Form 10-Q: Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Biglari Holdings Inc. reported its quarterly financial results for the period ended March 31, 2025. The company’s consolidated balance sheet showed total assets of $[amount] and total liabilities of $[amount], resulting in a net worth of $[amount]. The consolidated statements of earnings reported net income of $[amount] for the quarter, compared to $[amount] for the same period last year. The company’s cash flows from operations were $[amount], and its cash and cash equivalents totaled $[amount]. The report also includes notes to the consolidated financial statements, management’s discussion and analysis of financial condition and results of operations, and other information.
Overview of Biglari Holdings’ Financial Performance
Biglari Holdings Inc. is a diversified holding company with businesses in areas like insurance, restaurants, oil and gas, and brand licensing. The company is led by Chairman and CEO Sardar Biglari, who owns about 74% of the voting shares.
In the first quarter of 2025, Biglari Holdings reported a net loss of $33.3 million, compared to net earnings of $22.6 million in the same period of 2024. This swing was largely driven by significant losses from the company’s investment partnerships, which recorded a $49.6 million pre-tax loss in Q1 2025 compared to a $22 million pre-tax gain in Q1 2024.
The company’s operating businesses, which include restaurants, insurance, oil and gas, and brand licensing, generated $7.4 million in net earnings in Q1 2025, up from $4.1 million in the prior year period. This improvement was led by the oil and gas segment, which saw its earnings increase from $1.1 million to $8.3 million.
However, the restaurant division, which includes the Steak n Shake and Western Sizzlin chains, saw its contribution to net earnings decline from $3.5 million to $2.2 million. This was primarily due to higher food and labor costs at the company-operated Steak n Shake locations.
Segment Performance Breakdown
Restaurants Biglari Holdings’ restaurant operations consist of 454 Steak n Shake and Western Sizzlin locations as of March 31, 2025, down from 485 a year earlier. The company has been transitioning Steak n Shake from a company-operated to a franchise model, with the number of franchise partner units declining from 178 to 172 over the past year.
Total restaurant revenue increased 3.8% to $64.3 million in Q1 2025, driven by a 3.9% increase in same-store sales at Steak n Shake. However, the cost of food, labor, and other expenses rose at a faster pace, leading to a 28.5% decline in restaurant earnings before taxes to $3.3 million.
The company noted that the transition to more franchise locations will reduce overall revenue, as Biglari only records its share of franchise profits rather than the full sales at company-operated stores. But the franchise model is expected to improve profitability over time.
Insurance Biglari’s insurance operations, which include First Guard, Southern Pioneer, and Biglari Reinsurance, generated $1.2 million in net underwriting gains in Q1 2025, down from $1.7 million a year earlier. Investment income from the insurance float contributed an additional $0.8 million to pre-tax earnings.
First Guard, which sells commercial truck insurance, saw its underwriting gain increase by $415,000 year-over-year. However, Southern Pioneer, which underwrites property and liability coverage, swung to a $502,000 underwriting loss in Q1 2025 compared to a $59,000 gain in the prior year period.
The insurance segment remains a steady contributor to Biglari’s overall profitability, though its results can be volatile from quarter to quarter based on underwriting performance and investment returns.
Oil and Gas Biglari’s oil and gas operations, which are primarily conducted through its Abraxas Petroleum and Southern Oil subsidiaries, saw a significant increase in earnings in Q1 2025. Pre-tax earnings jumped from $1.5 million to $10.6 million, driven by a $9.3 million gain on the sale of undeveloped oil and gas properties.
Revenues from oil and gas production rose 4.4% to $9.9 million, while production costs and depreciation expenses remained relatively flat. The segment benefited from higher realized prices for crude oil and natural gas compared to the prior year period.
Going forward, the profitability of Biglari’s oil and gas business will continue to be highly dependent on commodity price fluctuations, which can be volatile. The company may also need to record impairments if prolonged price declines occur.
Brand Licensing Biglari’s brand licensing and media segment, which includes the Maxim brand, reported a $267,000 net loss in Q1 2025, compared to a $265,000 loss a year earlier. Revenues increased from $212,000 to $1.4 million, but higher licensing and media costs offset the top-line growth.
This segment remains a small part of Biglari’s overall business, contributing less than 2% of total revenue. The company is still working to develop new licensing and media opportunities to grow this division.
Analysis of Strengths and Weaknesses
A key strength of Biglari Holdings is the diversification of its business operations across multiple industries. This helps mitigate risk and provides some stability, as strong performance in one segment can offset weakness in another. The insurance and oil and gas divisions, in particular, have been reliable contributors to the company’s profitability.
However, Biglari’s heavy reliance on investment partnership gains and losses introduces significant volatility into its financial results. The $49.6 million pre-tax loss from investments in Q1 2025 swung the company to an overall net loss, despite solid operating performance in many of its business units.
Another potential weakness is the ongoing challenges in the restaurant segment, where rising costs have pressured margins at the company-operated Steak n Shake locations. The transition to a more franchise-focused model may help improve profitability, but execution risks remain.
Biglari’s concentrated ownership structure, with Chairman Biglari controlling about 74% of the voting shares, also raises corporate governance concerns for some investors. Major strategic and capital allocation decisions rest solely with the CEO, which could lead to risks if his judgment proves flawed.
Outlook and Future Prospects
Looking ahead, Biglari Holdings’ future performance will depend on several key factors:
Successful execution of the restaurant segment’s transition to a franchise model, which could improve profitability if the company can maintain sales while lowering costs.
Continued strong underwriting results and investment income from the insurance operations, which have been a reliable source of earnings.
Stability or growth in the oil and gas business, which relies heavily on volatile commodity prices that are difficult to predict.
The ability of the brand licensing division to develop new revenue streams and improve its financial contribution.
The performance of Biglari’s investment partnerships, which have been a major wild card impacting overall profitability.
Given the company’s diversified business mix and Sardar Biglari’s track record, Biglari Holdings appears positioned to weather near-term challenges. However, the outsized influence of investment partnership results and the CEO’s concentrated control remain potential long-term risks that shareholders should monitor closely.
Overall, Biglari Holdings’ financial report demonstrates the company’s ability to generate solid operating earnings, but also highlights the volatility that can arise from its investment activities and corporate structure. Navigating these dynamics will be crucial for the company’s future success.
