Q1 2025 Sadot Group Inc Earnings Call

Greetings well.

Operator: Welcome to Sadot Group Inc Q1 2025 earnings conference call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded.

Speaker Change: Welcome to Sadat Group, Inc, Q1, 2025 earnings conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Please note this conference is being recorded.

Amy Infante: I will now turn the conference over to your host, Amy Infante, Chief Marketing Officer. You may begin. Thanks, Operator.

Speaker Change: I will now turn the conference over to your host Amy Infante Chief Marketing Officer.

Speaker Change: You may begin.

Amy Infante: Before we get started, we would like to state that this call may include forward-looking statements pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. To the extent that the information presented on this call discusses financial projections, information, or expectations about the business plans, results of operations, products, or markets, or otherwise make statements about future events, such statements may be forward-listed. Such forward-looking statements can be identified by the use of words such as should, may, intends, anticipates, believes, estimates, projects, forecasts, expects, plans, and proposes. Although management believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

Thanks, operator before we get started we would like to state that this call may include forward looking statements pursuant to the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.

Speaker Change: To the extent that the information presented on this call discusses financial projections information or expectations about the business plans and results of operation products or markets or otherwise make statements about future events such statements may be forward looking.

Speaker Change: Such forward looking statements can be identified by the use of words, such as should May intends anticipates believes estimates projects forecasts expects plans and proposes.

Speaker Change: Although management believes that the expectations reflected in these forward looking statements are based on reasonable assumptions. There are a number of risks and uncertainties that could cause actual results to differ materially from such forward looking statements.

Amy Infante: You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading Risk Factors in Sadot Group Inc.'s most recently filed Form 10-K and elsewhere in documents that Sadot Group Inc. files from time to time with the SEC. Forward-looking statements speak only as of the date of the document in which they are contained and Sadot Group, Inc. does not undertake any duty to update any forward-looking statements except as may be required by law.

Speaker Change: You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading risk factors into that grouping. Most recently filed Form 10-K and elsewhere in documents that the Doctor is being filed from time to time with the SEC.

Speaker Change: Forward looking statements speak only as of the date of the document in which they are contained and Dot group, Inc. Does not undertake any duty to update any forward looking statements, except as maybe required by law.

Amy Infante: For this call, all numbers disclosed have been rounded to the closest 100,000 and percentages have been rounded to the closest tenth of a percent unless otherwise noted. All numbers disclosed in this report are the amounts attributable to Sadot Group Inc. and exclude the portion related to the non-controlling interest.

Speaker Change: For this call I'll numbers disclosed have been rounded to the closest 100000 and percentages have been knowledge as of close to two tenths of a percent unless otherwise noted.

Speaker Change: All numbers disclosed in this report are the amounts attributable to Sudhakar, Inc, and exclude the portion related to the noncontrolling interests.

Amy Infante: On this call, we will refer to Sadot Group, Inc. as Sadot Group, Sadot, or the company.

Speaker Change: On this call we will refer to Sudhakar <unk>, Inc. As Sadat group, so dot or the company.

Amy Infante: With me on the call today are Sadot Group's Chief Financial Officer, Jennifer Black, and Interim Chief Executive Officer, David Hanna. Throughout this presentation, we will be referring to David Hanna as CEO, which his appointment begins June 2, 2025.

David Hannah: With me on the call today are Sudhakar, <unk>, Chief Financial Officer, Jennifer Black and interim Chief Executive Officer, David Hannah throughout this presentation, we will be referring to David Hannah as CEO, which his appointment begin June 2nd 2025.

Amy Infante: Jennifer will be presenting prepared remarks related to Sadot Group's financials filed on May 14, 2025, and those documents may be found on the company's website, Newswire feeds, and on the SEC's website linked from the Sadot Group's website at www.sadotgroupinc.com under the Investor tab.

Jennifer Black: Jennifer will be presenting prepared remarks related to Saddam group's financials filed on May 14, 2025, and those documents may be found on the company's website use wire feeds and on the SEC website linked from the Sadat group's website at Www Dot Dot group Dot com under the Investor tab.

Jennifer Black: At this point, I would like to turn it over to Sadot Group's CFO, Jennifer Black. Jennifer. Thank you, Amy.

David Hannah: At this point I would like to turn it over to sit at groups CFO Jennifer Black.

Jennifer Black: Jennifer.

Jennifer Black: Thank you Amy before I begin please note that our financial results for the quarter ending March 31st 2025 on the Form 10-Q were filed with the SEC yesterday may 14th 2025, along with the press release on that same day.

Jennifer Black: Before I begin, please note that our financial results for the quarter ending March 31, 2025 on Form 10-Q were filed with the SEC yesterday, May 14, 2025, along with the press release on that same day. Our Sadot Agri-Foods revenue was $132.2 million in Q1. The company completed 76 transactions in Q1 across 17 different countries. Revenue increased by $25.7 million as compared to Q1 2024, an increase of 24.1% over 2024. Net income attributable to Sadot Group improved to $0.9 million in Q1 2025 compared to a $0.3 million net loss in Q1 of 2024. This is an improvement of $1.2 million over Q1 of 2024.

Our Siddhartha Agri foods revenue was $132 2 million in Q1.

Jennifer Black: The company completed 76 transactions in Q1 across 17 different countries.

Jennifer Black: Revenue increased by $25 7 million.

Jennifer Black: As compared to Q1 2024, an increase of 24, 1% over 2024.

Jennifer Black: Net income attributable to sit at group improved to a point 9 million in Q1 2025 compared to a point 3 million net loss in Q1 of 2020 for.

Jennifer Black: This is an improvement of $1 2 million over Q1 of 2024.

Jennifer Black: EBITDA rose to $2.5 million compared to $0.1 million in the prior period. Both basic and dilutive earnings per share, as attributable to Sadot Group, was positive $0.18 per share compared to a negative $0.06 per share in the prior year. SG&A expenses were $3.1 million this quarter, an increase of over $1.7 million compared to last year. The increase in SG&A was mostly attributable to reclassifying some expenses from cost of goods sold to an SG&A, which better reflects the actual cost of goods sold, shifting wages for administrative personnel, insurance, and other items into the general SG&A account.

Jennifer Black: EBITDA rose to $2 5 million compared to a point 1 million in the prior period.

Jennifer Black: Both basic and dilutive earnings per share as attributable to Sadat group was positive 18 cents per share compared to a negative <unk> <unk> per share in the prior year.

Jennifer Black: SG&A expenses were $3 1 billion this quarter, an increase of over $1 7 million compared to last year.

Jennifer Black: The increase in SG&A was mostly attributable to reclassifying certain expenses from cost of goods sold to SG&A, which better reflects the actual cost of goods sold.

Jennifer Black: Shifting wages for administrative personnel insurance and other items into the general SG&A account.

Jennifer Black: Looking at our balance sheet, the company had a cash balance of $1.9 million and working capital surplus of $21.9 million. It is important to note that as a part of our ongoing strategy, we continue to reinvest our cash into agri-food commodity trading business to drive revenue, growth, and acquire strategic assets.

Jennifer Black: Looking at our balance sheet. The company had a cash balance of $1 9 million and working capital surplus of $21 9 billion.

Jennifer Black: It is important to note that as a part of our ongoing strategy, we continue to reinvest our cash and the aggregate commodity trading business to drive revenue growth and acquire strategic assets.

Jennifer Black: We are proud to report Q1 was our fourth consecutive profitable quarter and an improvement versus Q1 of 2024, which was our last negative quarter we reported. We believe positive changes are occurring across our business.

Jennifer Black: We are proud to report Q1 was our fourth consecutive profitable quarter and an improvement versus Q1, 2024, which was our last negative quarter we reported.

Jennifer Black: Really positive changes are occurring across our business.

David Hanna: With that, I would like to turn the call over to David to introduce himself. Thank you, Jennifer. As has been previously announced, I'm assuming the interim CEO position effective June 2, 2025.

David Hannah: With that I would like to turn the call over to David to introduce himself.

David Hannah: Thank you Jennifer.

David Hannah: As has been previously announced I'm, assuming the interim CEO position effective June <unk> two.

David Hanna: I'd like to spend a few minutes introducing myself to everyone. I joined Sadot in June of 2024, and I'm currently the Executive Vice President and Head of Sadot Canada. I will also be performing the dual role of interim CEO for Sadot Group. There are many moving parts of Sadot. We are a rapidly growing company. What's unique is this expansion is happening on a global basis, making it even more complex than a typical emerging company, where we handle the complexities of international rules, customs, time zones, translations, etc. However, through our vast network of employees and consultants, we have been able to manage this growth to date.

David Hannah: 2025.

David Hannah: I'd like to spend a few minutes introducing myself to everyone.

Speaker Change: He joined Sudan.

Speaker Change: June of 2024, and I'm currently the executive Vice President and head of SEDAR, Canada, I will also be performing the dual role of interim CEO of <unk> group.

Speaker Change: There are many moving parts of Sudan, we are rapidly growing company.

Speaker Change: What's unique is this expansion is happening on a global basis, making it even more complex than a typical emerging company.

Speaker Change: We handle the complexities of international rules customs time zones translations et cetera.

Speaker Change: However, through our vast network of employees and consultants, we have been able to manage this growth to date.

David Hanna: With this growth, it is natural for companies to experience inefficiencies between new divisions, countries, etc. Sadot is no different.

Speaker Change: With this growth it is natural for companies to experience inefficiencies between new divisions countries et cetera, Sudan is no different.

David Hanna: Sadot is at a point where we need to take a hard look at how we improve our balance sheet and income statements within a controlled growth plan. I believe my background and skill set will be key in attacking these challenges head-on. I have been involved in rapid growth companies in the past and fully understand the challenges. I even founded my own business focused on pulses, especially crops, distribution and trading of ingredients for the plant based protein sector. I grew this business over 80 million in containers, truckloads and railcars to over 35 countries around the world.

Speaker Change: Sudan is at a point, where we need to take a hard look at how we improve our balance sheet and income statements within a controlled growth plan.

Speaker Change: I believe my background and skill set will be key in attacking these challenges head on.

Speaker Change: I have been involved in rapid growth companies in the past and fully understand the challenges.

Founded my own business focused on pulses, especially across distribution and trading of ingredients for plant based protein sector.

Speaker Change: I agree with this business over $80 million in containers truckloads and railcars over 35 countries around the world.

David Hanna: We developed a plant-based pet food ingredient division with sales into leading pet food manufacturers across North America, while also becoming the leading Canadian exporter of specialized peas for the pea protein extraction industry.

Speaker Change: We developed a plant based pet food ingredient division with sales into leading pet food manufacturers across North America, while also becoming the leading Canadian export are specialized.

Speaker Change: Our specialized piece for the Pea protein extraction industry.

David Hanna: I bring a unique skill set. to the CEO role for Sadot. Not only will I bring global agri-foods and commodity trading experience from building agri-food businesses in excess of $500 million annually, I will also be combining this experience directly with extensive financial experience in M&A, public and private equity, and debt financing, where I was involved in transactions totaling more than $1 billion. I believe I am a leader who can bring all the components of the Sadot business together, both the international commodity trading business and agri-foods operations, plus the financial acumen and experience to drive shareholder value through various mechanisms, including trade finance, M&A, debt financing, operational efficiencies and cost cutting.

Speaker Change: I bring a unique skill set.

Speaker Change: To the CEO role for set up not only in delivering global Ags was a commodity trading experience from building agro food businesses in excess of 500 million annually.

Speaker Change: I will also be combining this experience directly with extensive financial experience in M&A and public and private equity and debt financing, where I was involved in transactions totaling more than $1 billion.

Speaker Change: I believe I am a leader who can bring all the components of this <unk> business together, both the international commodity trading business and Niagara food operations.

Speaker Change: That's the financial acumen and experience to drive shareholder value through various mechanisms, including trade finance M&A debt financing.

Speaker Change: Operational efficiencies and cost cutting.

David Hanna: On a different note, if you are interested in receiving press releases and other company information automatically, please visit our website at www.sadotgroupinc.com, go under Investor Relations, and then Investor Alerts, and sign up for these announcements, which will be sent to your email. It's a great way to keep informed of all announcements.

Speaker Change: On a different note.

Speaker Change: We're interested in receiving press releases and other company information automatically. Please visit our website at Www Dot Dot Group, Inc. Dot Com go into Investor Relations, and then investor alerts and sign up for these announcements, which will be sent to your email.

Speaker Change: Great way to keep informed of all announcements.

Jennifer Black: I'd like to turn the call back over to Jennifer to review a few questions that we have recently been asked by various parties. Thanks, David. The company receives questions or comments from the investor community during the quarter, and we like to summarize and address these questions during our call.

Jennifer Black: I'd like to turn the call back over to Jennifer to review a few questions that we have recently been asked by various parties.

Jennifer Black: Thanks, David.

Jennifer Black: The company received questions or comments from the Investor community during the quarter and we like to summarize and address these questions during our call.

David Hanna: The first one we have is can you comment with an update on the general tariff environment and how it affects Sadat's business? David. There has certainly been a lot of movement on tariffs globally over the past few months. While the U.S. tariffs cover a wide range of products, industries, and countries, we can say confidently that we do not believe tariffs will have a significant material impact on Sadot. Sadot is a global company. We have conducted agri-commodity trades with 33 countries. The large majority of our revenue is generated outside of the United States, between other countries of origin or destination, having no impact from the new tariffs.

Jennifer Black: The first one we have is can you comment with an update on the general tariff environment and how it affects the docs business David.

David Hannah: Yeah, It's certainly been a lot of movement on tariffs globally over the past few months, while the Europe tariffs cover a wide range of products industries and countries. We can say confidently that we do not believe tariffs will have a significant material impact answer Doug.

Speaker Change: <unk> is a global company, we have conducted aggregate commodity trades with 33 countries. The large majority of our revenue is generated outside of the United States between other countries of origin or destination, having no impact from the new tariffs.

David Hanna: For the full year 2024, only a marginal portion of Sadot Group's global trade revenue was directly related to trades originating from or delivering into the United States. Our revenue is mostly generated by agri-commodity trades between countries all over the world. For example, we recently announced a trade to our new South Korea subsidiary between Australia, Kenya, and other countries. Because this trade was not originating from or delivering into the United States, it was not subject to the new U.S. tariffs. In addition, our commodity trading business model and products, which represents over 99% of total company-wide revenue, are not considered consumer discretionary items. Everyone has to eat, and tariffs, if they apply, are costs that are usually passed through 100%.

Speaker Change: For the full year 2020 for only a marginal portion of Sudan group's global trade revenue was directly related to trade the originating from or delivering into the United States.

Speaker Change: Our revenue is mostly generated by higher commodity traders between countries all over the World. For example, we recently announced that traded through our new South Korea subsidiaries between Australia and other countries.

Speaker Change: Does this trade was not originating from or delivering into the United States. It was not subject to the new U S tariffs.

Speaker Change: In addition to our commodity trading business model.

Speaker Change: <unk>, which represents over 99% of total company wide revenue are not considered consumer discretionary items, everyone has to eat tariffs.

Speaker Change: Our costs that are usually pass through 100%.

David Hanna: What tariffs can impact are what countries become more competitive as origins. We believe the company can manage in almost any environment due to the nature of the food-related products we trade, as well as the global sourcing and distribution of our network. remains vigilant in monitoring the situation and will provide updates should any significant material changes arise. For now, the tariff should be considered a non-material event concerning Sadat's global business.

Speaker Change: Tariffs can impact or what countries become more competitive as Georges we believe the company can manage in almost any environment due to the nature of the food related products, we trade as well as the global sourcing and distribution of our operating network.

Speaker Change: <unk> group remained vigilant in monitoring the situation and.

Speaker Change: And we will provide updates should any significant material changes arise for now the tariff should be considered a non material event concerning sadosky global business.

David Hanna: All right. Thanks, David.

Speaker Change: Alright, Thanks, David the second question, we have is kind of a continuation on the tariffs subject I'll have the tariffs between U S and China impacted the business directly.

David Hanna: The second question we have is kind of a continuation on the tariff subject. How have the tariffs between US and China impacted the business directly? Again, we have a flexible trading model where we can source products from different countries to satisfy demand.

Speaker Change: Again, we have a flexible trading model, where we can source products from different countries to satisfy demand.

David Hanna: What we've seen is that China's demand for major products like soybeans has shifted from US origin product to other markets such as Brazil. We're studying this trade flow to capitalize on new opportunities created by the change in market dynamics, particularly where we can leverage our inland origination capability.

Speaker Change: We have seen is that China's demand for major products like soybeans has shifted from U S origin product to other markets such as Brazil. We're studying this trade flow to capitalize on new opportunities created by the change in market dynamics, particularly where we can leverage our inland origination capabilities.

David Hanna: Thanks, David.

David Hanna: The third question we have, the company's gross margins have been less than 1%. How are you going to improve those margins? We're looking at a number of areas where higher margins are more achievable, specifically containerized specialty crops like pulses, such as lentils and beans and sesame seeds. These are lower volume products.

Speaker Change: Thanks, David.

Speaker Change: The third question, we have the company's gross margins had been less than 1% how are you going to improve those margins.

Speaker Change: We're looking at a number of areas, where higher margins are more achievable, specifically containerized specialty crops like pulses, such as landfills in beams and sesame seeds.

Speaker Change: These are lower volume products. So this strategy won't drive sales growth, but will contribute to higher gross margins as we develop those business lines, both the Canadian and Brazilian teams are focusing primarily on these product lines.

David Hanna: So this strategy won't drive sales growth, but will contribute to higher gross margins as we develop those business lines. Both the Canadian and Brazilian teams are focusing primarily on these product lines.

David Hanna: We also signed a management services agreement for a pet food ingredients processing business in Canada. While relatively small, this is a fee based contract that has no related cost of goods sold and contributes fully to gross margin. We're continuing to look for more opportunities like this as part of our development as a company.

Speaker Change: We also signed a management services agreement for pet food ingredients processing business in Canada, while relatively small this is a fee based contract that have no related cost of goods sold and contribute fully to gross margin. We're continuing to look for more opportunities like this as part of our development as a company.

David Hanna: All right, the last question we have, please provide an update on the sell of the restaurant process. While the sale of restaurants is taking longer than anticipated, we are making progress and we have multiple parties interested in acquiring the Pocomoto and MMG chains. We're finalizing a new LOI with a qualified buyer.

Speaker Change: Alright, and the last question. We have please provide an update on the sale of the restaurant process.

Speaker Change: While the sale of restaurants has taken longer than anticipated, we are making progress and we have multiple parties interested in acquiring <unk> and <unk>.

Speaker Change: We are finalizing a new LOI with a qualified buyer.

David Hanna: The Pokemono chain continues to open new locations with recent openings in California, Alabama, Florida, Connecticut and Massachusetts. We also have new locations opening over the next few months in Claremont and Fort Lauderdale, Florida, Kingstown, Rhode Island and Puerto Rico. We currently have 41 open locations and another roughly 60 franchise agreements that have been sold but not open to date. We continue to expand Bukimoto.

Speaker Change: The polka Moto G and continues to open new locations with recent openings in California, Alabama.

Speaker Change: In Connecticut, and Massachusetts, We also have new locations opening over the next few months and Claremont in Fort Lauderdale, Florida, Kingstone, Rhode Island in Puerto Rico.

Speaker Change: We currently have 41 open locations and another roughly 60 franchise agreements that have been sold but not opened to date, we continue to expand okamoto. The restaurant Division in Q1 reported positive 107000 net income while we want to complete the sale.

David Hanna: The restaurant division in Q1 reported positive $107,000 net income. While we want to complete the sale as quickly as possible, we're also trying to get the maximum value throughout the sale process.

Speaker Change: Quickly as possible.

Speaker Change: We're also trying to get the maximum value throughout the sale process.

David Hanna: We thank all of our investors, stakeholders and team members for your time and continued support of Sadot Group. Thank you. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

Speaker Change: We thank all of our investors and stakeholders of team members for your time and continued support of <unk> group.

Speaker Change: Thank you. This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.