Q4 2023 Sadot Group Inc Earnings Call
Twenty-two. Pretty significant change.
The adjustments to EBITDA were a series of non-cash items related to the restructuring of our legacy restaurant brands.
Our corporate name change to the Sadat Group, Inc., and overall financing strategies, among other items.
While these charges did impact our bottom line, they were one-time charges essential for helping to fortify our long-term financial strength and growth opportunities for the company. We anticipate further non-cash items to affect our bottom line in the near future as we proceed with the sale of our restaurant operations along with stock-based performance expenses as part of our consulting agreement with Agia FZ LLC with respect to our agricultural
Operations.
Focusing on Sadat agri-foods.
The business unit serves as our economic engine, characterized by high dollar volume with narrow margins, which is typical for the agri-commodity trading industry. In 2023, Sadat Agri-Foods generated $718 million in revenue and $9.3 million in net income for the company.
You may have noticed that we've transitioned from disclosing monthly revenue numbers to a quarterly reporting cadence to better align revenues with the company's margins and profitability to present a more precise financial overview. It is also important to note that we trade exclusively in agri-foods for human and animal consumption including soy, corn, wheat, oils, and oilseeds.
The trades typically range in physical size from 130 to over 78,000 metric tons, or 35,000 to 45 million per trade, and we averaged over 20 trades per quarter over the past year.
In order to expand our global reach, we've recently increased our trading offices, adding Sadat Latam in Miami, Florida, and Sadat Brazil in Sao Paulo, sorry if I mispronounced that, Sao Paulo, to our existing locations in Singapore and Dubai. Moreover, we remain open to exploring additional expansion opportunities in the future.
While expanding our global presence is essential, our growth hinges on access to trade, finance, and capital.
The growth of our top line revenues and bottom line margins is directly linked to increasing our access to trade financing, particularly to execute larger trades.
With a year of financial reporting behind us, we are now in a better position to potentially access new and larger trade financing facilities.
I cannot emphasize how important these trade financing facilities are to our growth. Access to such financing would provide us with the flexibility to pursue more and larger agri-commodity trading opportunities, thereby increasing our top-line revenue and potentially enhancing our margins and net income.
In August 2023, the company expanded its footprint in the global food supply chain with the acquisition of approximately 5,000 acres of farmland in the Makushi region of Zambia to our majority-owned subsidiary.
This strategic move enables us to produce in-demand grains and tree crops such as soybean, wheat, corn, mango, and avocado, complementing our origination and trading operations to bolster our supply chain resilience and efficiency.
So that's farm operations, not only standalone as a profit center, but it also serves as an integral part of the total supply chain operation. The farm crop allows the company to trade year-round and the underlying commodity as a collateral in case the market turns negative to help insulate the market fluctuations.
I am happy to report that we have recently signed an agreement with the Republic of Zambia's Food Reserve Agency.
reaffirming the company's dedication to combating global food security challenges. This agreement aims to support the Zambian government's efforts to safeguard national food security and bolster the supply and production of maize, a key staple in the region amidst growing demand. The agreement will facilitate the cultivation of high-quality maize.
In support of this agreement, we have started our fall harvest of both maize and soybeans and has, as of this recording, delivered over 96 metric tons of maize from 24 hectares, with a full maize harvest of the remaining 513 planted hectares anticipated to take approximately seven to eight weeks to complete.
The harvest for more than 348 hectares of soybeans will begin approximately three weeks from now and be completed in the mid to late May time frame.
In addition to the Sadat Agri-Foods current ongoing harvest, the company has also initiated the pilot program to help small farm owners in the region receive essential farm inputs such as seeds, fertilizers, etc.
that they need in order to plant and farm their land. This contract farming program is in its pilot stage, engaging approximately 140 local farmers, covering over 1,400 hectares.
It's estimated that there are close to 3 million hectares, which actually converts to about 7 million acres, of land in Zambia alone, belonging to small owners that are all in need of help to acquire the inputs needed to farm.
The program allows for Agri-Foods to secure the inputs from local suppliers on credit terms.
allowing the small farmers to pay for them at a later date with the farm product at time of harvest. The company in turn collects a minimal management fee and increases its presence in the region. This initiative marks a significant contribution to local communities and the positive impact we can create as a large international company in rural Africa.
Another new and exciting business line we've engaged in is carbon credits. Earlier this year the company acquired a forward contract for carbon credits from an ongoing mangrove planting project in Indonesia.
This move is aligned with Sadaq Group's sustainability values and diversifies our product portfolio to open new markets and new opportunities. Carbon credits have become an inseparable part of agriculture and industry across the world, playing a major part in regulating and managing global environmental pollution.
This asset is also part of the company's vision to potentially offer carbon neutral commodity trades in the future.
Overall, for 2023, CDOT group reported a net loss of approximately $7.8 million, in contrast to the net loss of approximately $8 million in the previous year ending December 31, 2022. As previously mentioned, there were a number of one-time charges that significantly impacted our results. While these charges necessitated short-term financial adjustments, they are essential steps towards our long-term objectives.
What is important to understand is that our economic engine, Sadat Agri-Foods, continued to perform, generating $9.3 million in operating income in 2023, further validating the company's strategic direction to focus on this business moving forward.
While some tough strategic decisions were made this year that have impacted our financial results, we recognize their necessity in order to potentially impact the long-term benefits for the overall strength of the company and our valued stakeholders.
We remain dedicated to executing our strategic vision and harnessing the opportunities the global food supply chain presents, and we eagerly anticipate building upon this momentum as we move forward.
Now I'd like to turn the call over to our CFO, Jennifer Black.
Jennifer Kay Black: to review the financial performance of the company for the fourth quarter and full year results for 2023. Jennifer? Thank you, Mike. Before I begin, I'd like to note that our financial results for the year ended December 31st, 2023, on Form 10-K were filed with the SEC yesterday, March 20th, along with the press release that same day.
Jennifer Kay Black: With that, I'd like to give an overview of the financials for the fourth quarter of 2023.
Jennifer Kay Black: Our Q4 2023 company-wide revenues increased significantly, totaling $171 million, compared to $153 million for Q4 of 2022.
Jennifer Kay Black: The $18 million revenue increase was primarily due to self-revenue from our Sadat Agri-Foods Division.
Jennifer Kay Black: which was only partially operational in Q4 of 2022.
Jennifer Kay Black: Sadat Agri-Foods completed 24 transactions in 2-4, with the average revenue per transaction of $7.1 million, with the average cost of goods sold of that transaction of $7 million.
Jennifer Kay Black: These 24 transactions were completed across 16 different countries.
Jennifer Kay Black: The company incurred approximately $525,000 in stock-based compensation expense in Q4 2023. These expenses are primarily the result of stock-based performance expenses as part of our consulting management agreement with our consultant, Aggiea.
Speaker Change: Now let me turn to the overall financial picture for the Sadat Group for the full year ending December 31, 2023.
Speaker Change: For the year ending December 31st, 2023, our company WOD Revenue significantly increased and totaled $727 million compared to $162 million for the prior year ended December 31st, 2022.
Speaker Change: The $565 million increase is primarily attributed to the commodity sales revenue generated by Sadat Agri-Foods.
Speaker Change: Our adjusted EBITDA was a positive $89,000 in 2023 as compared to a loss of $2,000,000 in 2022.
Speaker Change: I would now like to further discuss the financials for our two operating divisions of Sadat Group, Inc.
Speaker Change: As Mike mentioned earlier, the company's main revenue and margin driver is Sadat Agri-Foods consisting of our origination and trading operations as well as our farming operations in Zambia.
Speaker Change: Sadat Agri-Foods generated commodity sales revenue of $718 million for the year-end of December 31, 2022, as compared to $151 million in 2022.
Speaker Change: The vast majority of the increase was due to its origination in trading operations.
Speaker Change: with the farming operations contributing to a negligible amount.
Speaker Change: Our Sadat Agri-Foods 2023 Net Income.
Speaker Change: Sorry, Jyre Fruit's 2023 net income was $9.3 million.
Speaker Change: Moving on to the company's legacy restaurant operations consisting of Pokemoto, Muscle Maker Grill, and Superfit Foods.
Speaker Change: The division generated revenue of $9.2 million for the year ended December 31, 2023, compared to $11.1 million for the December 31, 2022.
Speaker Change: This decline in revenue generated was mainly due to the closing and re-franchising of our corporately owned restaurant locations.
Speaker Change: The Restaurant Division reported a loss of $2.8 million in 2023 compared to a loss of $3.3 million in 2022.
Speaker Change: As of December 31, 2023, we had a cash balance of $1.4 million compared to a cash balance of $9.9 million as of December 31, 2022.
Speaker Change: This decline is a deliberate outcome of our strategic shift away from the restaurant business towards the agri-commodity trading sector.
Speaker Change: Historically, as a restaurant company, there was a limited use for our cash reserves. However, with our new focus, the deployment of cash is intrinsic to our business model for generating revenue and margins.
Speaker Change: Instead of maintaining large cash balance, our priority now is to actively utilize our cash to drive growth and profitability. This strategic approach aligns with our core objective of maximizing returns and creating value for our stakeholders.
Speaker Change: It is notable that our total assets increased from $27 million in 2022 to $178 million by the close of 2023.
Speaker Change: This substantial increase is attributed to strategic initiatives such as the acquisition of the farm by our majority-owned subsidiary, accounts receivable related to trades, and forward sales contracts for future delivery.
Speaker Change: These developments have significantly fortified our balance sheet, reflecting the strategic investment we've made to bolster our operations.
Speaker Change: While it is true that our cash reserves decreased by $8.3 million, it is essential to underscore that our overall asset base rose by $151 million. This shift underscores our commitment to deploying capital strategically to enhance our financial position and drive sustainable growth.
Speaker Change: It's important to remember that we continue to grow our overall revenue, increasing our working capital surplus.
Speaker Change: and build our balance sheet, all while making significant strategic changes in the company.
Speaker Change: With that, I'd like to turn the call back over to Michael Roper.
Michael J. Roper: Thanks, Jennifer, and thanks for that financial overview.
Michael J. Roper: In closing, I want to express my gratitude to all our investors and stakeholders for joining us today and for your continued support. Our 2023 full-year earnings call has shed light on a remarkable journey over the past year, showcasing our emergence as a key player in the global food supply chain.
Michael J. Roper: We've witnessed positive growth, particularly in our Sadat Agri-Foods division, despite facing challenges along the way. Over the past six months, we've implemented our announced strategy to convert all of our corporately owned and operated locations into franchise-owned locations.
Michael J. Roper: We believe this strategy will position the division, once complete, to potentially divest the restaurants.
Michael J. Roper: We believe this approach underscores our commitment to focus on our core operations and driving long-term value for our shareholders.
Michael J. Roper: We are currently evaluating additional opportunities in the global farming, trading, processing, shipping and distribution to increase our market share and operational footprint.
Michael J. Roper: I'm proud of the resilience and dedication demonstrated by our team whose hard work has propelled us towards amidst a dynamic landscape.
Michael J. Roper: As we move forward, we remain steadfast in our strategic vision, exploring new opportunities and partnerships to further strengthen our position in the market.
Speaker Change: Thank you once again for your trust into that group, Inc. We look forward to the exciting journey ahead and delivering continued success for our investors, stakeholders, and the communities we serve. With that, please give us a few seconds to open the call for questions.
Speaker Change: Before we get to questions from our selected analysts, Michael Roper and Jennifer Black would like to address some questions which we have received from our stakeholders.
Speaker Change: Also on the call with us is one of Sadat Group's board members, Benjamin Patel. Mike, Jennifer, the floor is yours.
Michael J. Roper: Hey, thanks, Alexa. Yeah, we have we got a few questions that came in previously that we wanted to go over and And address before we turn it over to the live Questions as well with the analysts and so I'm going to read the questions And then we'll we'll do the answers and then that will train so transition after that So the first question that we've received is how is adjusted EBITDA Calculated and why should we use this number?
Michael J. Roper: So I'm going to let Jennifer answer that one.
Jennifer Kay Black: Okay, Mike. So we define adjusted EBITDA, and we start with net loss, and then we adjust it for a few things like depreciation, amortization, net interest, income and expense, income taxes, impairment expenses, stock-based consulting expenses, other incomes, change in fair value of stock-based comp, gains on extinguishment, warrant modification expense, and gain on fair value measurement. These items are removed. They're either one-time transactions or they're non-cash transactions that have impacted our net loss position.
Jennifer Kay Black: We believe that Adjusted EBITDA, which is a non-GAAP measure, is a useful metric for investors to understand and evaluate our operating results and ongoing profitability because they permit investors to evaluate our recurring profitability from our ongoing operations.
Mike: Awesome. Thanks, Jennifer. Let me find the next question here. Here it is. How does the additional trading subsidiaries compete with or affect each other? Okay, so we're talking about Sadat Latam, Brazil, the MENA region, those type of things. How do they compete with each other or affect each other? So basically, you know, really the subsidiaries support each other.
Mike: You know, and our strategy is to establish these different trading offices in the important production and distribution geographies across the world.
Mike: That will work together to facilitate supply and demand, as well as the specific needs of the different locations. So, for example, our most recent subsidiary established in Brazil, those actually source commodities for our Dubai office, which in turn may supply the Asia area. So they're all kind of interacting and they support each other without necessarily being in competition.
Mike: By expanding our global footprint, this plays a vital role in our overall diversification.
Mike: It allows us to actually mitigate risks and enjoy multiple options rather than just relying on a limited source or client basis. Again, we're spread out across the world. There's different opportunities that pop up.
Mike: all the time. And don't forget that each one of our individual subsidiaries not only can trade internationally, but also trade domestically as well, right? So, LATAM, that's in the central area, they can trade throughout Latin America, Central America, South America, North America, they can trade and move product all over the world as well, just as an example. So, there is no real competing against those different areas.
Mike: Let's see, the next question, why is your cash on hand decreased year over year? And again, I'll throw that back towards Jennifer.
Jennifer Kay Black: All right. Thanks, Mike. So this one, we've made multiple investments since we started our strategic pivot about 16 months ago. And you can see this by looking at the increase in the balance sheet. We're investing in business to expand our operations and our business verticals.
Jennifer Kay Black: You know, for example, we purchased a farm in Zambia for cash. We also deployed cash into other various trades with cycles that are throughout the trade process. Many of our trades require capital components and contributions from the company to execute those.
Jennifer Kay Black: And just like Mike was just talking about, we also expanded our trading areas to include Brazil and Latam.
Jennifer Kay Black: Lastly, we also changed the company name, symbol, and we launched a new strategic direction. All of these areas are where capital has been deployed.
Jennifer Kay Black: The declining cash on hand is a deliberate outcome of our strategy shift away from the restaurant business towards the Cidade Agri-Food Division. The deployment of cash is intrinsic to the company's business model for generating revenue and margins.
Speaker Change: Thanks, Jennifer.
Speaker Change: Fourth question that we see here is how can the company increase its overall margins and then more specifically on the actual Commodity trades being executed today. So how do we increase margins basically right at the end of the day? So like I think there's a few things to talk about here So overall, you know, I think it's important to remember that we are building a business right and we are an expansion mode So it's not an established, you know
Speaker Change: whatever, I don't wanna say senior business, whatever the right word is, right? But it's new, right? And we're building this thing. We're building a very large corporation that's out there. And this takes some upfront expenditures that may not have an immediate impact on revenues and profits.
Speaker Change: So, for example,
Speaker Change: Okay, it would be the farm in Zambia. The farm is a seasonal component of its operations, meaning there's an upfront expense that the products, you know, that you put in, like planting and all that, where it produces income at a later date. Again, we're seeing that in Zambia now as we just started a major harvest of maize and soybeans that will be completed over the next few months.
Speaker Change: The contract farmers also begin their harvest later, which again brings in revenue throughout the later months.
Speaker Change: We did incur expenses not only in getting the farm integrated into the overall company, but then also incurred expenses for planting, for example. So again, pay money up front. Some of these things have a little bit of delay to come in. You know, now we're in those cycles as we've started our harvest for the farm. Another example would be the Brazil office. You know, as we build up the team and infrastructure, you know, you got to spend that money up front, and then we'll start to execute trades, right? We're getting into that mode where we should start seeing some trades now starting to come through the Brazil office as well.
Speaker Change: For trades specifically, this can fluctuate depending on the season, the type of commodity, market conditions, shipping costs, etc. We're in the process of looking to add different types of commodities to our portfolio, such as vanilla, lentils, and peas.
Speaker Change: diversification going in there. In addition, we want to continue to open new trade areas beyond our current MENA, LATAM, and Brazil areas. This will all allow us to shift between regions as market conditions fluctuate. So again, we're going to be able to be, you know,
Speaker Change: and doing things in Brazil while maybe the conditions are bad in Brazil.
Speaker Change: wherever, right? And so, you know, we're gonna be able to shift around between all these different areas by expanding in these in these different roles, which that all combined should help drive some of the margins in the business.
Speaker Change: So, I think that was the last of the kind of the pre-questions, if you want to say, that we received. So, Alexa, do you want to turn it over to the different analysts?
Alexa: Yes, thank you Mike, Jennifer. We will go ahead and take the first question from our analyst Erin Gray with AGP. Do you have any questions, Erin?
Erin Gray: Yeah, great. Thanks for all the detailed prepared remarks and answers to the questions so far. I'd like to pick off a little...
Erin Gray: a little bit where you just left off in the last question. Just in terms of commodity trading environment for the quarter, right, so gross margins were down, slightly negative or flat based off some of the remarks I heard, average $7 million, average cost $7. So was it one large trade that kind of led to the flat gross margins and it seems like gross margins for commodity trade didn't, you know, happen?
Erin Gray: trending that way for the past couple quarters now. So I know there can be volatility, but it seems like it might be a little more trend now. So can you speak towards the quarter? Was it more of a one-off sale that really went on margins? Was it accumulation of all the sales that weighed on it? And just to add that onto of what you had just briefly spoken towards.
Speaker Change: Thanks, Aaron. So a couple pieces there, and I do have Benjamin Patel on the phone, and I'll turn it over to him in a second as well, but you had mentioned, you know,
Speaker Change: [inaudible]
Benjamin David Klieve: 7.1 million in revenue and 7 million cost, so it's not quite flat, but it's still, you know.
Benjamin David Klieve: It's still not where we want it to ultimately be or whatever, just to clarify that. So Benjamin, do you want to kind of talk about this?
Benjamin David Klieve: Sure. Hi. Hello, Aaron. Nice to talk to you again. I think in general looking at the environment we're in right now is
Benjamin David Klieve: that there's a lot of strain or volatility in the trading world in general. I think that there's a few factors to that, kind of piggybacking on the tension in Ukraine, adding to that the tension in the Middle East.
Benjamin David Klieve: and also China, which is, of course, the largest consumer of the world, and they've been showing kind of signs of slowing down over the last quarter. But as Michael said in the, you know, throughout his, everything that was said here before, I think this is the main thing that diversification is very important for, and that we plan to increase those margins.
Benjamin David Klieve: basically getting into different verticals of the supply chain and of different products and of different geographies. So certain commodities or certain paths and geographies could be down or lower at times. This also depends greatly on the structure of which the trades have been done and the financing is also Michael alluded to. So I think it's a combination of factors but this is definitely why we're striving and working so hard to put in new and parts of the supply chain, be it geographies, products, financing, etc. in order to be able to mitigate and raise these margins.
Speaker Change: Awesome. Thanks, Benjamin. Aaron, what else you got, man?
Aaron: No, I appreciate the color there, Michael Benjamin. Second question for me, just the trade financing, can you speak on the timing when that was finalized? I may have missed it, so just for the color and the timing and then.
Speaker Change: Any color in terms of the commodity transactions in a quarter to date in 1Q? We're almost done with the quarter, about 9 days left. So just in terms of sales and margins, how that might have turned in a quarter to date versus 4Q? Thanks.
Speaker Change: Yes I'll talk about the the trade financing stuff so we're all we're always working on trade finance right continue to expand things out and we've got several
Speaker Change: Finalized deals I guess is the way you want to look at it that we have been leveraging so far. You know that's probably in the
Speaker Change: What's the total you think now in the trades? I'm looking at Jennifer. Yeah, let's call it $15 to $20 million that we've already got.
Speaker Change: [inaudible]
Speaker Change: When you take a look at the total quarter that we're in so far, I don't have the numbers that I can share necessarily at this stage.
Speaker Change: But I think it's, you know, I think you can say it's, you know, it's a pretty typical quarter just in general, but I don't, I don't have the actual, you know, numbers here in front of me or whatever that we can share without having, you know, more details or whatever that are there.
Speaker Change: What else you got, man?
Speaker Change: Okay, great. Thanks. Um, all right. All right. So yeah, so, uh,
Speaker Change: I think that's helpful. I guess just kind of bring it all together then, especially since we've got Benjamin online here, so.
Speaker Change: In terms of timing and line of sight, so you're talking about now being a typical quarter, how are you seeing in terms of, are we in a longer term period of these more, you know, compressed margins? Do you think the trade financing is enough to get you in a normalized way? Or do you have the ability to be more nimble and get to some markets that are, you know, more favorable? How do we think about
Speaker Change: you know, the overall balance of top line growth, but also profitable growth for you guys as we look for the longer term 2024 in the environment out there. So if you could just kind of give a holistic outlook on that, that'd be helpful. Thanks.
Speaker Change: Yeah, I think.
Speaker Change: I think we've got, how do I?
Speaker Change: go through this. So, yeah, we are nimble, right? We do have the ability to move around to different regions of the world. We actually cover a big chunk, you know, of the world now in the biggest markets, right, that are out there, you know, especially with Brazil coming online.
Speaker Change: You know, nuts, we always have the Americas to the Tom, and then we've had the original stuff that was kind of in the MENA region, right? So we do control a lot of the different areas and have access to move between things, right? I think really a better way of looking at it is, you know, if there's a certain commodity that's not, you know, performing as well, let's say it's, it's
Speaker Change: you know, sowing, right? We do have the ability to start moving into different areas like, you know, vanilla, you know, as an example, right? Or peas or whatever it might be, right? So, you know, we are, we are able to kind of move around between those type of things. You know, when you look at the typical quarters and things that are there,
Speaker Change: You know, it's interesting because you do have seasonality, you do have, you know, things with trade finance, all these things kind of tie together, and, you know, help build this business, right? And you are going to have ups and downs and everything in between. That's there. But
Speaker Change: Kevin, I think wanted to jump in and say something. Yeah. Hey, Aaron. It's Kevin. No, I was just saying I think that another thing that's really going to be critical for our go forward is to continue to add these trade lines, right? So I think if you look back at the history of this company, we kind of started off by doing a lot of ...
Kevin: Net-offs and back-to-backs and I think that the company is now sort of transitioning to something that's a little bit more traditional So I think that you know sort of as we implement that strategy and as we grow that side of the business We are definitely hoping that things are going to improve
Speaker Change: Yeah, and one other thing to think of too, Aaron, it's not just necessarily the we talked about trade financing a lot, right, but we also have supplier credit lines, you know, and that's that we kind of, you know, lump that stuff together when people talk about it, but they are kind of two distinct, you know, different areas. And so we are working on a lot of credit lines as well with the different suppliers.
Speaker Change: If I could, if I could, if I could summarize through just one, one more sentence.
Speaker Change: Aaron, I think you used the word nimble, and we usually use the word agile, but I think that's correct.
Speaker Change: Really, the main thing here is to be agile and to be able to seize
Speaker Change: opportunities that are best on that are in line with our strategy. And if we see that there's a slowdown, you know, in our typical commodity cycles, which are very short term, and our return on equity is usually quite significant. It's just we're dealing here with very large volumes with a very large ticket size, of which there are, you know, limited margins to begin with.
Speaker Change: But there are
Speaker Change: different products and there are different geographies as Michael kind of alluded to which are things that we are very much involved in examining and in different stages of bringing in to the to the group that will
Speaker Change: [inaudible]
Speaker Change: do a lot to increase these margins and also secure different kinds of trades and flows that will make us not depend on one geography, one product, one financing and so on.
Speaker Change: So, I think that agile is definitely the word, and we look forward to diversification and diversifying into these other areas.
Speaker Change: Thanks, really appreciate the color and detail on the answers there guys, I'll jump back in the queue. Okay, great. Thanks, really appreciate the color and detail on the answers there guys, I'll jump back
Speaker Change: Okay, Alexa, did you want to go to the next? Yep, thank you, Aaron. We'll move to Tom Kerr with Zach's for questions.
Thomas Kerr: Good morning, guys. Can you hear me?
Thomas Kerr: Here you find
Thomas Kerr: Just a couple of clarifications. Most of my questions have been covered, but...
Thomas Kerr: One second.
Thomas Kerr: [inaudible]
Thomas Kerr: What do you have, any jokes they want to say? Sorry about that. No problem, Tom. Somebody said the word Alexa, and my Alexa turned on and started talking to me. That's funny. Just a clarification on the trade finance. Who is it or what is it? Is it going to be multiple sources? Is it a bank? Is it a...
Thomas Kerr: private investors, just kind of what is, who is arranging the trade financing and what does it qualify, how do you qualify for that?
Thomas Kerr: These are a bunch of different sources, it's not all banks, some of them are either trade companies, some of them are banks, some of them are private, it's a combination of all of them that we put together, mainly because we don't want to rely on one source.
Thomas Kerr: Hey, we wanted to, you know, we want to diversify this just like we diversify everything else. Yeah. And, you know, kind of what you want to call your eggs in one basket. And so we have, you know, there's different sources.
Thomas Kerr: on that. Benjamin, did you want to add to that?
Benjamin David Klieve: No, I think that basically covers it. Again, it is a very vast kind of term, trade finance. And in our light of business, oftentimes it could also come from the counterparts, either suppliers or customers or so on, where you have different terms with them, where in essence, they're providing you with the finance to do the trade, depending on the way you negotiate it and the timeline and so on.
Benjamin David Klieve: in the banking or institutional world. There are banks that provide, there are funds that provide, and then there's, as Jennifer said, there's
Benjamin David Klieve: private or pseudo family offices and so on that also are involved in this business. So we have a blend of some of those at the moment and always looking to find more that fit within our matrix of finance and what we're looking for.
Benjamin David Klieve: got it in the 15 to 20 million you referenced that's just the collective number of all those sources you may correct okay
Benjamin David Klieve: And back to the margins, just to beat that dead horse for a second, we had talked about
Benjamin David Klieve: 3% margins in that commodity business over time, or that's a goal of 3% or better. I know you guys aren't providing guidance, but is there a timeframe perhaps we can look for that 3% goal? Is it 2024, 2025, or any other color on that?
Benjamin David Klieve: Well, I think number one, this is Kevin, I think number one, I think we were, you know, one to three is kind of, I think, what we've, you know, historically talked about. But I think that there are a lot of creative ways being the type of company that we are, a smaller company where we've had
Benjamin David Klieve: success in getting much higher margins than that. So sometimes you're going to have fluctuations in the business where
Benjamin David Klieve: You may have some of these higher margin deals that you can facilitate and then you may have, you know, a quarter where you don't make a whole lot. Right? So the whole goal is to try to balance those out as the year goes on. And as things change, whether it's market fluctuations, whether, you know, trade finance opportunities, etc.
Benjamin David Klieve: I'll continue if possible and just say that I won't I'm not going to give a date here but I think that all the all the things we've mentioned so far with
Benjamin David Klieve: The entering into new verticals, which allow us to not only hedge ourselves against the volatility of the market, but also add margins every step of the way. So if it's just, for example, if it's getting into shipping, where we're not into shipping right now, that would make a significant difference today already, if we had a shipping arm already in the company, and we're able to mitigate shipping costs and so on and so forth, because those are also commoditized, and they also go up and down, depending on conditions.
Benjamin David Klieve: That's what we're trying to do and not rely on the, you know, the good, the good fortune of the market, if I would say, of the commodity prices and so on, where we see that it's unreliable. We need to diversify and we need to open ourselves to new products, new geographies, and new verticals that will all form this.
Benjamin David Klieve: picture together and we'll hopefully increase the margins to the point we want them to get to.
Speaker Change: Great, that's helpful. And last question for me on the restaurant business. Can you kind of give us any more color on where we are in that process? I mean, do you have to wait for those corporate?
Speaker Change: Thanks to be refranchised or is there open without strong interest I mean is you guys looking at bids or what ending are we in yeah? Let me let me I get what you're going. Let me jump in there, so there was always two phases
Speaker Change: to looking at the restaurants, right? And should we divest them or not, right? First phase was...
Speaker Change: take the corporate locations and convert them over to franchise locations.
Speaker Change: Right.
Speaker Change: That is, for all practical purposes, been complete, okay? We still have a few out there that we're working on, but it's pretty much been complete.
Speaker Change: and that positioned the restaurants then and positioned the...
Speaker Change: the whole overall structure to now go out and investigate, you know, and hire somebody to go do this, right?
Speaker Change: And so we actually hired Lissetts & Associates who, part of their expertise is, you know, selling restaurant chains.
Speaker Change: have been doing it for about 40 years. They've been out there for a long time doing this stuff, right? So we have hired them recently.
Speaker Change: as we're now moving into the second phase, which is where we are today. So the first phase is already done and complete. We're now into the second phase of looking to divest these restaurants.
Speaker Change: From a timing perspective on it, we recently just hired them, right, in the last, you know, call it last 30 days, two weeks, whatever, somewhere in that timeframe as we work things out. We are now in the process of creating the data room and all that to be able to put things in there. We do have some people already showing interest.
Speaker Change: We've had some general discussions that have already started, but I don't have necessarily a timeline on it per se, other than it's it's an important thing for us and we're working against it pretty quickly. And I would add something also to that, Tom, and I would say that Lissiton specifically, they are very specific in.
Speaker Change: this particular business sale and they are intimately
Speaker Change: knowledgeable about the brand specifically. So they are up in the Northeast. They know the brand extremely well. We've known them for a long time. That was actually the firm that we purchased Pokemoto from. And so I know that there was, I can I could disclose this, there was a lot of people that were bidding on that when we first bought it. And so it made sense after interviewing, you know, several other firms to go with Lisita. But we're very comfortable with that decision.
Speaker Change: Great. That's all I have for this morning. Thanks.
Speaker Change: All right. I think that's basically it. Alexa, do we have anything else that's out there from an analyst perspective or questions?
Speaker Change: That is all. I believe that concludes our Q&A portion of this call. Mr. Roper, any final comments? Okay. Yeah, just I just want to thank everybody again, as always. You know, we got a lot of things that are changing in this business. We're growing it. It's pretty exciting.
Michael J. Roper: You know, we're, you know, obviously started our farm stuff with the harvest in Zambia, which is pretty exciting. I don't know if anybody saw, but we had the president of Zambia actually was on our farm this week.
Michael J. Roper: doing some press work and some festival activities as well. So, getting some high-profile type of visits from people as well that are out there. So, very exciting stuff and more to come soon. I appreciate it, everybody.