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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| | | | | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2024
or
| | | | | |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___ to ___
Commission file number 001-38477
| | |
| BIGLARI HOLDINGS INC. |
| (Exact name of registrant as specified in its charter) |
| | | | | | | | |
| Indiana | | 82-3784946 |
| (State or other jurisdiction of incorporation) | | (I.R.S. Employer Identification No.) |
| | | | | | | | | | | |
19100 Ridgewood Parkway, | Suite 1200 | | |
| San Antonio, | Texas | | 78259 |
| (Address of principal executive offices) | | (Zip Code) |
(210) 344-3400
Registrant’s telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbols | Name of each exchange on which registered |
| Class A Common Stock, no par value | BH.A | New York Stock Exchange |
| Class B Common Stock, no par value | BH | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
| Large accelerated filer | ☐ | Accelerated filer | ☒ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
| | | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
Number of shares of common stock outstanding as of November 5, 2024:
| | | | | |
| Class A common stock – | 206,864 | |
| Class B common stock – | 2,068,640 | |
BIGLARI HOLDINGS INC.
INDEX
PART 1 – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIGLARI HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands) | | | | | | | | | | | |
| September 30,
2024 | | December 31,
2023 |
| (Unaudited) | | |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 29,891 | | | $ | 28,066 | |
| Investments | 102,902 | | | 91,879 | |
| Receivables | 21,384 | | | 22,241 | |
| Inventories | 3,859 | | | 2,980 | |
| Other current assets | 7,183 | | | 7,385 | |
| Total current assets | 165,219 | | | 152,551 | |
| Property and equipment | 380,622 | | | 380,491 | |
| Operating lease assets | 33,637 | | | 32,215 | |
| Goodwill and other intangible assets | 75,845 | | | 76,760 | |
| Investment partnerships | 201,591 | | | 199,103 | |
| Other assets | 8,202 | | | 8,302 | |
| Total assets | $ | 865,116 | | | $ | 849,422 | |
| Liabilities and shareholders’ equity | | | |
| Liabilities | | | |
| Current liabilities: | | | |
| Accounts payable and accrued expenses | $ | 66,694 | | | $ | 66,743 | |
| Loss and loss adjustment expenses | 15,281 | | | 15,168 | |
| Unearned premiums | 15,711 | | | 14,334 | |
| Current portion of lease obligations | 14,359 | | | 14,855 | |
| Total current liabilities | 112,045 | | | 111,100 | |
| Lease obligations | 91,989 | | | 86,389 | |
| Line of credit | 9,000 | | | — | |
| Deferred taxes | 35,194 | | | 37,939 | |
| Asset retirement obligations | 14,777 | | | 14,316 | |
| Other liabilities | 348 | | | 348 | |
| Total liabilities | 263,353 | | | 250,092 | |
| Shareholders’ equity | | | |
| Common stock | 1,138 | | | 1,138 | |
| Additional paid-in capital | 385,594 | | | 385,594 | |
| Retained earnings | 637,972 | | | 631,458 | |
| Accumulated other comprehensive loss | (2,179) | | | (2,518) | |
| Treasury stock, at cost | (420,762) | | | (416,342) | |
| Biglari Holdings Inc. shareholders’ equity | 601,763 | | | 599,330 | |
| Total liabilities and shareholders’ equity | $ | 865,116 | | | $ | 849,422 | |
See accompanying Notes to Consolidated Financial Statements.
BIGLARI HOLDINGS INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in thousands except per share amounts) | | | | | | | | | | | | | | | | | | | | | | | |
| Third Quarter | | First Nine Months |
| 2024 | | 2023 | | 2024 | | 2023 |
| (Unaudited) | | (Unaudited) |
| Revenues | | | | | | | |
| Restaurant operations | $ | 62,384 | | | $ | 61,886 | | | $ | 188,855 | | | $ | 187,506 | |
| Insurance premiums and other | 18,247 | | | 16,624 | | | 53,674 | | | 50,400 | |
| Oil and gas | 9,574 | | | 12,159 | | | 27,755 | | | 35,123 | |
| Licensing and media | 202 | | | 268 | | | 715 | | | 1,624 | |
| Total revenues | 90,407 | | | 90,937 | | | 270,999 | | | 274,653 | |
| Costs and expenses | | | | | | | |
| Restaurant cost of sales | 36,212 | | | 36,789 | | | 107,519 | | | 104,455 | |
| Insurance losses and underwriting expenses | 14,397 | | | 12,964 | | | 45,205 | | | 39,244 | |
| Oil and gas production costs | 4,425 | | | 3,771 | | | 13,206 | | | 12,754 | |
| Licensing and media costs | 432 | | | 476 | | | 1,458 | | | 1,427 | |
| Selling, general and administrative | 19,510 | | | 18,315 | | | 56,438 | | | 54,587 | |
| Gain on sale of oil and gas properties | (54) | | | (13,563) | | | (16,700) | | | (13,563) | |
| Impairments | — | | | 752 | | | 1,107 | | | 2,381 | |
| Depreciation, depletion, and amortization | 10,585 | | | 9,611 | | | 29,760 | | | 29,645 | |
| Interest expense on leases | 1,353 | | | 1,262 | | | 4,016 | | | 3,870 | |
| Interest expense on borrowings | 275 | | | 262 | | | 317 | | | 469 | |
| Total costs and expenses | 87,135 | | | 70,639 | | | 242,326 | | | 235,269 | |
| Other income | | | | | | | |
| Investment gains (losses) | 4,740 | | | (4,715) | | | 3,724 | | | (724) | |
| Investment partnership gains (losses) | 35,314 | | | (89,599) | | | (22,591) | | | (24,507) | |
| Total other income (expenses) | 40,054 | | | (94,314) | | | (18,867) | | | (25,231) | |
| Earnings (loss) before income taxes | 43,326 | | | (74,016) | | | 9,806 | | | 14,153 | |
| Income tax expense (benefit) | 11,201 | | | (17,502) | | | 3,292 | | | 3,254 | |
| Net earnings (loss) | 32,125 | | | (56,514) | | | 6,514 | | | 10,899 | |
| Earnings attributable to noncontrolling interest | — | | | — | | | — | | | 591 | |
| Net earnings (loss) attributable to Biglari Holdings Inc. shareholders | $ | 32,125 | | | $ | (56,514) | | | $ | 6,514 | | | $ | 10,308 | |
| | | | | | | |
| Net earnings (loss) per average equivalent Class A share * | $ | 114.77 | | | $ | (195.55) | | | $ | 23.15 | | | $ | 35.44 | |
*Net earnings (loss) per average equivalent Class B share outstanding are one-fifth of the average equivalent Class A share or $22.95 and $4.63 for the third quarter and first nine months of 2024, respectively, and $(39.11) and $7.09 for the third quarter and first nine months of 2023, respectively.
See accompanying Notes to Consolidated Financial Statements.
BIGLARI HOLDINGS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Third Quarter | | First Nine Months | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
| | (Unaudited) | | (Unaudited) | | |
| Net earnings (loss) | $ | 32,125 | | | $ | (56,514) | | | $ | 6,514 | | | $ | 10,899 | | | | | |
| Foreign currency translation | 488 | | | (286) | | | 339 | | | (276) | | | | | |
| Comprehensive income (loss) | 32,613 | | | (56,800) | | | 6,853 | | | 10,623 | | | | | |
| Comprehensive income attributable to noncontrolling interests | — | | | — | | | — | | | 591 | | | | | |
| Total comprehensive income (loss) attributable to Biglari Holdings Inc. shareholders | $ | 32,613 | | | $ | (56,800) | | | $ | 6,853 | | | $ | 10,032 | | | | | |
See accompanying Notes to Consolidated Financial Statements.
BIGLARI HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
| | | | | | | | | | | |
| First Nine Months |
| 2024 | | 2023 |
| (Unaudited) |
| Operating activities | | | |
| Net earnings | $ | 6,514 | | | $ | 10,899 | |
| Adjustments to reconcile net earnings to operating cash flows: | | | |
| Depreciation, depletion, and amortization | 29,760 | | | 29,645 | |
| Provision for deferred income taxes | (2,756) | | | (5,931) | |
| Asset impairments | 1,107 | | | 2,381 | |
| Gains on sale of assets | (21,718) | | | (18,391) | |
| Investment and investment partnership gains and losses | 18,867 | | | 25,231 | |
| Distributions from investment partnerships | 1,000 | | | — | |
| Changes in receivables, inventories and other assets | (2,503) | | | 5,441 | |
| Changes in accounts payable and accrued expenses | 1,394 | | | (599) | |
| Net cash provided by operating activities | 31,665 | | | 48,676 | |
| Investing activities | | | |
| Capital expenditures | (23,497) | | | (16,910) | |
| Proceeds from property and equipment disposals | 25,412 | | | 20,403 | |
| Purchases of noncontrolling interests | — | | | (5,387) | |
| Purchases of interests in limited partnerships | (30,499) | | | (41,530) | |
| Purchases of investments | (56,183) | | | (78,520) | |
| Sales of investments and redemptions of fixed maturity securities | 49,851 | | | 65,718 | |
| Net cash used in investing activities | (34,916) | | | (56,226) | |
| Financing activities | | | |
| Proceeds from line of credit | 16,050 | | | 31,600 | |
| Payments on line of credit | (7,050) | | | (22,600) | |
| Principal payments on direct financing lease obligations | (4,131) | | | (4,618) | |
| Net cash provided by financing activities | 4,869 | | | 4,382 | |
| Effect of exchange rate changes on cash | (42) | | | (56) | |
| Increase (decrease) in cash, cash equivalents and restricted cash | 1,576 | | | (3,224) | |
| Cash, cash equivalents and restricted cash at beginning of year | 29,654 | | | 38,805 | |
| Cash, cash equivalents and restricted cash at end of third quarter | $ | 31,230 | | | $ | 35,581 | |
| | | | | | | | | | | |
| September 30, |
| 2024 | | 2023 |
| (Unaudited) |
| Cash and cash equivalents | $ | 29,891 | | | $ | 33,993 | |
| Restricted cash in other long-term assets | 1,339 | | | 1,588 | |
| Cash, cash equivalents and restricted cash at end of third quarter | $ | 31,230 | | | $ | 35,581 | |
See accompanying Notes to Consolidated Financial Statements.
BIGLARI HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Biglari Holdings Inc. Shareholders’ Equity | | | | |
| Common
Stock | | Additional Paid-In
Capital | | Retained
Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury
Stock | | Non-controlling Interests | | Total |
| For the third quarter and first nine months of 2024 | | | | | | | | |
| Balance at December 31, 2023 | $ | 1,138 | | | $ | 385,594 | | | $ | 631,458 | | | $ | (2,518) | | | $ | (416,342) | | | $ | — | | | $ | 599,330 | |
| Net earnings (loss) | | | | | 22,579 | | | | | | | | | 22,579 | |
| Other comprehensive 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 | |
| Net earnings (loss) | | | | | (48,190) | | | | | | | | | (48,190) | |
| Other comprehensive loss | | | | | | | (118) | | | | | | | (118) | |
| Adjustment for holdings in investment partnerships | | | | | | | | | (1,085) | | | | | (1,085) | |
| Balance at June 30, 2024 | $ | 1,138 | | | $ | 385,594 | | | $ | 605,847 | | | $ | (2,667) | | | $ | (420,733) | | | $ | — | | | $ | 569,179 | |
| Net earnings (loss) | | | | | 32,125 | | | | | | | | | 32,125 | |
| Other comprehensive income | | | | | | | 488 | | | | | | | 488 | |
| Adjustment for holdings in investment partnerships | | | | | | | | | (29) | | | | | (29) | |
| Balance at September 30, 2024 | $ | 1,138 | | | $ | 385,594 | | | $ | 637,972 | | | $ | (2,179) | | | $ | (420,762) | | | $ | — | | | $ | 601,763 | |
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| For the third quarter and first nine months of 2023 | | | | | | | | |
| Balance at December 31, 2022 | $ | 1,138 | | | $ | 381,788 | | | $ | 576,510 | | | $ | (2,790) | | | $ | (409,680) | | | $ | 8,602 | | | $ | 555,568 | |
| Net earnings (loss) | | | | | 64,886 | | | | | | | 651 | | | 65,537 | |
| Other comprehensive income | | | | | | | 332 | | | | | | | 332 | |
| Adjustment for holdings in investment partnerships | | | | | | | | | (239) | | | | | (239) | |
| Balance at March 31, 2023 | $ | 1,138 | | | $ | 381,788 | | | $ | 641,396 | | | $ | (2,458) | | | $ | (409,919) | | | $ | 9,253 | | | $ | 621,198 | |
| Net earnings (loss) | | | | | 1,936 | | | | | | | (60) | | | 1,876 | |
| Other comprehensive loss | | | | | | | (322) | | | | | | | (322) | |
| Adjustment for holdings in investment partnerships | | | | | | | | | (1,011) | | | | | (1,011) | |
| Purchases of noncontrolling interests | | | 3,806 | | | | | | | | | (9,193) | | | (5,387) | |
| Balance at June 30, 2023 | $ | 1,138 | | | $ | 385,594 | | | $ | 643,332 | | | $ | (2,780) | | | $ | (410,930) | | | $ | — | | | $ | 616,354 | |
| Net earnings (loss) | | | | | (56,514) | | | | | | | | | (56,514) | |
| Other comprehensive loss | | | | | | | (286) | | | | | | | (286) | |
| Adjustment for holdings in investment partnerships | | | | | | | | | (2,150) | | | | | (2,150) | |
| Balance at September 30, 2023 | $ | 1,138 | | | $ | 385,594 | | | $ | 586,818 | | | $ | (3,066) | | | $ | (413,080) | | | $ | — | | | $ | 557,404 | |
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See accompanying Notes to Consolidated Financial Statements.
BIGLARI HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(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, 2023.
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. 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 September 30, 2024, Mr. Biglari beneficially owns shares of the Company that represent approximately 71.5% 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.
Note 2. Earnings Per Share (continued)
The following table presents shares authorized, issued and outstanding on September 30, 2024 and December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2024 | | December 31, 2023 |
| | 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 | |
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.
| | | | | | | | | | | | | | | | | | | | | | | |
| Third Quarter | | First Nine Months |
| 2024 | | 2023 | | 2024 | | 2023 |
| Equivalent Class A common stock outstanding | 620,592 | | | 620,592 | | | 620,592 | | | 620,592 | |
| Proportional ownership of Company stock held by investment partnerships | 340,683 | | | 331,585 | | | 339,245 | | | 329,732 | |
| Equivalent Class A common stock for earnings per share | 279,909 | | | 289,007 | | | 281,347 | | | 290,860 | |
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 gains for the third quarter and first nine months of 2024 were $4,740 and $3,724, respectively. Investment losses in the third quarter and first nine months of 2023 were $4,715 and $724, respectively.
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.
Note 4. Investment Partnerships (continued)
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, 2023 | $ | 472,772 | | | $ | 273,669 | | | $ | 199,103 | |
| Investment partnership gains (losses) | (10,682) | | | 11,909 | | | (22,591) | |
| Contributions (net of distributions) | 29,499 | | | | | 29,499 | |
| Changes in proportionate share of Company stock held | | | 4,420 | | | (4,420) | |
| Partnership interest at September 30, 2024 | $ | 491,589 | | | $ | 289,998 | | | $ | 201,591 | |
| | | | | | | | | | | | | | | | | |
| | Fair Value | | Company
Common Stock | | Carrying Value |
| Partnership interest at December 31, 2022 | $ | 383,004 | | | $ | 227,210 | | | $ | 155,794 | |
| Investment partnership gains (losses) | 21,141 | | | 45,648 | | | (24,507) | |
| Contributions (net of distributions) | 41,530 | | | | | 41,530 | |
| Changes in proportionate share of Company stock held | | | 3,400 | | | (3,400) | |
| Partnership interest at September 30, 2023 | $ | 445,675 | | | $ | 276,258 | | | $ | 169,417 | |
The carrying value of the investment partnerships net of deferred taxes is presented below.
| | | | | | | | | | | |
| | September 30,
2024 | | December 31, 2023 |
| Carrying value of investment partnerships | $ | 201,591 | | | $ | 199,103 | |
| Deferred tax liability related to investment partnerships | (22,880) | | | (27,896) | |
| Carrying value of investment partnerships net of deferred taxes | $ | 178,711 | | | $ | 171,207 | |
We expect that a majority of the $22,880 deferred tax liability 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 $420,762 and $416,342 at September 30, 2024 and December 31, 2023, 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.
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| | Third Quarter | | First Nine Months | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Gains (losses) from investment partnerships | $ | 35,314 | | | $ | (89,599) | | | $ | (22,591) | | | $ | (24,507) | | | | | |
| Tax expense (benefit) | 8,867 | | | (21,222) | | | (5,438) | | | (6,660) | | | | | |
| Contribution to net earnings (loss) | $ | 26,447 | | | $ | (68,377) | | | $ | (17,153) | | | $ | (17,847) | | | | | |
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 nine months of 2024 and 2023.
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 September 30, 2024 | $ | 372,605 | | | $ | 382,895 | |
| Total liabilities as of September 30, 2024 | $ | 22,447 | | | $ | 183,055 | |
| Revenue for the first nine months of 2024 | $ | (1,940) | | | $ | (630) | |
| Earnings (loss) for the first nine months of 2024 | $ | (3,233) | | | $ | (9,261) | |
| Biglari Holdings’ ownership interest as of September 30, 2024 | 90.2 | % | | 87.8 | % |
| | | |
| Total assets as of December 31, 2023 | $ | 371,365 | | | $ | 373,302 | |
| Total liabilities as of December 31, 2023 | $ | 26,594 | | | $ | 185,024 | |
| Revenue for the first nine months of 2023 | $ | 44,886 | | | $ | (12,172) | |
| Earnings (loss) for the first nine months of 2023 | $ | 44,208 | | | $ | (19,603) | |
| Biglari Holdings’ ownership interest as of September 30, 2023 | 89.4 | % | | 87.8 | % |
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.
| | | | | | | | | | | |
| | September 30,
2024 | | December 31,
2023 |
| Land | $ | 136,953 | | | $ | 139,897 | |
| Buildings | 158,890 | | | 151,716 | |
| Land and leasehold improvements | 152,016 | | | 149,795 | |
| Equipment | 213,279 | | | 212,424 | |
| Oil and gas properties | 156,364 | | | 145,065 | |
| Construction in progress | 346 | | | 1,629 | |
| | 817,848 | | | 800,526 | |
| Less accumulated depreciation, depletion, and amortization | (437,226) | | | (420,035) | |
| Property and equipment, net | $ | 380,622 | | | $ | 380,491 | |
Depletion expense related to oil and gas properties was $7,412 and $7,550 during the first nine months of 2024 and 2023, respectively.
The Company recorded no impairment to restaurant long-lived assets in the third quarter of 2024 and $752 in the third quarter of 2023. The Company recorded an impairment to restaurant long-lived assets related to underperforming stores of $107 and $2,361 in the first nine months of 2024 and 2023, respectively.
Property and equipment held for sale of $773 are recorded in other assets as of December 31, 2023. There was no property and equipment held for sale as of September 30, 2024.
During the first nine months of 2024, the Company sold former company-operated restaurants for a gain of $5,335. During the first nine months of 2023, the Company sold former company-operated restaurants for a gain of $5,253 and Abraxas Petroleum sold its office building with no gain or loss recorded.
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, 2023 | |
| Goodwill | $ | 53,830 | |
| Impairments prior to 2024 | (300) | |
| 53,530 | |
| Impairment during the first nine months of 2024 | (1,000) | |
| Change in foreign exchange rates during the first nine months of 2024 | 7 | |
Goodwill at September 30, 2024 | $ | 52,537 | |
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 by Steak n Shake for goodwill during the first nine months of 2024 or 2023. During the second quarter of 2024, we performed our annual assessment of our recoverability of goodwill related to Western Sizzlin and an impairment to goodwill of $1,000 was recorded. Western Sizzlin did not record an impairment for goodwill during the first nine months of 2023. There was no impairment recorded for intangible assets during the first nine months of 2024 and a $20 impairment was recorded in the first nine months of 2023.
Other Intangible Assets
Intangible assets with indefinite lives are composed of the following.
| | | | | | | | | | | | | | | | | |
| | Trade Names | | Lease Rights | | Total |
Balance at December 31, 2023 | | | | | |
| Intangibles | $ | 15,876 | | | $ | 11,102 | | | $ | 26,978 | |
| Impairments prior to 2024 | — | | | (3,748) | | | (3,748) | |
| 15,876 | | | 7,354 | | | 23,230 | |
| Change in foreign exchange rates during the first nine months of 2024 | — | | | 78 | | | 78 | |
Balance at September 30, 2024 | $ | 15,876 | | | $ | 7,432 | | | $ | 23,308 | |
Note 7. Restaurant Operations Revenues
Restaurant operations revenues were as follows.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Third Quarter | | First Nine Months | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Net sales | $ | 39,660 | | | $ | 39,195 | | | $ | 119,210 | | | $ | 115,613 | | | | | |
| Franchise partner fees | 17,157 | | | 17,622 | | | 53,064 | | | 54,604 | | | | | |
| Franchise royalties and fees | 3,442 | | | 4,073 | | | 10,534 | | | 12,456 | | | | | |
| Other | 2,125 | | | 996 | | | 6,047 | | | 4,833 | | | | | |
| | $ | 62,384 | | | $ | 61,886 | | | $ | 188,855 | | | $ | 187,506 | | | | | |
Note 7. Restaurant Operations Revenues (continued)
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 third quarter of 2024 and 2023, restaurant operations recognized $5,780 and $5,692, respectively, in franchise partner fees related to rental income. During the first nine months ended September 30, 2024 and September 30, 2023, restaurant operations recognized $17,265 and $17,030, 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.
Note 8. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses include the following.
| | | | | | | | | | | |
| | September 30,
2024 | | December 31,
2023 |
| Accounts payable | $ | 26,314 | | | $ | 22,448 | |
| Gift cards and other marketing | 5,263 | | | 7,089 | |
| Insurance accruals | 2,411 | | | 2,565 | |
| Compensation | 7,545 | | | 12,821 | |
| Deferred revenue | 4,834 | | | 5,314 | |
| Taxes payable | 13,471 | | | 11,050 | |
| Oil and gas payable | 2,803 | | | 3,560 | |
| Other | 4,053 | | | 1,896 | |
| Accounts payable and accrued expenses | $ | 66,694 | | | $ | 66,743 | |
Note 9. Lines of Credit
Biglari Holdings Line 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. The balance of the line of credit was $9,000 on September 30, 2024. There was no balance on the line of credit on December 31, 2023. Our interest rate was 7.71% and 8.06% on September 30, 2024 and December 31, 2023, respectively, which is based on the 30-day Secured Overnight Financing Rate plus 2.75% and 2.73%, respectively.
Western Sizzlin Revolver
Western Sizzlin’s available line of credit is $500. As of September 30, 2024 and December 31, 2023, Western Sizzlin had no debt outstanding under its revolver.
Note 10. Unpaid Losses 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 nine month periods ended September 30, 2024 and 2023 follows.
| | | | | | | | | | | |
| September 30,
2024 | | September 30,
2023 |
| Balances at beginning of year: | | | |
| Gross liabilities | $ | 16,105 | | | $ | 17,520 | |
| Reinsurance recoverable on unpaid losses | (937) | | | (715) | |
| Net liabilities | 15,168 | | | 16,805 | |
| Incurred losses and loss adjustment expenses: | | | |
| Current accident year | 36,246 | | | 29,171 | |
| Prior accident years | (4,189) | | | (3,421) | |
| Total | 32,057 | | | 25,750 | |
| Paid losses and loss adjustment expenses: | | | |
| Current accident year | 27,226 | | | 22,443 | |
| Prior accident years | 4,718 | | | 6,026 | |
| Total | 31,944 | | | 28,469 | |
| Balances at September 30: | | | |
| Net liabilities | 15,281 | | | 14,086 | |
| Reinsurance recoverable on unpaid losses | 576 | | | 1,047 | |
| Gross liabilities | $ | 15,857 | | | $ | 15,133 | |
We recorded net reductions of estimated ultimate liabilities for prior accident years of $4,189 and $3,421 in the first nine months of 2024 and 2023, respectively, which produced corresponding reductions in incurred losses and loss adjustment expenses in those periods. These reductions as a percentage of the net liabilities at the beginning of each year were 27.6% in 2024 and 20.4% in 2023.
Note 11. Lease Assets and Obligations
Lease obligations include the following.
| | | | | | | | | | | |
| Current portion of lease obligations | September 30,
2024 | | December 31,
2023 |
| Finance lease liabilities | $ | 1,282 | | | $ | 1,258 | |
| Finance obligations | 4,603 | | | 4,826 | |
| Operating lease liabilities | 8,474 | | | 8,771 | |
| Total current portion of lease obligations | $ | 14,359 | | | $ | 14,855 | |
| | | |
| Long-term lease obligations | | | |
| Finance lease liabilities | $ | 3,020 | | | $ | 3,581 | |
| Finance obligations | 61,417 | | | 56,471 | |
| Operating lease liabilities | 27,552 | | | 26,337 | |
| Total long-term lease obligations | $ | 91,989 | | | $ | 86,389 | |
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Third Quarter | | First Nine Months | | |
| 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Finance lease costs: | | | | | | | | | | | |
| Amortization of right-of-use assets | $ | 249 | | | $ | 239 | | | $ | 696 | | | $ | 723 | | | | | |
| Interest on lease liabilities | 78 | | | 80 | | | 245 | | | 257 | | | | | |
| Operating and variable lease costs | 2,880 | | | 3,012 | | | 8,657 | | | 9,260 | | | | | |
| Sublease income | (3,002) | | | (2,988) | | | (8,977) | | | (9,133) | | | | | |
| Total lease costs | $ | 205 | | | $ | 343 | | | $ | 621 | | | $ | 1,107 | | | | | |
Supplemental cash flow information related to leases is as follows.
| | | | | | | | | | | |
| | First Nine Months |
| | 2024 | | 2023 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Financing cash flows from finance leases | $ | 921 | | | $ | 934 | |
| Operating cash flows from finance leases | $ | 245 | | | $ | 257 | |
| Operating cash flows from operating leases | $ | 8,147 | | | $ | 9,670 | |
Note 11. Lease Assets and Obligations (continued)
Supplemental balance sheet information related to leases is as follows.
| | | | | | | | | | | |
| September 30,
2024 | | December 31,
2023 |
| Finance leases: | | | |
| Property and equipment, net | $ | 3,202 | | | $ | 3,574 | |
Weighted-average lease terms and discount rates are as follows.
| | | | | |
| September 30,
2024 |
| Weighted-average remaining lease terms: | |
| Finance leases | 4.47 years |
| Operating leases | 6.06 years |
| |
| Weighted-average discount rates: | |
| Finance leases | 7.0 | % |
| Operating leases | 7.0 | % |
Maturities of lease liabilities as of September 30, 2024 are as follows.
| | | | | | | | | | | | | | |
| Year | | Operating
Leases | | Finance
Leases |
| Remainder of 2024 | | $ | 2,878 | | | $ | 378 | |
| 2025 | | 10,220 | | | 1,486 | |
| 2026 | | 7,865 | | | 1,163 | |
| 2027 | | 5,580 | | | 828 | |
| 2028 | | 4,761 | | | 437 | |
| After 2028 | | 12,637 | | | 729 | |
| Total lease payments | | 43,941 | | | 5,021 | |
| Less interest | | 7,915 | | | 719 | |
| Total lease liabilities | | $ | 36,026 | | | $ | 4,302 | |
Lease Income
The components of lease income recorded in restaurant operations are as follows.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Third Quarter | | First Nine Months | | |
| 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Operating lease income | $ | 4,284 | | | $ | 4,085 | | | $ | 12,701 | | | $ | 12,214 | | | | | |
| Variable lease income | 1,761 | | | 1,840 | | | 5,384 | | | 5,545 | | | | | |
| Total lease income | $ | 6,045 | | | $ | 5,925 | | | $ | 18,085 | | | $ | 17,759 | | | | | |
Note 11. Lease Assets and Obligations (continued)
The following table displays the Company’s future minimum rental receipts for non-cancelable leases and subleases as of September 30, 2024. Franchise partner leases and subleases are short-term leases and have been excluded from the table.
| | | | | | | | | | | | | | |
| | Operating Leases |
| Year | | Subleases | | Owned Properties |
| Remainder of 2024 | | $ | 165 | | | $ | 99 | |
| 2025 | | 622 | | | 404 | |
| 2026 | | 225 | | | 407 | |
| 2027 | | 206 | | | 415 | |
| 2028 | | 86 | | | 424 | |
| After 2028 | | — | | | 2,435 | |
| Total future minimum receipts | | $ | 1,304 | | | $ | 4,184 | |
| | | | |
Note 12. Income Taxes
In determining the quarterly provision for income taxes, the Company used an estimated annual effective tax rate for the first nine months of 2024 and 2023. 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 expense for the third quarter of 2024 was $11,201 compared to an income tax benefit of $17,502 for the third quarter of 2023. Income tax expense for the first nine months of 2024 was $3,292 compared to an income tax expense of $3,254 for the first nine months of 2023. The variance in income taxes between 2024 and 2023 is attributable to taxes on income generated by the investment partnerships.
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.
Note 14. Fair Value of Financial Assets (continued)
•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 are classified as Level l of the fair value hierarchy.
As of September 30, 2024 and December 31, 2023, the fair values of financial assets were as follows.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2024 | | December 31, 2023 |
| Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
| Assets | | | | | | | | | | | | | | | |
| Cash equivalents | $ | 9,741 | | | $ | — | | | $ | — | | | $ | 9,741 | | | $ | 2,374 | | | $ | — | | | $ | — | | | $ | 2,374 | |
| Equity securities | | | | | | | | | | | | | | | |
| Consumer goods | 43,826 | | | — | | | — | | | 43,826 | | | 26,660 | | | — | | | — | | | 26,660 | |
| Other | 4,962 | | | — | | | — | | | 4,962 | | | 3,171 | | | — | | | — | | | 3,171 | |
| Bonds | | | | | | | | | | | | | | | |
| Government | 53,995 | | | — | | | — | | | 53,995 | | | 61,536 | | | — | | | — | | | 61,536 | |
| Corporate | 795 | | | — | | | — | | | 795 | | | 3,199 | | | — | | | — | | | 3,199 | |
| Total assets at fair value | $ | 113,319 | | | $ | — | | | $ | — | | | $ | 113,319 | | | $ | 96,940 | | | $ | — | | | $ | — | | | $ | 96,940 | |
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 $7,200 in service fees during the first nine months of 2024 and $6,300 during the first nine months of 2023. 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. The Company accrued $2,050 in incentive fees in the first nine months of 2024 and $3,700 in the first nine months of 2023.
Note 16. Business Segment Reporting
Our reportable business segments are organized in a manner that reflects how management views those business activities. Our restaurant operations include Steak n Shake and Western Sizzlin. Our insurance operations include First Guard and Southern Pioneer. 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 in corporate. 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.
A disaggregation of our consolidated data for the third quarters and first nine months of 2024 and 2023 is presented in the tables which follow.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Revenues |
| Third Quarter | | First Nine Months | | |
| 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Operating Businesses: | | | | | | | | | | | |
| Restaurant Operations: | | | | | | | | | | | |
| Steak n Shake | $ | 59,821 | | | $ | 59,180 | | | $ | 180,886 | | | $ | 179,244 | | | | | |
| Western Sizzlin | 2,563 | | | 2,706 | | | 7,969 | | | 8,262 | | | | | |
| Total Restaurant Operations | 62,384 | | | 61,886 | | | 188,855 | | | 187,506 | | | | | |
| | | | | | | | | | | |
| Insurance Operations: | | | | | | | | | | | |
| Underwriting | | | | | | | | | | | |
| First Guard | 9,394 | | | 9,351 | | | 28,198 | | | 27,465 | | | | | |
| Southern Pioneer | 7,281 | | | 5,809 | | | 20,690 | | | 18,430 | | | | | |
| Investment income and other | 1,572 | | | 1,464 | | | 4,786 | | | 4,505 | | | | | |
| Total Insurance Operations | 18,247 | | | 16,624 | | | 53,674 | | | 50,400 | | | | | |
| | | | | | | | | | | |
| Oil and Gas Operations: | | | | | | | | | | | |
| Abraxas Petroleum | 6,019 | | | 8,310 | | | 16,879 | | | 21,493 | | | | | |
| Southern Oil | 3,555 | | | 3,849 | | | 10,876 | | | 13,630 | | | | | |
| Total Oil and Gas Operations | 9,574 | | | 12,159 | | | 27,755 | | | 35,123 | | | | | |
| | | | | | | | | | | |
| Maxim | 202 | | | 268 | | | 715 | | | 1,624 | | | | | |
| $ | 90,407 | | | $ | 90,937 | | | $ | 270,999 | | | $ | 274,653 | | | | | |
Note 16. Business Segment Reporting (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Earnings (Losses) Before Income Taxes |
| | Third Quarter | | First Nine Months | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Operating Businesses: | | | | | | | | | | | |
| Restaurant Operations: | | | | | | | | | | | |
| Steak n Shake | $ | 6,248 | | | $ | 3,358 | | | $ | 15,994 | | | $ | 19,317 | | | | | |
| Western Sizzlin | 265 | | | 397 | | | 1,162 | | | 1,462 | | | | | |
| Total Restaurant Operations | 6,513 | | | 3,755 | | | 17,156 | | | 20,779 | | | | | |
| | | | | | | | | | | |
| Insurance Operations: | | | | | | | | | | | |
| Underwriting: | | | | | | | | | | | |
| First Guard | 1,366 | | | 2,362 | | | 3,497 | | | 7,378 | | | | | |
| Southern Pioneer | 912 | | | (166) | | | 186 | | | (728) | | | | | |
| Investment income and other | 845 | | | 1,155 | | | 3,536 | | | 3,456 | | | | | |
| Total Insurance Operations | 3,123 | | | 3,351 | | | 7,219 | | | 10,106 | | | | | |
| | | | | | | | | | | |
| Oil and Gas Operations: | | | | | | | | | | | |
| Abraxas Petroleum | 696 | | | 17,990 | | | 19,497 | | | 21,044 | | | | | |
| Southern Oil | 16 | | | 963 | | | 32 | | | 2,902 | | | | | |
| Total Oil and Gas Operations | 712 | | | 18,953 | | | 19,529 | | | 23,946 | | | | | |
| | | | | | | | | | | |
| Maxim | (267) | | | (239) | | | (876) | | | 91 | | | | | |
| Interest expense not allocated to segments | (275) | | | (262) | | | (317) | | | (469) | | | | | |
| Total Operating Businesses | 9,806 | | | 25,558 | | | 42,711 | | | 54,453 | | | | | |
| | | | | | | | | | | |
| Goodwill impairment | — | | | — | | | (1,000) | | | — | | | | | |
| Corporate and other | (6,534) | | | (5,260) | | | (13,038) | | | (15,069) | | | | | |
| Investment gains (losses) | 4,740 | | | (4,715) | | | 3,724 | | | (724) | | | | | |
| Investment partnership gains (losses) | 35,314 | | | (89,599) | | | (22,591) | | | (24,507) | | | | | |
| | $ | 43,326 | | | $ | (74,016) | | | $ | 9,806 | | | $ | 14,153 | | | | | |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except per share data)
Overview
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. 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 September 30, 2024, Mr. Biglari beneficially owns shares of the Company that represent approximately 71.5% of the voting interest.
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders are disaggregated in the table that follows. Amounts are recorded after deducting income taxes.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Third Quarter | | First Nine Months | | |
| | 2024 | | 2023 | | 2024 | | 2023 | | | | |
| Operating businesses: | | | | | | | | | | | |
| Restaurant | $ | 4,870 | | | $ | 3,395 | | | $ | 12,587 | | | $ | 16,170 | | | | | |
| Insurance | 2,455 | | | 2,674 | | | 5,647 | | | 7,975 | | | | | |
| Oil and gas | 599 | | | 14,631 | | | 15,117 | | | 18,451 | | | | | |
| Brand licensing |