Biglari Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
BH$322.43-2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001726173-24-000035
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001726173-24-000041
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 81 previous paragraphs and 80 current paragraphs.
54 unchanged; 23 reworded; 3 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
First Guard produced an underwriting gain in the third quarter and first nine months of 2024. Its underwriting profitability declined in 2024 as compared to 2023 because of a higher ratio of losses and loss adjustment expenses to premiums earned. Our periodic underwriting earnings are subject to considerable volatility from significant weather-related loss events. It is the nature of the insurance business to experience volatility in underwriting performance.
Current report
Cash from operating activities decreased in 2024 as compared to 2023 primarily because of lower net earnings in restaurants and oil and gas of $3,583 and $3,334, respectively.
Current report
Cash from financing activities during 2024 was relatively consistent with 2023.
Removed paragraphs (4)
Previous report
First Guard produced an underwriting gain in the second quarter and first six months of 2024, despite having a higher ratio of losses and loss adjustment expenses to premiums earned (64.9% in the second quarter and 68.8% in the first six months) than it had in 2023 (46.2% in the second quarter and 52.4% in the first six months).
Previous report
We acquired Maxim with the idea of transforming its business model. The magazine developed the Maxim brand, a franchise we are utilizing to generate nonmagazine revenue, notably through licensing, a cash-generating business related to consumer products, services, and events.
Previous report
In 2024, cash from operating activities decreased by $10,608 as compared to 2023. The change was primarily attributable to a decrease in cash flows from Steak n Shake’s operations.
Previous report
Cash used in financing activities decreased during 2024 by $6,787 as compared to 2023 primarily due to principal payments on the Company’s line of credit in 2023.
Reworded paragraphs (23)
Previous wording
Our restaurant businesses, which include Steak n Shake and Western Sizzlin, comprise 477 company-operated and franchise restaurants as of June 30, 2024.
Current wording
Our restaurant businesses, which include Steak n Shake and Western Sizzlin, comprise 468 company-operated and franchise restaurants as of September 30, 2024.
Previous wording
As of June 30, 2024, 15 of the 142 company-operated Steak n Shake stores were closed. Steak n Shake plans to sell or lease 8 of the 15 locations and refranchise the balance.
Current wording
As of September 30, 2024, 11 of the 143 company-operated Steak n Shake stores were closed. Steak n Shake plans to sell or lease 6 of the 11 locations and refranchise the balance.
Previous wording
Net sales for the second quarter and first six months of 2024 were $40,815 and $79,550, respectively, representing an increase of $1,291 or 3.3% and $3,132 or 4.1%, compared to the second quarter and first six months of 2023, respectively. The increase in net sales was primarily due to an increase in Steak n Shake’s same-store sales of 7.0% during the second quarter of 2024.
Current wording
Net sales for the third quarter and first nine months of 2024 were $39,660 and $119,210, respectively, representing an increase of $465 or 1.2% and $3,597 or 3.1%, compared to the third quarter and first nine months of 2023, respectively. The increase in net sales was primarily due to an increase in Steak n Shake’s same-store sales of 5.4% during the third quarter of 2024.
Previous wording
Our franchise partner fees were $18,149 during the second quarter of 2024, as compared to $19,070 during the second quarter of 2023. Franchise partner fees were $35,907 and $36,982 during the first six months of 2024 and 2023, respectively. As of June 30, 2024 and June 30, 2023, there were 182 and 177 franchise partner units, respectively. Included in franchise partner fees were $5,780 and $5,763 of rental income during the second quarter of 2024 and 2023, respectively, and $11,485 and $11,338 during the first six months of 2024 and 2023, respectively. Franchise partners rent buildings and equipment from Steak n Shake. Our share of franchise partner fees was lower primarily because our franchise partners’ food and labor expenses were higher during the first six months of 2024 as compared to the first six months of 2023.
Current wording
Our franchise partner fees were $17,157 during the third quarter of 2024, as compared to $17,622 during the third quarter of 2023. Franchise partner fees were $53,064 and $54,604 during the first nine months of 2024 and 2023, respectively. As of September 30, 2024 and September 30, 2023, there were 177 and 181 franchise partner units, respectively. Included in franchise partner fees were $5,780 and $5,692 of rental income during the third quarter of 2024 and 2023, respectively, and $17,265 and $17,030 during the first nine months of 2024 and 2023, respectively. Franchise partners rent buildings and equipment from Steak n Shake. Our share of franchise partner fees was lower primarily because our franchise partners’ food and labor expenses were higher during the first nine months of 2024 as compared to the first nine months of 2023.
Previous wording
The franchise royalties and fees generated by the traditional franchising business were $3,615 during the second quarter of 2024, as compared to $4,125 during the second quarter of 2023. Franchise royalties and fees during the first six months of 2024 were $7,092 as compared to $8,383 during the first six months of 2023. There were 120 Steak n Shake traditional units open on June 30, 2024, as compared to 138 units open on June 30, 2023. The decrease in franchise royalties and fees was primarily due to fewer traditional units open during 2024.
Current wording
The franchise royalties and fees generated by the traditional franchising business were $3,442 during the third quarter of 2024, as compared to $4,073 during the third quarter of 2023. Franchise royalties and fees during the first nine months of 2024 were $10,534 as compared to $12,456 during the first nine months of 2023. There were 116 Steak n Shake traditional units open on September 30, 2024, as compared to 134 units open on September 30, 2023. The decrease in franchise royalties and fees was primarily due to fewer traditional units open during 2024.
Previous wording
The cost of food at company-operated units during the second quarter of 2024 was $12,357 or 30.3% of net sales, as compared to $11,702 or 29.6% of net sales during the second quarter of 2023. The cost of food at company-operated units during the first six months of 2024 was $23,331 or 29.3% of net sales, as compared to $22,150 or 29.0% of net sales during the first six months of 2023. Cost of food expressed as a percentage of net sales remained relatively consistent.
Current wording
The cost of food at company-operated units during the third quarter of 2024 was $12,218 or 30.8% of net sales, as compared to $11,888 or 30.3% of net sales during the third quarter of 2023. The cost of food at company-operated units during the first nine months of 2024 was $35,549 or 29.8% of net sales, as compared to $34,038 or 29.4% of net sales during the first nine months of 2023. Cost of food expressed as a percentage of net sales remained relatively consistent.
Previous wording
Labor costs at company-operated restaurants during the second quarter of 2024 were $12,992 or 31.8% of net sales, as compared to $12,175 or 30.8% of net sales in the second quarter of 2023. Labor costs at company-operated restaurants during the first six months of 2024 were $25,536 or 32.1% of net sales, as compared to $23,885 or 31.3% of net sales in 2023. Labor costs expressed as a percentage of net sales increased during 2024 compared to 2023 primarily due to an increase in store level managers in Steak n Shake company-operated restaurants.
Current wording
Labor costs at company-operated restaurants during the third quarter of 2024 were $13,158 or 33.2% of net sales, as compared to $12,192 or 31.1% of net sales in the third quarter of 2023. Labor costs at company-operated restaurants during the first nine months of 2024 were $38,694 or 32.5% of net sales, as compared to $36,077 or 31.2% of net sales in 2023. Labor costs expressed as a percentage of net sales increased during 2024 compared to 2023 primarily due to an increase in store level managers in Steak n Shake company-operated restaurants.
Previous wording
General and administrative expenses during the second quarter of 2024 were $13,016 or 20.2% of total revenue, as compared to $10,790 or 16.7% of total revenue in the second quarter of 2023. General and administrative expenses during the first six months of 2024 were $24,746 or 19.6% of total revenue, as compared to $21,253 or 16.9% of total revenue in the first six months of 2023. The increase in general and administrative expenses was mainly attributable to higher personnel costs at Steak n Shake.
Current wording
General and administrative expenses during the third quarter of 2024 were $10,355 or 16.6% of total revenue, as compared to $10,720 or 17.3% of total revenue in the third quarter of 2023. General and administrative expenses during the first nine months of 2024 were $35,101 or 18.6% of total revenue, as compared to $31,973 or 17.1% of total revenue in the first nine months of 2023. The increase in general and administrative expenses was mainly attributable to higher personnel costs at Steak n Shake.
Previous wording
The Company recorded $853 of impairment charges in the second quarter of 2023 and $107 and $1,629 in the first six months of 2024 and 2023, respectively, related to underperforming stores.
Current wording
The Company recorded no impairment charges in the third quarter of 2024 and $752 of impairment charges in the third quarter of 2023. The Company recorded impairment charges of $107 and $2,381 in the first nine months of 2024 and 2023, respectively, related to underperforming stores.
Previous wording
Interest on obligations under leases was $2,663 during 2024 versus $2,608 during 2023.
Current wording
Interest on obligations under leases was $4,016 during 2024 versus $3,870 during 2023.
Previous wording
Other income was $2,442 during 2024 versus $4,301 during 2023. During 2024, Western Sizzlin received a settlement of $450. During 2024, Steak n Shake sold three properties for a gain of $1,957 and sold four properties for a gain of $4,414 during 2023.
Current wording
Other income was $4,420 during 2024 versus $5,126 during 2023. During 2024, Western Sizzlin received a settlement of $450. During 2024, Steak n Shake sold five properties for a gain of $4,383 and sold six properties for a gain of $5,253 during 2023.
Previous wording
We view our insurance businesses as possessing two activities: underwriting and investing. Underwriting decisions are the responsibility of the unit managers, whereas investing decisions are the responsibility of our Chairman and CEO, Sardar Biglari. Our business units are operated under separate local management. Biglari Holdings’ insurance operations consist of First Guard and Southern Pioneer.
Current wording
We view our insurance businesses as possessing two activities: underwriting and investing. Underwriting decisions are the responsibility of the unit managers, whereas investing decisions are the responsibility of our Chairman and CEO, Sardar Biglari. Our business units are operated under separate local management. Biglari Holdings’ insurance operations consist of Biglari Reinsurance, First Guard, and Southern Pioneer.
Previous wording
Southern Pioneer’s ratio of losses and loss adjustment expenses to premiums earned was 70.6% during the second quarter of 2024 as compared to 61.0% during the second quarter of 2023 and 66.4% during the first six months of 2024 as compared to 59.2% during the first six months of 2023.
Current wording
Premiums written increased $1,817 (9.0%) in 2024 compared to 2023. Southern Pioneer’s ratio of losses and loss adjustment expenses to premiums earned was 47.9% during the third quarter of 2024 as compared to 60.5% during the third quarter of 2023 and 59.9% during the first nine months of 2024 as compared to 59.6% during the first nine months of 2023.
Previous wording
Our oil and gas business is highly dependent on oil and natural gas prices. The lower natural gas prices and lower production during 2024 caused decreases in revenues and production costs. Production decreases were primarily because several gas wells were shut-in along with the natural depletion of oil and gas reserves.
Current wording
Our oil and gas business is highly dependent on oil and natural gas prices. The lower natural gas prices and lower production during 2024 caused decreases in revenues. Production decreases were primarily because several gas wells were shut-in along with the natural depletion of oil and gas reserves.
Previous wording
During the first six months of 2024, Abraxas Petroleum recorded a gain of $16,646 as a result of selling undeveloped reserves to an unaffiliated party whose aim is to conduct development activities; however, Abraxas Petroleum will not be required to fund any exploration expenditures on its undeveloped properties. During the third quarter of 2023, Abraxas Petroleum entered into a similar royalty-based arrangement on its undeveloped properties.
Current wording
During the first nine months of 2024, Abraxas Petroleum recorded a gain of $16,700 as a result of selling undeveloped reserves to an unaffiliated party whose aim is to conduct development activities; however, Abraxas Petroleum will not be required to fund any exploration expenditures on its undeveloped properties. During the third quarter of 2023, Abraxas Petroleum entered into a similar royalty-based arrangement on its undeveloped properties, which began producing in the third quarter of 2024.
Previous wording
Licensing revenue was lower during 2024 as compared to 2023 primarily due to fewer licensing events in the first six months of 2024.
Current wording
Licensing revenue was lower during 2024 as compared to 2023 primarily due to fewer licensing events in the first nine months of 2024.
Previous wording
Investment losses net of tax for the second quarter of 2024 were $2,159 as compared to investment gains net of tax for the second quarter of 2023 of $276. Investment losses net of tax for the first six months of 2024 were $827 as compared to investment gains net of tax for the first six months of 2023 of $3,141. Dividends 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.
Current wording
Investment gains net of tax for the third quarter of 2024 were $3,706 as compared to investment losses net of tax for the third quarter of 2023 of $3,710. Investment gains net of tax for the first nine months of 2024 were $2,879 as compared to investment losses net of tax for the first nine months of 2023 of $569. Dividends 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.
Previous wording
On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000. There was no balance on the line of credit on June 30, 2024, or December 31, 2023.
Current wording
Biglari Holdings’ line of credit dated September 13, 2022 was amended on September 13, 2024 and the available line of credit was increased to an aggregate principal amount of up to $35,000. 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.
Previous wording
Corporate expenses exclude the activities of the restaurant, insurance, brand licensing, and oil and gas businesses. Corporate and other net losses during the second quarter and first six months of 2024 decreased as compared to the same periods in 2023 because of lower incentive fees accrued.
Current wording
Corporate expenses exclude the activities of the restaurant, insurance, brand licensing, and oil and gas businesses. Corporate and other net losses during the third quarter of 2024 increased as compared to the same period in 2023 because of higher legal and professional expenses. Corporate and other net losses during the first nine months of 2024 decreased as compared to the same period in 2023 primarily due to lower incentive fees accrued.
Previous wording
Income tax benefit for the second quarter of 2024 was $14,725 compared to income tax expense of $1,018 for the second quarter of 2023. Income tax benefit for the first six months of 2024 was $7,909 compared to income tax expense of $20,756 for the first six months of 2023. The variance in income taxes between 2024 and 2023 is attributable to taxes on income generated by the investment partnerships. Investment partnership pre-tax losses were $79,890 during the second quarter of 2024 compared to pre-tax losses of $7,496 during the second quarter of 2023. Investment partnership pre-tax losses were $57,905 during the first six months of 2024 compared to pre-tax gains of $65,092 during the first six months of 2023.
Current wording
Income tax expense for the third quarter of 2024 was $11,201 compared to 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 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.
Previous wording
Cash used in investing activities decreased during 2024 by $8,888 as compared to 2023 primarily due to an increase in proceeds from property and equipment disposals.
Current wording
Cash used in investing activities decreased during 2024 by $21,310 as compared to 2023 primarily due to a decrease in investments.
Previous wording
Biglari Holdings line of credit is $30,000. The line of credit matures on September 12, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants. As of June 30, 2024, we were in compliance with all covenants. There was no balance on the line of credit on June 30, 2024, or December 31, 2023.
Current wording
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. As of September 30, 2024, we were in compliance with all 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.
Previous wording
Western Sizzlin’s available line of credit is $500. As of June 30, 2024, Western Sizzlin had a balance of $50 under its revolver. As of December 31, 2023, there was no debt outstanding under its revolver.
Current wording
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.