Biglari Holdings Inc. 10-Q Summary: Q2 2026
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Biglari Holdings Inc. is a holding company with diverse operations including restaurant franchising (Steak n Shake, Western Sizzlin), property and casualty insurance (First Guard, Southern Pioneer), oil and gas (Abraxas Petroleum, Southern Oil), and brand licensing (Maxim). The company utilizes a decentralized operational model with centralized capital allocation decisions made by the Chairman and CEO.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Total Revenues | $108.5M | $100.6M | $206.0M | $195.7M |
| Net Earnings | $39.9M | $50.9M | $25.4M | $17.7M |
| EPS (Class A Equivalent) | $158.17 | $194.57 | $99.78 | $67.26 |
| Operating Cash Flow (YTD) | $35.3M | $57.9M | $35.3M | $57.9M |
| Cash & Equivalents | $68.4M | $32.8M | $68.4M | $32.8M |
| Total Debt (Current + Long Term) | $238.5M | $246.9M | $238.5M | $246.9M |
Note: Debt figures include current and long-term portions of notes payable and lines of credit. Interest expense on borrowings increased significantly to $5.5M in Q2 2026 from $0.9M in Q2 2025 due to a new Steak n Shake term loan.
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 7.9% in Q2 2026 compared to Q2 2025, driven by higher oil and gas revenues (+50%) and licensing/media revenues (+53%). Restaurant revenues grew 3.8%.
- Net Earnings Decline: Despite revenue growth, Q2 net earnings decreased 21.6% to $39.9M. This was primarily due to a significant drop in investment partnership gains ($35.6M in Q2 2026 vs. $58.5M in Q2 2025) and higher interest expenses.
- Investment Activity: The company significantly increased its investment portfolio, with investments rising from $69.1M to $274.3M on the balance sheet. Net cash used in investing activities was $238.4M YTD 2026, compared to $27.2M in YTD 2025.
- Restaurant Operations: Company-operated Steak n Shake net sales decreased 2.6% due to fewer units, but same-store sales increased 11.9%. Franchise partner fees increased 14.8%.
- Oil & Gas: Abraxas Petroleum recorded a $4.8M gain on the sale of undeveloped reserves in Q2 2026, compared to $0.8M in Q2 2025.
Outlook, Risks, and Management Commentary
- Internal Controls: Management concluded that disclosure controls and procedures were not effective as of June 30, 2026, due to a material weakness in internal control over financial reporting previously identified. Remediation efforts are ongoing.
- Investment Volatility: Management notes that investment gains and losses (including unrealized gains from partnerships) cause significant volatility in periodic earnings and may be "meaningless for analytical purposes" regarding core operations.
- Commodity Risk: Oil and gas earnings remain highly dependent on volatile commodity prices. Management warns that a decline in prices could lead to material impairments.
- Debt Covenants: The company is in compliance with all financial maintenance covenants for its line of credit and Steak n Shake term loan.
- Guidance: The filing does not provide specific forward-looking financial guidance or forecasts for future periods.
Key Facts for Investor Verification
- Investment Partnership Valuation: Verify the fair value and unrealized gains of The Lion Fund, L.P. and The Lion Fund II, L.P., which contributed $22.2M to YTD earnings but are subject to market volatility.
- Internal Control Remediation: Monitor the progress of remediation efforts regarding the material weakness in internal controls over financial reporting.
- Debt Service Capacity: Assess the impact of the new $225M Steak n Shake term loan (8.8% interest) on future cash flows, given the significant increase in interest expense.
- Restaurant Unit Economics: Review the transition from company-operated to franchise partner units and its long-term effect on revenue recognition and margin stability.
- Oil & Gas Reserves: Confirm the sustainability of oil and gas revenues given the reliance on commodity prices and the one-time nature of property sale gains.