BH 10-Q Quarterly Report March 31, 2023 | Alphaminr
Biglari Holdings Inc.
ALPHAMINR

BH 10-Q Quarter ended March 31, 2023

Balance Sheet
Cash Flow
Income Statement
Debt
BIGLARI HOLDINGS INC.
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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 March 31, 2023
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 May 3, 2023:
Class A common stock – 206,864
Class B common stock – 2,068,640

BIGLARI HOLDINGS INC.
INDEX
Page No.


PART 1 – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIGLARI HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
March 31,
2023 		December 31,
2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 39,363 $ 37,467
Investments 79,652 69,466
Receivables 27,044 29,375
Inventories 3,755 3,851
Other current assets 13,542 10,495
Total current assets 163,356 150,654
Property and equipment 392,904 400,725
Operating lease assets 33,532 34,739
Goodwill and other intangible assets 76,672 76,550
Investment partnerships 230,843 155,794
Other assets 9,911 10,012
Total assets $ 907,218 $ 828,474
Liabilities and shareholders’ equity
Liabilities
Current liabilities:
Accounts payable and accrued expenses $ 79,244 $ 78,616
Unpaid losses and loss adjustment expenses 15,514 16,805
Unearned premiums 13,445 12,495
Current portion of lease obligations 16,109 16,981
Line of credit 6,500 10,000
Total current liabilities 130,812 134,897
Lease obligations 90,135 91,844
Deferred taxes 49,809 31,343
Asset retirement obligations 14,240 14,068
Other liabilities 1,024 754
Total liabilities 286,020 272,906
Shareholders’ equity
Common stock 1,138 1,138
Additional paid-in capital 381,788 381,788
Retained earnings 641,396 576,510
Accumulated other comprehensive loss ( 2,458 ) ( 2,790 )
Treasury stock, at cost ( 409,919 ) ( 409,680 )
Biglari Holdings Inc. shareholders’ equity 611,945 546,966
Noncontrolling interests 9,253 8,602
Total shareholders’ equity 621,198 555,568
Total liabilities and shareholders’ equity $ 907,218 $ 828,474
See accompanying Notes to Consolidated Financial Statements.
1
BIGLARI HOLDINGS INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in thousands except per share amounts)
First Quarter
2023 2022
(Unaudited)
Revenues
Restaurant operations $ 61,129 $ 59,847
Insurance premiums and other 16,229 15,079
Oil and gas 12,223 9,812
Licensing and media 595 634
Total revenues 90,176 85,372
Costs and expenses
Restaurant cost of sales 32,738 35,352
Insurance losses and underwriting expenses 13,013 13,774
Oil and gas production costs 5,471 3,819
Licensing and media costs 452 953
Selling, general and administrative 17,263 16,224
Impairments 776 —
Depreciation, depletion, and amortization 9,940 7,871
Interest expense on leases 1,307 1,412
Interest expense on borrowings 167 —
Total costs and expenses 81,127 79,405
Other income
Investment gains 3,638 225
Investment partnership gains (losses) 72,588 ( 6,661 )
Total other income (expenses) 76,226 ( 6,436 )
Earnings (loss) before income taxes 85,275 ( 469 )
Income tax expense (benefit) 19,738 ( 171 )
Net earnings (loss) 65,537 ( 298 )
Earnings attributable to noncontrolling interest 651 —
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders $ 64,886 $ ( 298 )
Net earnings (loss) per average equivalent Class A share* $ 222.28 $ ( 0.98 )
* Net earnings (loss) per average equivalent Class B share outstanding are one-fifth of the average equivalent Class A share or $ 44.46 for the first quarter of 2023 and $( 0.20 ) for the first quarter of 2022.
See accompanying Notes to Consolidated Financial Statements.

2
BIGLARI HOLDINGS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in thousands)
First Quarter
2023 2022
(Unaudited)
Net earnings (loss) $ 65,537 $ ( 298 )
Foreign currency translation 332 ( 231 )
Comprehensive income (loss) 65,869 ( 529 )
Comprehensive income attributable to noncontrolling interest 651 —
Total comprehensive income (loss) attributable to Biglari Holdings Inc. shareholders $ 65,218 $ ( 529 )

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(dollars in thousands)
(Unaudited)

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 first quarter 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

For the first quarter of 2022
Balance at December 31, 2021 $ 1,138 $ 381,788 $ 608,528 $ ( 1,907 ) $ ( 401,851 ) $ — $ 587,696
Net earnings (loss) ( 298 ) ( 298 )
Other comprehensive loss ( 231 ) ( 231 )
Adjustment for holdings in investment partnerships 130 130
Balance at March 31, 2022 $ 1,138 $ 381,788 $ 608,230 $ ( 2,138 ) $ ( 401,721 ) $ — $ 587,297
See accompanying Notes to Consolidated Financial Statements.
3
BIGLARI HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
First Quarter
2023 2022
(Unaudited)
Operating activities
Net earnings (loss) $ 65,537 $ ( 298 )
Adjustments to reconcile net earnings (loss) to operating cash flows:
Depreciation, depletion, and amortization 9,940 7,871
Provision for deferred income taxes 18,450 ( 4,750 )
Asset impairments 776 —
Gains on sale of assets ( 1,590 ) ( 133 )
Investment and investment partnerships (gains) losses ( 76,226 ) 6,436
Distributions from investment partnerships — 4,500
Changes in receivables, inventories and other assets 2,006 4,633
Changes in accounts payable and accrued expenses 1,030 2,833
Net cash provided by operating activities 19,923 21,092
Investing activities
Capital expenditures ( 5,929 ) ( 9,293 )
Proceeds from property and equipment disposals 2,140 109
Purchases of interests in limited partnerships ( 2,700 ) ( 3,000 )
Purchases of investments ( 27,255 ) ( 50,086 )
Sales of investments and redemptions of fixed maturity securities 21,009 46,193
Net cash used in investing activities ( 12,735 ) ( 16,077 )
Financing activities
Repayments of borrowings ( 3,500 ) —
Principal payments on direct financing lease obligations ( 1,550 ) ( 1,564 )
Net cash used in financing activities ( 5,050 ) ( 1,564 )
Effects of foreign currency exchange rate changes 8 ( 23 )
Increase in cash, cash equivalents and restricted cash 2,146 3,428
Cash, cash equivalents and restricted cash at beginning of year 38,805 43,687
Cash, cash equivalents and restricted cash at end of first quarter $ 40,951 $ 47,115
First Quarter
2023 2022
(Unaudited)
Cash and cash equivalents $ 39,363 $ 45,777
Restricted cash in other long-term assets 1,588 1,338
Cash, cash equivalents and restricted cash at end of first quarter $ 40,951 $ 47,115
See accompanying Notes to Consolidated Financial Statements.
4
BIGLARI HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(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, 2022.
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 March 31, 2023, Mr. Biglari beneficially owns shares of the Company that represent approximately 66.3 % of the economic interest and approximately 70.4 % of the voting interest.

Business Acquisition
On September 14, 2022, the Company purchased Series A Preferred Stock (the “Preferred Shares”) of Abraxas Petroleum Corporation for a purchase price of $ 80 million. On October 26, 2022, the Company exchanged the Preferred Shares for 90 % of the outstanding common stock of Abraxas Petroleum.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, including Steak n Shake Inc., Western Sizzlin Corporation, First Guard Insurance Company, Maxim Inc., Southern Pioneer Property & Casualty Insurance Company, Southern Oil Company, and Abraxas Petroleum Corporation. 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, 2023 and December 31, 2022.
March 31, 2023 December 31, 2022
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
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, 2023 March 31, 2022
Equivalent Class A common stock outstanding 620,592 620,592
Proportional ownership of Company stock held by investment partnerships 328,681 316,020
Equivalent Class A common stock for earnings per share 291,911 304,572
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 earned on investments are reported as investment income by our insurance companies. We consider investment income as a component of our aggregate insurance operating result. However, we consider investment gains and losses, whether realized or unrealized, as non-operating.

Investment gains for the first quarter of 2023 and 2022 were $ 3,638 and $ 225 , 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.
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, 2022 $ 383,004 $ 227,210 $ 155,794
Investment partnership gains (losses) 121,795 49,207 72,588
Contributions 2,700 2,700
Changes in proportionate share of Company stock held 239 ( 239 )
Partnership interest at March 31, 2023 $ 507,499 $ 276,656 $ 230,843
Fair Value Company
Common Stock 		Carrying Value
Partnership interest at December 31, 2021 $ 474,201 $ 223,802 $ 250,399
Investment partnership gains (losses) ( 909 ) 5,752 ( 6,661 )
Distributions (net of contributions) ( 1,500 ) ( 1,500 )
Changes in proportionate share of Company stock held ( 130 ) 130
Partnership interest at March 31, 2022 $ 471,792 $ 229,424 $ 242,368
6
Note 4. Investment Partnerships (continued)

The carrying value of the investment partnerships net of deferred taxes is presented below.
March 31,
2023 		December 31, 2022
Carrying value of investment partnerships $ 230,843 $ 155,794
Deferred tax liability related to investment partnerships ( 40,410 ) ( 23,643 )
Carrying value of investment partnerships net of deferred taxes $ 190,433 $ 132,151
Because of a transaction that occurred between The Lion Fund, L.P., and The Lion Fund II, L.P., in 2022, we expect that a majority of the $ 40,410 deferred tax liability enumerated above will not become due until the dissolution of the investment partnerships. In effect, the tax-basis cost increased for the common stock of certain unaffiliated securities held by the investment partnerships.
The Company’s proportionate share of Company stock held by investment partnerships at cost was $ 409,919 and $ 409,680 as of March 31, 2023 and December 31, 2022, 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
2023 2022
Gains (losses) from investment partnerships $ 72,588 $ ( 6,661 )
Tax expense (benefit) 16,559 ( 1,860 )
Contribution to net earnings $ 56,029 $ ( 4,801 )
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 2023 and 2022.

7
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, 2023 $ 348,606 $ 415,057
Total liabilities as of March 31, 2023 $ 10,373 $ 173,731
Revenue for the first quarter of 2023 $ 63,558 $ 78,592
Earnings for the first quarter of 2023 $ 63,404 $ 76,341
Biglari Holdings’ ownership interest as of March 31, 2023 88.6 % 86.1 %
Total assets as of December 31, 2022 $ 285,071 $ 330,832
Total liabilities as of December 31, 2022 $ 10,517 $ 167,847
Revenue for the first quarter of 2022 $ 969 $ ( 1,249 )
Earnings for the first quarter of 2022 $ 926 $ ( 1,581 )
Biglari Holdings’ ownership interest as of March 31, 2022 62.5 % 93.9 %
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,
2023 		December 31,
2022
Land $ 139,705 $ 143,313
Buildings 149,081 151,627
Land and leasehold improvements 154,641 151,496
Equipment 215,715 222,661
Oil and gas properties 144,692 144,888
Construction in progress 900 2,238
804,734 816,223
Less accumulated depreciation, depletion, and amortization ( 411,830 ) ( 415,498 )
Property and equipment, net $ 392,904 $ 400,725
Depletion expense related to oil and gas properties was $ 2,648 and $ 1,380 during the first quarter of 2023 and 2022, respectively.
The Company recorded an impairment to restaurant long-lived assets of $ 776 in the first quarter of 2023 related to underperforming stores. There were no impairments in the first quarter of 2022.
Property and equipment held for sale of $ 8,012 and $ 4,700 are recorded in other current assets as of March 31, 2023 and December 31, 2022, respectively. The assets classified as held for sale include seven properties owned by Steak n Shake, which were previously operated restaurants, and Abraxas Petroleum’s office building.
During the first quarter of 2023, Steak n Shake sold the property of a former company-operated restaurant for a gain of $ 1,431 .
8

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, 2022
Goodwill $ 53,813
Accumulated impairment losses ( 300 )
$ 53,513
Change in foreign exchange rates during the first quarter of 2023 9
Goodwill at March 31, 2023
$ 53,522

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 2023 or 2022.
Other Intangible Assets
Intangible assets with indefinite lives are composed of the following.
Trade Names Lease Rights Total
Balance at December 31, 2022
Intangibles $ 15,876 $ 10,889 $ 26,765
Accumulated impairment losses — ( 3,728 ) ( 3,728 )
$ 15,876 $ 7,161 $ 23,037
Change in foreign exchange rates during the first quarter of 2023 — 113 113
Balance at March 31, 2023
$ 15,876 $ 7,274 $ 23,150
Note 7. Restaurant Operations Revenues
Restaurant operations revenues were as follows.
First Quarter
2023 2022
Net sales $ 36,894 $ 38,216
Franchise partner fees 17,912 15,624
Franchise royalties and fees 4,258 5,146
Other 2,065 861
$ 61,129 $ 59,847
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.
9
Note 7. Restaurant Operations Revenues (continued)

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 2023 and 2022, restaurant operations recognized $ 5,575 and $ 4,774 , 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 sells 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 estimates 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.
March 31,
2023 		December 31,
2022
Accounts payable $ 30,932 $ 28,431
Gift card and other marketing 10,640 12,028
Insurance accruals 2,479 6,012
Salaries and wages 6,602 4,400
Deferred revenue 5,835 4,445
Taxes payable 15,500 14,896
Oil and gas payable 4,641 3,877
Other 2,615 4,527
Accounts payable and accrued expenses $ 79,244 $ 78,616

Note 9. Line of Credit and Note Payable
Biglari Holdings Line of Credit
On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $ 30,000 . The line of credit will be available on a revolving basis until September 12, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants. The balance of the line of credit was $ 6,500 and $ 10,000 on March 31, 2023 and December 31, 2022, respectively. Our interest rate was 7.3 % on March 31, 2023. The line of credit was paid in full in April 2023.
Western Sizzlin Revolver
Western Sizzlin’s available line of credit is $ 500 . As of March 31, 2023 and December 31, 2022, Western Sizzlin had no debt outstanding under its revolver.
10
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 three-month periods ending March 31, 2023 and 2022 follows.
2023 2022
Balances at beginning of year:
Gross liabilities $ 17,520 $ 14,993
Reinsurance recoverable on unpaid losses ( 715 ) ( 1,892 )
Net liabilities 16,805 13,101
Incurred losses and loss adjustment expenses:
Current accident year 10,247 9,721
Prior accident years ( 1,651 ) ( 133 )
Total 8,596 9,588
Paid losses and loss adjustment expenses:
Current accident year 4,433 5,577
Prior accident years 5,454 3,977
Total 9,887 9,554
Balances at March 31:
Net liabilities 15,514 13,135
Reinsurance recoverable on unpaid losses 2,207 890
Gross liabilities $ 17,721 $ 14,025
Incurred loss and loss adjustment expenses of $ 8,596 and $ 9,588 in the first quarter of 2023 and 2022, respectively, were recorded in earnings and related to insured events occurring in the current period and events occurring in all prior periods. Incurred and paid loss and loss adjustment expenses are net of reinsurance recoveries. We recorded net reductions of estimated ultimate liabilities for prior accident years of $ 1,651 and $ 133 in the first quarter of 2023 and 2022, 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 9.8 % in 2023 and 1.0 % in 2022.
Note 11. Lease Assets and Obligations
Lease obligations include the following.
Current portion of lease obligations March 31,
2023 		December 31,
2022
Finance lease liabilities $ 1,242 $ 1,237
Finance obligations 5,139 5,161
Operating lease liabilities 9,728 10,583
Total current portion of lease obligations $ 16,109 $ 16,981
Long-term lease obligations
Finance lease liabilities $ 3,779 $ 4,129
Finance obligations 58,428 58,868
Operating lease liabilities 27,928 28,847
Total long-term lease obligations $ 90,135 $ 91,844
11
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
2023 2022
Finance lease costs:
Amortization of right-of-use assets $ 242 $ 363
Interest on lease liabilities 91 115
Operating and variable lease costs 3,167 3,612
Sublease income ( 3,091 ) ( 4,069 )
Total lease costs $ 409 $ 21
Supplemental cash flow information related to leases is as follows.
First Quarter
2023 2022
Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows from finance leases $ 344 $ 421
Operating cash flows from finance leases $ 91 $ 115
Operating cash flows from operating leases $ 3,355 $ 3,067


Supplemental balance sheet information related to leases is as follows.
March 31,
2023 		December 31,
2022
Finance leases:
Property and equipment, net $ 3,656 $ 4,352
Weighted-average lease terms and discount rates are as follows.
March 31,
2023
Weighted-average remaining lease terms:
Finance leases 4.11 years
Operating leases 4.68 years
Weighted-average discount rates:
Finance leases 7.0 %
Operating leases 7.0 %
12
Note 11. Lease Assets and Obligations (continued)
Maturities of lease liabilities as of March 31, 2023 are as follows.
Year Operating
Leases 		Finance
Leases
Remainder of 2023 $ 9,210 $ 1,134
2024 10,228 1,534
2025 8,437 1,298
2026 5,868 959
2027 3,503 623
After 2027 7,028 232
Total lease payments 44,274 5,780
Less interest 6,618 759
Total lease liabilities $ 37,656 $ 5,021
Lease Income
The components of lease income are as follows.
First Quarter
2023 2022
Operating lease income $ 4,085 $ 4,724
Variable lease income 1,784 313
Total lease income $ 5,869 $ 5,037

The following table displays the Company’s future minimum rental receipts for non-cancelable leases and subleases as of March 31, 2023. Franchise partner leases and subleases are short-term leases and have been excluded from the table.

Operating Leases
Year Subleases Owned Properties
Remainder of 2023 $ 520 $ 119
2024 503 265
2025 454 265
2026 134 275
2027 116 275
After 2027 125 2,315
Total future minimum receipts $ 1,852 $ 3,514
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 2023 and 2022. 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 first quarter of 2023 was $ 19,738 compared to an income tax benefit of $ 171 for the first quarter of 2022.  The variance in income taxes between 2023 and 2022 is primarily attributable to taxes on income generated by the investment partnerships.  Investment partnership pre-tax gains were $ 72,588 during the first quarter of 2023 compared to pre-tax losses of $ 6,661 during the first quarter of 2022.
13
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 are classified as Level l of the fair value hierarchy.
Non-qualified deferred compensation plan investments: The assets of the non-qualified plan are set up in a rabbi trust. They represent mutual funds and publicly traded securities, each of which are classified as Level 1 of the fair value hierarchy.
14
Note 14. Fair Value of Financial Assets (continued)
As of March 31, 2023 and December 31, 2022, the fair values of financial assets were as follows.
March 31, 2023 December 31, 2022
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets
Cash equivalents $ 25,209 $ — $ — $ 25,209 $ 17,608 $ — $ — $ 17,608
Equity securities
Consumer goods 22,337 — — 22,337 17,274 — — 17,274
Other 2,555 — — 2,555 2,031 — — 2,031
Bonds
Government 53,663 — — 53,663 48,456 — — 48,456
Corporate 1,603 — — 1,603 2,199 — — 2,199
Non-qualified deferred compensation plan investments 684 — — 684 699 — — 699
Total assets at fair value $ 106,051 $ — $ — $ 106,051 $ 88,267 $ — $ — $ 88,267
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 $ 2,100 in service fees during the first quarters of 2023 and 2022. 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. 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.
15
Note 16. Business Segment Reporting (continued)


A disaggregation of our consolidated data for the first quarters of 2023 and 2022 is presented in the tables which follow.
Revenues
First Quarter
2023 2022
Operating Businesses:
Restaurant Operations:
Steak n Shake $ 58,487 $ 57,753
Western Sizzlin 2,642 2,094
Total Restaurant Operations 61,129 59,847
Insurance Operations:
Underwriting:
First Guard 8,899 8,731
Southern Pioneer 5,865 5,438
Investment income and other 1,465 910
Total Insurance Operations 16,229 15,079
Oil and Gas Operations:
Abraxas Petroleum 7,252 —
Southern Oil 4,971 9,812
Total Oil and Gas Operations 12,223 9,812
Maxim 595 634
$ 90,176 $ 85,372


16
Note 16. Business Segment Reporting (continued)


Earnings (Losses) Before Income Taxes
First Quarter
2023 2022
Operating Businesses:
Restaurant Operations:
Steak n Shake $ 7,325 $ 4,198
Western Sizzlin 472 232
Total Restaurant Operations 7,797 4,430
Insurance Operations:
Underwriting:
First Guard 1,862 732
Southern Pioneer ( 111 ) ( 337 )
Investment income and other 1,036 969
Total Insurance Operations 2,787 1,364
Oil and Gas Operations:
Abraxas Petroleum 1,209 —
Southern Oil 894 3,921
Total Oil and Gas Operations 2,103 3,921
Maxim 122 ( 336 )
Interest expense not allocated to segments ( 167 ) —
Total Operating Businesses 12,642 9,379
Corporate and other ( 3,593 ) ( 3,412 )
Investment gains 3,638 225
Investment partnership gains (losses) 72,588 ( 6,661 )
$ 85,275 $ ( 469 )
17

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 March 31, 2023, Mr. Biglari beneficially owns shares of the Company that represent approximately 66.3% of the economic interest and 70.4% of the voting interest.
On September 14, 2022, the Company purchased Series A Preferred Stock (the “Preferred Shares”) of Abraxas Petroleum Corporation for a purchase price of $80 million. On October 26, 2022, the Company exchanged the Preferred Shares for 90% of the outstanding common stock of Abraxas Petroleum.
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders are disaggregated in the table that follows. Amounts are recorded after deducting income taxes.
First Quarter
2023 2022
Operating businesses:
Restaurant $ 5,840 $ 3,262
Insurance 2,169 1,044
Oil and gas 1,670 2,924
Brand licensing 91 (251)
Interest expense (129) —
Corporate and other (2,998) (2,651)
Total operating businesses 6,643 4,328
Investment partnership gains (losses) 56,029 (4,801)
Investment gains 2,865 175
Net earnings (loss) 65,537 (298)
Earnings attributable to noncontrolling interest 651 —
Net earnings (loss) attributable to Biglari Holdings Inc. shareholders $ 64,886 $ (298)
18

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Restaurants
Our restaurant businesses, which include Steak n Shake and Western Sizzlin, comprise 532 company-operated and franchise restaurants as of March 31, 2023.
Steak n Shake Western Sizzlin
Company-
operated 		Franchise
Partner 		Traditional
Franchise 		Company-
operated 		Franchise Total
Total stores as of December 31, 2022
177 175 154 3 36 545
Corporate stores transitioned (3) 3 — — — —
Net restaurants opened (closed) (2) — (11) — — (13)
Total stores as of March 31, 2023
172 178 143 3 36 532
Total stores as of December 31, 2021
199 159 178 3 38 577
Corporate stores transitioned (12) 12 — — — —
Net restaurants opened (closed) (3) — 1 — — (2)
Total stores as of March 31, 2022
184 171 179 3 38 575
As of March 31, 2023, 36 of the 172 company-operated Steak n Shake stores were closed. Steak n Shake has contracted to sell seven of the 36 closed stores. An additional seventeen closed stores are listed with brokers for lease or sale. Steak n Shake plans to refranchise the remaining closed company-operated restaurants.
During the first quarter of 2023, Steak n Shake reopened two stores and sold one property; all were closed as of December 31, 2022.

19

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Restaurant operations are summarized below.
First Quarter
2023 2022
Revenue
Net sales $ 36,894 $ 38,216
Franchise partner fees 17,912 15,624
Franchise royalties and fees 4,258 5,146
Other revenue 2,065 861
Total revenue 61,129 59,847
Restaurant cost of sales
Cost of food 10,448 28.3 % 10,960 28.7 %
Restaurant operating costs 18,457 50.0 % 20,032 52.4 %
Occupancy costs 3,833 10.4 % 4,360 11.4 %
Total cost of sales 32,738 35,352
Selling, general and administrative
General and administrative 10,463 17.1 % 8,650 14.5 %
Marketing 2,953 4.8 % 3,744 6.3 %
Other expenses (income) (1,612) (2.6) % 45 0.1 %
Total selling, general and administrative 11,804 19.3 % 12,439 20.8 %
Impairments (776) —
Depreciation and amortization (6,707) (6,214)
Interest on finance leases and obligations (1,307) (1,412)
Earnings (loss) before income taxes 7,797 4,430
Income tax expense (benefit) 1,957 1,168
Contribution to net earnings $ 5,840 $ 3,262
Cost of food, restaurant operating costs, and occupancy costs are expressed as a percentage of net sales.
General and administrative, marketing and other expenses are expressed as a percentage of total revenue.

Net sales for 2023 were $36,894, representing a decrease of $1,322 or 3.5% compared to 2022. The decrease in revenue of company-owned restaurants is primarily due to the shift of company units to franchise partner units. For company-operated units, sales to the end customer are recorded as revenue generated by the Company, but for franchise partner units, only our share of the restaurant’s profits, along with certain fees, are recorded as revenue. Because we derive most of our revenue from our share of the profits, revenue will continue to decline as we transition from company-operated units to franchise partner units.
Our franchise partner fees were $17,912 during the first quarter of 2023, as compared to $15,624 during the first quarter of 2022. As of March 31, 2023, there were 178 franchise partner units, compared to 171 franchise partner units as of March 31, 2022. Included in franchise partner fees were $5,575 and $4,774 of rental income during the first quarter of 2023 and 2022, respectively. Franchise partners rent buildings and equipment from Steak n Shake.


20

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
The franchise royalties and fees generated by the traditional franchising business were $4,258 during the first quarter of 2023, as compared to $5,146 during the first quarter of 2022. The decrease in franchise royalties and fees was primarily because of reduced marketing by franchisees. There were 143 Steak n Shake traditional units open on March 31, 2023, as compared to 179 units open on March 31, 2022.
The cost of food at company-operated units during the first quarter of 2023 was $10,448 or 28.3% of net sales, as compared to $10,960 or 28.7% of net sales during the first quarter of 2022. The cost of food expressed as a percentage of net sales remained relatively consistent.

The operating costs at company-operated restaurants during the first quarter of 2023 were $18,457 or 50.0% of net sales, as compared to $20,032 or 52.4% of net sales during the first quarter of 2022. The decrease in operating costs as a percentage of net sales was mainly attributable to lower labor costs.
General and administrative expenses during the first quarter of 2023 were $10,463 or 17.1% of total revenue, as compared to $8,650 or 14.5% of total revenue during the first quarter of 2022. The increase in general and administrative expenses was mainly attributable to increased support for franchise partnerships.
Marketing expense decreased by $791 during the first quarter of 2023 compared to the first quarter of 2022. The decrease was primarily attributable to reduced marketing by traditional franchisees.

During the first quarter of 2023, Steak n Shake sold the property of a former company-operated restaurant for a gain of $1,431.

The Company recorded impairment charges of $776 in the first quarter of 2023 related to underperforming stores. There were no impairments in the first quarter of 2022.

Depreciation and amortization expense was $6,707 during 2023 versus $6,214 during 2022. The year-over-year increase is primarily attributable to higher capital expenditures incurred in 2022 and 2021.

Interest on obligations under leases was $1,307 during 2023 versus $1,412 during 2022. The year-over-year decrease in interest expense is primarily attributable to the maturity and retirement of lease obligations.
Insurance
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.
Underwriting results of our insurance operations are summarized below.
First Quarter
2023 2022
Underwriting gain attributable to:
First Guard $ 1,862 $ 732
Southern Pioneer (111) (337)
Pre-tax underwriting gain 1,751 395
Income tax expense 368 83
Net underwriting gain $ 1,383 $ 312

21

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Earnings of our insurance operations are summarized below.
First Quarter
2023 2022
Premiums earned $ 14,764 $ 14,169
Insurance losses 8,596 9,588
Underwriting expenses 4,417 4,186
Pre-tax underwriting gain 1,751 395
Other income and expenses
Investment income 585 213
Other income (expenses) 451 756
Total other income 1,036 969
Earnings before income taxes 2,787 1,364
Income tax expense 618 320
Contribution to net earnings $ 2,169 $ 1,044
Insurance premiums and other on the consolidated statement of earnings includes premiums earned, investment income, other income, and commissions.

First Guard

First Guard is a direct underwriter of commercial truck insurance, selling physical damage and nontrucking liability insurance to truckers. First Guard’s insurance products are marketed primarily through direct response methods via the Internet or by telephone. First Guard’s cost-efficient direct response marketing methods enable it to be a low-cost insurer. A summary of First Guard’s underwriting results follows.
First Quarter
2023 2022
Amount % Amount %
Premiums earned $ 8,899 100.0 % $ 8,731 100.0 %
Insurance losses 5,244 58.9 % 6,188 70.9 %
Underwriting expenses 1,793 20.1 % 1,811 20.7 %
Total losses and expenses 7,037 79.0 % 7,999 91.6 %
Pretax underwriting gain $ 1,862 $ 732

First Guard’s ratio of losses and loss adjustment expenses to premiums earned was 58.9% during the first quarter of 2023 as compared to 70.9% during the first quarter of 2022. First Guard’s underwriting results in 2023 were in line with its historical performance despite cost inflation in property and physical damage claims, which began to accelerate in 2022.


22

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Southern Pioneer

Southern Pioneer underwrites garage liability and commercial property insurance, as well as homeowners and dwelling fire insurance. A summary of Southern Pioneer’s underwriting results follows.
First Quarter
2023 2022
Amount % Amount %
Premiums earned $ 5,865 100.0 % $ 5,438 100.0 %
Insurance losses 3,352 57.2 % 3,400 62.5 %
Underwriting expenses 2,624 44.7 % 2,375 43.7 %
Total losses and expenses 5,976 101.9 % 5,775 106.2 %
Pretax underwriting gain (loss) $ (111) $ (337)
Southern Pioneer’s ratio of losses and loss adjustment expenses to premiums earned was 57.2% during the first quarter of 2023 as compared to 62.5% during the first quarter of 2022. Southern Pioneer’s underwriting losses were primarily attributable to a higher expense ratio, an increase caused by information technology projects related to the implementation of a new policy administration system.
A summary of net investment income attributable to our insurance operations follows.
First Quarter
2023 2022
Interest, dividends and other investment income:
First Guard $ 387 $ 74
Southern Pioneer 198 139
Pre-tax investment income 585 213
Income tax expense 123 45
Net investment income $ 462 $ 168
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.
23

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Oil and Gas
A summary of revenues and earnings of our oil and gas operations follows.
First Quarter
2023 2022
Oil and gas revenues $ 12,223 $ 9,812
Oil and gas production costs 5,471 3,819
Depreciation, depletion and accretion 2,850 1,519
General and administrative expenses 1,799 553
Earnings before income taxes 2,103 3,921
Income tax expense 433 997
Contribution to net earnings $ 1,670 $ 2,924
Our oil and gas business is highly dependent on oil and natural gas prices. The average West Texas Intermediate price per barrel for the first quarter of 2023 was approximately $76.11 as compared to approximately $94.82 in the first quarter of 2022. It is expected that the prices of oil and gas commodities will remain volatile, which will be reflected in our financial results.
Southern Oil
Southern Oil primarily operates oil and natural gas properties offshore in the shallow waters of the Gulf of Mexico.  Earnings for Southern Oil are summarized below.
First Quarter
2023 2022
Oil and gas revenues $ 4,971 $ 9,812
Oil and gas production costs 2,340 3,819
Depreciation, depletion and accretion 1,184 1,519
General and administrative expenses 553 553
Earnings before income taxes 894 3,921
Income tax expense 155 997
Contribution to net earnings $ 739 $ 2,924

24

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Abraxas Petroleum
Abraxas Petroleum operates oil and gas properties in the Permian Basin of West Texas. Earnings for Abraxas Petroleum are summarized below.
First Quarter
2023
Oil and gas revenues $ 7,252
Oil and gas production costs 3,131
Depreciation, depletion and accretion 1,666
General and administrative expenses 1,246
Earnings before income taxes 1,209
Income tax expense 278
Contribution to net earnings $ 931

Brand Licensing
Maxim’s business lies principally in licensing and media. Earnings of operations are summarized below.
First Quarter
2023 2022
Licensing and media revenues $ 595 $ 634
Licensing and media costs 452 953
General and administrative expenses 21 17
Earnings before income taxes 122 (336)
Income tax expense (benefit) 31 (85)
Contribution to net earnings $ 91 $ (251)
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.
Investment Gains and Investment Partnership Gains

Investment gains net of tax for the first quarter of 2023 and 2022 were $2,865 and $175, respectively. 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.
Earnings (loss) from our investments in partnerships are summarized below.
First Quarter
2023 2022
Investment partnership gains (losses) $ 72,588 $ (6,661)
Tax expense (benefit) 16,559 (1,860)
Contribution to net earnings $ 56,029 $ (4,801)
25

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Investment partnership gains include gains/losses from changes in market values of underlying investments and dividends earned by the partnerships.  Dividend income has a lower effective tax rate than income from capital gains. These gains and losses have caused and will continue to cause significant volatility in our periodic earnings.

The investment partnerships hold the Company’s common stock as investments. 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. Gains and losses on Company common stock included in the earnings of the partnerships are eliminated in the Company’s consolidated financial results.

Investment gains and losses in 2023 and 2022 were mainly derived from our investments in equity securities and included unrealized gains and losses from market price changes during the period. We believe that investment and derivative gains/losses are generally meaningless for analytical purposes in understanding our reported quarterly and annual results.
Interest Expense
The Company’s interest expense is summarized below.
First Quarter
2023 2022
Interest expense on line of credit $ 167 $ —
Tax benefit 38 —
Interest expense net of tax $ 129 $ —

On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000. The balance of the line of credit was $6,500 and $10,000 on March 31, 2023 and December 31, 2022, respectively. Our interest rate was 7.3% on March 31, 2023.
Corporate and Other
Corporate expenses exclude the activities of the restaurant, insurance, brand licensing, and oil and gas businesses. Corporate and other net losses during the first quarter of 2023 were relatively consistent to the same period during 2022.
Income Taxes
Income tax expense for the first quarter of 2023 was $19,738 compared to an income tax benefit of $171 for the first quarter of 2022. The variance in income taxes between 2023 and 2022 is attributable to taxes on income generated by the investment partnerships.  Investment partnership pretax gains were $72,588 during the first quarter of 2023 compared to pretax losses of $6,661 during the first quarter of 2022.
Financial Condition
Consolidated cash and investments are summarized below.
March 31, 2023 December 31,
2022
Cash and cash equivalents $ 39,363 $ 37,467
Investments 79,652 69,466
Fair value of interest in investment partnerships 507,499 383,004
Total cash and investments 626,514 489,937
Less: portion of Company stock held by investment partnerships (276,656) (227,210)
Carrying value of cash and investments on balance sheet $ 349,858 $ 262,727
Unrealized gains/losses of Biglari Holdings’ stock held by the investment partnerships are eliminated in the Company’s consolidated financial results.

26

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Liquidity
Our balance sheet continues to maintain significant liquidity.  Consolidated cash flow activities are summarized below.
First Quarter
2023 2022
Net cash provided by operating activities $ 19,923 $ 21,092
Net cash used in investing activities (12,735) (16,077)
Net cash used in financing activities (5,050) (1,564)
Effect of exchange rate changes on cash 8 (23)
Increase in cash, cash equivalents and restricted cash $ 2,146 $ 3,428
The increase in cash during 2023 was $2,146 compared to $3,428 during 2022. We intend to meet the working capital needs of our operating subsidiaries principally through anticipated cash flows generated from operations and cash on hand. We continually review available financing alternatives.
Biglari Holdings Line of Credit
On September 13, 2022, Biglari Holdings entered into a line of credit in an aggregate principal amount of up to $30,000. The line of credit will be available on a revolving basis until September 12, 2024. The line of credit includes customary covenants, as well as financial maintenance covenants. The balance on the line of credit on March 31, 2023 was $6,500. The line of credit was paid in full in April 2023.
Western Sizzlin Revolver
Western Sizzlin’s available line of credit is $500. As of March 31, 2023, Western Sizzlin had no debt outstanding on its revolver.
Critical Accounting Policies
Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Certain accounting policies require management to make estimates and judgments concerning transactions that will be settled several years in the future. Amounts recognized in our consolidated financial statements from such estimates are necessarily based on numerous assumptions involving varying and potentially significant degrees of judgment and uncertainty. Accordingly, the amounts currently reflected in our consolidated financial statements will likely increase or decrease in the future as additional information becomes available.  There have been no material changes to critical accounting policies previously disclosed in our annual report on Form 10-K for the year ended December 31, 2022.
Recently Issued Accounting Pronouncements
No recently issued accounting pronouncements were applicable for this Quarterly Report on Form 10-Q.
27
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Cautionary Note Regarding Forward-Looking Statements
This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In general, forward-looking statements include estimates of future revenues, cash flows, capital expenditures, or other financial items, and assumptions underlying any of the foregoing. Forward-looking statements reflect management’s current expectations regarding future events and use words such as “anticipate,” “believe,” “expect,” “may,” and other similar terminology. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. These forward-looking statements are all based on currently available operating, financial, and competitive information and are subject to various risks and uncertainties. Our actual future results and trends may differ materially depending on a variety of factors, many beyond our control, including, but not limited to, the risks and uncertainties described in Item 1A, Risk Factors of our annual report on Form 10-K and Item 1A of this report. We undertake no obligation to publicly update or revise them, except as may be required by law.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Based on an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), our Chief Executive Officer and Controller have concluded that our disclosure controls and procedures were effective as of March 31, 2023.
There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2023 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
28
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information in response to this Item is included in Note 13 to the Consolidated Financial Statements included in Part 1, Item 1 of this Form 10-Q and is incorporated herein by reference.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors as previously disclosed in Item 1A to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit Number Description
101 Interactive Data Files.
104 Cover page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)
_________________
* Furnished herewith.

29

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Biglari Holdings Inc.
Date: May 5, 2023 By:
/s/ B RUCE L EWIS
Bruce Lewis
Controller

30
TABLE OF CONTENTS
Part 1 Financial InformationItem 1. Financial StatementsNote 1. Summary Of Significant Accounting PoliciesNote 2. Earnings Per ShareNote 2. Earnings Per Share (continued)Note 3. InvestmentsNote 4. Investment PartnershipsNote 4. Investment Partnerships (continued)Note 5. Property and EquipmentNote 6. Goodwill and Other Intangible AssetsNote 7. Restaurant Operations RevenuesNote 7. Restaurant Operations Revenues (continued)Note 8. Accounts Payable and Accrued ExpensesNote 9. Line Of Credit and Note PayableNote 10. Unpaid Losses and Loss Adjustment ExpensesNote 11. Lease Assets and ObligationsNote 11. Lease Assets and Obligations (continued)Note 12. Income TaxesNote 13. Commitments and ContingenciesNote 14. Fair Value Of Financial AssetsNote 14. Fair Value Of Financial Assets (continued)Note 15. Related Party TransactionsNote 16. Business Segment ReportingNote 16. Business Segment Reporting (continued)Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits

Exhibits

31.01 Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.02 Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.01* Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.