10-K: Biglari Holdings Reports 2025 Net Loss Amid Investment Declines

Biglari Holdings Inc. reported a net loss of $37.488 million for fiscal year 2025, primarily driven by significant losses in investment partnerships, despite revenue growth in restaurant and insurance segments.

Summary

• Net loss attributable to Biglari Holdings Inc. shareholders was $37,488 thousand in 2025, a significant increase from a loss of $3,759 thousand in 2024.
• Total revenues increased to $395,261 thousand in 2025 from $362,114 thousand in 2024.
• Restaurant operations net earnings grew to $16,377 thousand in 2025, up from $15,470 thousand in 2024, driven by a 10.5% increase in Steak n Shake's company-operated same-store sales.
• Insurance operations net earnings increased to $10,476 thousand in 2025 from $7,169 thousand in 2024, with First Guard's underwriting gain rising by 49.0% to $6,015 thousand.
• Oil and gas operations net earnings decreased to $10,908 thousand in 2025 from $15,458 thousand in 2024, primarily due to lower crude oil prices.
• Brand licensing reported a wider net loss of $1,442 thousand in 2025, compared to a loss of $884 thousand in 2024, despite increased revenue from a new digital contest business.
• Investment partnership losses significantly impacted overall earnings, totaling $51,996 thousand in 2025, compared to $28,119 thousand in 2024.
• Consolidated shareholders' equity decreased by $49,532 thousand to $523,429 thousand as of December 31, 2025.
• Cash and cash equivalents increased substantially to $268,782 thousand as of December 31, 2025, from $30,709 thousand in the prior year, partly due to a new $225,000 thousand loan obtained by Steak n Shake.
• A material weakness in internal control over financial reporting was identified, related to the review and approval of insurance losses due to insufficient segregation of duties.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a concerning report due to the substantial net loss driven by investment performance and the identified material weakness in internal controls, despite some operational improvements in restaurants and insurance.

Positives

• Restaurant operations net earnings increased to $16,377 thousand in 2025, up from $15,470 thousand in 2024.
• Steak n Shake's company-operated same-store sales increased by 10.5% in 2025.
• Franchise partner units increased to 179 in 2025 from 173 in 2024, with franchise partner same-store sales increasing by 10.1%.
• Insurance operations net earnings increased to $10,476 thousand in 2025 from $7,169 thousand in 2024.
• First Guard's underwriting gain increased by 49.0% to $6,015 thousand in 2025.
• Southern Pioneer's premiums earned increased by 19.0% in 2025 due to higher average earned premium per policy.
• Brand licensing revenue increased significantly to $7,717 thousand in 2025 from $1,029 thousand in 2024 due to a new digital contest venture.
• Net cash provided by operating activities increased by $57,299 thousand to $106,959 thousand in 2025, partly due to $56,000 thousand in distributions from investment partnerships.
• The company maintains significant liquidity with total cash and investments (before adjusting for company stock held by partnerships) of $1,110,417 thousand as of December 31, 2025.

Negatives

• The company reported a net loss of $37,488 thousand in 2025, a significant deterioration from the $3,759 thousand loss in 2024 and a sharp decline from the $54,948 thousand profit in 2023.
• Investment partnership losses widened to $51,996 thousand in 2025 from $28,119 thousand in 2024, significantly impacting overall earnings.
• Oil and gas operations net earnings decreased to $10,908 thousand in 2025 from $15,458 thousand in 2024, primarily due to lower crude oil prices.
• Brand licensing segment's net loss widened to $1,442 thousand in 2025, indicating increased costs associated with new ventures despite revenue growth.
• Consolidated shareholders' equity decreased by $49,532 thousand to $523,429 thousand as of December 31, 2025.
• Interest expense increased significantly to $6,166 thousand in 2025 from $589 thousand in 2024, primarily due to Steak n Shake's new note payable.
• A material weakness in internal control over financial reporting was identified, related to the review and approval of insurance losses due to insufficient segregation of duties.

Risks

• The company is highly dependent on Sardar Biglari, Chairman and CEO, for all major investment and capital allocation decisions, and his unavailability could have a material adverse effect.
• Mr. Biglari's beneficial ownership of over 50% of common stock allows him to control shareholder matters, potentially conflicting with the interests of passive shareholders and reducing the possibility of certain corporate transactions.
• As a 'controlled company' under NYSE rules, the company is exempt from certain director independence and board committee requirements, and does not have a governance and nominating committee.
• Access to capital is restricted by state insurance laws for subsidiaries and by rolling five-year lock-up periods for investments in The Lion Fund, L.P., and The Lion Fund II, L.P., which are controlled by Mr. Biglari.
• Intense competition and technological changes across operating businesses may erode competitive advantages and lead to lower earnings.
• Deterioration of general economic conditions could significantly reduce operating earnings across all segments.
• Epidemics, pandemics, or other outbreaks may adversely affect operations and investments due to closures, supply chain disruptions, reduced demand, credit losses, and market volatility.
• Potential changes in laws or regulations, such as those prohibiting disproportionate voting rights, could negatively impact the trading eligibility of Class A and Class B common stock.
• Litigation, investigations, and other legal proceedings could have a material adverse effect on financial position, cash flows, and results of operations.
• There is no assurance that fees paid to the Biglari Entities (owned by Mr. Biglari) for services will be commensurate with the benefits received.
• A material weakness in internal control over financial reporting related to insurance losses exposes the company to a greater risk of material misstatement in financial statements.
• Future sales of common stock through an at-the-market offering could adversely affect the market value of the common stock.
• Restaurant operations face intense competition, changes in consumer tastes, economic conditions, fluctuations in commodity and energy prices (especially beef and dairy), adverse weather conditions, and changes in labor costs.
• Restaurant operations are subject to various global, federal, state, and local health, employment, environmental, and franchise regulations, with non-compliance potentially leading to litigation or penalties.
• Investment activities are largely concentrated in a few equity securities, making them subject to significant loss in value from market declines.
• There is a risk of inadvertently becoming an investment company under the Investment Company Act of 1940, which would subject the company to extensive, restrictive, and potentially adverse regulations.
• The insurance business is vulnerable to significant catastrophic property loss and is subject to extensive state, local, and foreign governmental regulations that restrict business activities and revenue generation.
• Maintaining licensing opportunities for the Maxim brand may be difficult, and future licensing partners may fail to honor contractual obligations, diminishing brand value.
• The oil and gas business is exposed to the effects of volatile crude oil and natural gas commodity prices, which heavily influence revenue and profitability.
• Oil and gas operations are subject to disruption by factors beyond control, including natural or human causes, system failures, and adverse political or regulatory developments.

Future Outlook

The company expects oil and gas commodity prices to remain volatile, which will be reflected in financial results. Steak n Shake plans to reopen two of its seven closed company-operated stores and sell or lease the remaining five. The net proceeds from the At the Market Offering are intended to support business and investment activities, build a stronger capital position for acquisitions, augment the capital of insurance subsidiaries, or for other general corporate purposes. Management is currently evaluating the impact of new FASB guidance (ASU 2024-03) on future disclosures and will implement measures to address the identified material weakness in internal control over financial reporting.

Management Comments

• "We believe that investment gains/losses are generally meaningless for analytical purposes in understanding our reported quarterly and annual results. These gains and losses have caused and will continue to cause significant volatility in our periodic earnings."
• "We intend to meet the working capital needs of our operating subsidiaries, principally through cash flows generated from operations and cash on hand. We continually review available financing alternatives."
• "Management, under the oversight of the Audit Committee, will implement measures and take steps to address the underlying causes of the material weakness, so long as it does not cause disruption to subsidiary operations or materially increase the subsidiarys costs."

Industry Context

StockSavvy.ai notes that Biglari Holdings' diversified portfolio provides some insulation from single-industry downturns, but the significant impact of investment partnership losses highlights the volatility inherent in its capital allocation strategy, which is heavily influenced by its Chairman and CEO. The restaurant segment's growth, particularly Steak n Shake's same-store sales, outperforms many casual dining peers in a competitive and inflation-prone environment. The decline in oil and gas earnings reflects broader commodity price fluctuations affecting the energy sector.

Comparison to Industry Standards

• Steak n Shake's 10.5% same-store sales growth for company-operated units and 10.1% for franchise partners in 2025 is robust, potentially exceeding the average for the U.S. casual dining sector, which often sees single-digit growth or declines in challenging economic periods.
• The identified material weakness in internal control over financial reporting related to insurance losses is a significant governance concern, contrasting with best practices for well-established financial institutions that prioritize robust internal controls to prevent material misstatements.

Corporate Governance

Legal Proceedings

• The company is involved in various legal proceedings and has certain unresolved claims pending, but management believes the ultimate liability, if any, in excess of amounts already provided, is not likely to have a material effect on results of operations, financial position, or cash flow.

Related Party Transactions

• The company has a services agreement with Biglari Enterprises LLC and Biglari Capital Corp. (collectively, the Biglari Entities), both owned by Mr. Biglari, for business and administrative services. The company paid $11,400 thousand in service fees during 2025.
• The company holds limited interests in The Lion Fund, L.P., and The Lion Fund II, L.P., where Biglari Capital Corp. (solely owned by Mr. Biglari) is the general partner. The fair value of these investments was $772,585 thousand as of December 31, 2025.
• These investment partnerships are subject to a rolling five-year lock-up period, which can be waived by the general partner (Mr. Biglari) in his sole discretion.
• Biglari Capital is entitled to an incentive reallocation fee of 25% of net profits above a 6% hurdle rate over the previous high-water mark from the company's investments in the partnerships. No incentive reallocations occurred in 2025, 2024, or 2023.
• An Incentive Agreement provides for a performance-based annual incentive payment to Mr. Biglari based on growth in adjusted equity from operating businesses exceeding a 6% hurdle rate. Mr. Biglari did not earn an incentive fee in 2025 but earned $455 thousand in 2024 (paid in 2025).

Stakeholder Impact

• Shareholders face negative impacts from the significant net loss, decrease in shareholders' equity, and potential dilution from the At the Market Offering. Corporate governance concerns due to 'controlled company' status and internal control weaknesses may also affect investor confidence.
• Employees in restaurant operations are subject to competitive labor markets and the company's ability to recruit and retain high-quality staff.
• Customers of restaurant operations are affected by changes in consumer tastes and economic conditions, with the company promoting new, enhanced products.
• Franchisees benefit from assistance with development and operations, but traditional franchise store closings indicate challenges in that segment.
• Creditors are impacted by Steak n Shake's new $225,000 thousand loan, secured by real estate, increasing the company's debt obligations, though the company reports compliance with covenants.

Next Steps

• Reopen two of the seven closed Steak n Shake company-operated stores.
• Sell or lease five of the seven closed Steak n Shake company-operated stores.
• Implement measures to address the material weakness in internal control over financial reporting.
• Continue to sell Class A and Class B Common Stock under the At the Market Offering Agreement.
• File the definitive proxy statement for the 2026 Annual Meeting of Shareholders by April 8, 2026.

Key Dates

Recommendation

The company's diversified business model shows mixed performance, with strong restaurant and insurance segment growth offset by substantial losses in investment partnerships and a decline in oil and gas. The identified material weakness in internal controls and the high dependence on a single individual for capital allocation introduce significant risks. While the capital raise provides liquidity, the overall financial performance and governance concerns suggest a 'hold' position until there is clear evidence of sustained profitability and remediation of internal control issues.

Keywords

Holding company, Restaurants, Insurance, Reinsurance, Oil and Gas, Brand Licensing, Steak n Shake, Western Sizzlin, First Guard, Southern Pioneer, Biglari Reinsurance, Southern Oil, Abraxas Petroleum, Maxim, Investment Partnerships, SEC filing, 10-K, Financial results, Corporate governance, Risk factors, Capital allocation, Sardar Biglari