ — $ 9,555 $ 11,684 $ — $ — $ 11,684 Equity securities Consumer goods 41,063 — — 41,063 39,706 — — 39,706 Other 4,757 — — 4,757 5,569 — — 5,569 Bonds Government 56,107 4,763 — 60,870 52,328 5,245 — 57,573 Corporate — 756 — 756 — 750 — 750 Total assets at fair value $ 111,482 $ 5,519 $ — $ 117,001 $ 109,287 $ 5,995 $ — $ 115,282 There were no changes in our valuation techniques used to measure fair values on a recurring basis. Note 15. Related Party Transactions Service Agreement The Company is party to a service agreement with Biglari Enterprises LLC (“Biglari Enterprises”), under which Biglari Enterprises provides business and administrative related services to the Company. Biglari Enterprises is owned by Mr. Biglari. The Company paid Biglari Enterprises $ 2,850 and $ 2,400 in service fees during the first quarter of 2025 and 2024, respectively. The service agreement does not alter the hurdle rate connected with the incentive reallocation paid to Biglari Capital Corp. Incentive Agreement The Incentive Agreement establishes a performance-based annual incentive payment for Mr. Biglari contingent upon the growth in adjusted equity in each year attributable to our operating businesses. In order for Mr. Biglari to receive any incentive, our operating businesses must achieve an annual increase in shareholders’ equity in excess of 6 % (the “hurdle rate”) above the previous highest level (the “high-water mark”). Mr. Biglari will receive 25 % of any incremental book value created above the high-water mark plus the hurdle rate. Note 16. Business Segment Reporting 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, Southern Pioneer, and Biglari Reinsurance. Our oil and gas operations include Southern Oil and Abraxas Petroleum. The Company also reports segment information for Maxim. Other business activities not specifically identified with reportable business segments are presented under corporate and other. 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. A disaggregation of our consolidated data for the first quarters of 2025 and 2024 is presented in the tables which follow. 16 Table of Contents Note 16. Business Segment Reporting (continued) Restaurant First Quarter 2025 Steak n Shake Western Sizzlin Total Restaurants Revenue $ 61,916 $ 2,433 $ 64,349 Cost and expenses: Cost of food 11,612 852 12,464 Labor costs 12,848 591 13,439 Occupancy and other 12,482 706 13,188 Selling, general and administrative 15,415 39 15,454 Depreciation, amortization and impairment 6,471 19 6,490 Total costs and expenses 58,828 2,207 61,035 Earnings before income taxes $ 3,088 $ 226 $ 3,314 First Quarter 2024 Steak n Shake Western Sizzlin Total Restaurants Revenue $ 59,354 $ 2,642 $ 61,996 Cost and expenses: Cost of food 10,113 861 10,974 Labor costs 11,697 732 12,429 Occupancy and other 11,695 637 12,332 Selling, general and administrative 14,687 ( 246 ) 14,441 Depreciation, amortization and impairment 6,925 17 6,942 Total costs and expenses 55,117 2,001 57,118 Earnings before income taxes $ 4,237 $ 641 $ 4,878 Insurance First Quarter 2025 First Guard Southern Pioneer Total Underwriting Investment Income Other Total Insurance Revenue $ 9,209 $ 8,556 $ 17,765 $ 837 $ 747 $ 19,349 Cost and expenses: Insurance losses 6,282 5,723 12,005 — — 12,005 Underwriting expenses 1,712 3,335 5,047 — — 5,047 Other segment items — — — — 760 760 Total costs and expenses 7,994 9,058 17,052 — 760 17,812 Earnings before income taxes $ 1,215 $ ( 502 ) $ 713 $ 837 $ ( 13 ) $ 1,537 17 Table of Contents Note 16. Business Segment Reporting (continued) First Quarter 2024 First Guard Southern Pioneer Total Underwriting Investment Income Other Total Insurance Revenue $ 9,310 $ 6,612 $ 15,922 $ 915 $ 896 $ 17,733 Cost and expenses: Insurance losses 6,775 4,103 10,878 — — 10,878 Underwriting expenses 1,735 2,450 4,185 — — 4,185 Other segment items — — — — 424 424 Total costs and expenses 8,510 6,553 15,063 — 424 15,487 Earnings before income taxes $ 800 $ 59 $ 859 $ 915 $ 472 $ 2,246 Other segment items include general and administrative costs, depreciation, and other income. Oil and Gas First Quarter 2025 Abraxas Petroleum Southern Oil Total Oil and Gas Revenue $ 5,890 $ 4,040 $ 9,930 Cost and expenses: Production costs 2,446 1,600 4,046 Depreciation, depletion and accretion 1,933 1,323 3,256 General and administrative 649 654 1,303 Total costs and expenses 5,028 3,577 8,605 Gains on sales of properties 9,323 — 9,323 Earnings before income taxes $ 10,185 $ 463 $ 10,648 First Quarter 2024 Abraxas Petroleum Southern Oil Total Oil and Gas Revenue $ 5,868 $ 3,642 $ 9,510 Cost and expenses: Production costs 2,819 1,680 4,499 Depreciation, depletion and accretion 1,547 1,245 2,792 General and administrative 596 638 1,234 Total costs and expenses 4,962 3,563 8,525 Gains on sales of properties 481 — 481 Earnings before income taxes $ 1,387 $ 79 $ 1,466 18 Table of Contents Note 16. Business Segment Reporting (continued) Maxim First Quarter 2025 2024 Revenue $ 1,407 $ 212 Cost and expenses: Licensing and media cost 1,651 503 General and administrative 43 63 Depreciation and amortization 70 — Total costs and expenses 1,764 566 Earnings before income taxes $ ( 357 ) $ ( 354 ) Reconciliation of revenues and earnings (loss) before income taxes of our business segments to the consolidated amounts for each of the three months ended March 31 follows. Revenues Earnings (losses) before income taxes 2025 2024 2025 2024 Total operating businesses $ 95,035 $ 89,451 $ 15,142 $ 8,236 Investment partnership gains (losses) — — ( 49,592 ) 21,985 Investment gains (losses) — — ( 1,585 ) 1,713 Interest expenses not allocated to segments — — ( 900 ) — Corporate and other — — ( 4,248 ) ( 2,539 ) $ 95,035 $ 89,451 $ ( 41,183 ) $ 29,395 19 Table of Contents