Sadot (SDOT) 13 Nov 242024 Q3 Earnings call transcript

Welcome to the Sadot Group Inc. Q3 2024 Earnings Conference Call. Today's call is being recorded. [Operator Instructions]

At this time, for opening remarks and introductions, I would like to turn the call over to Frank Pogubila, Sadot Group Inc.'s Investor Relations contact.

we forward-looking to safe statements of U.S. started, call that harbor get the include may pursuant we would state like this provisions Before to the Act Private of Litigation Reform Securities XXXX. expectations on extent the discusses information be plans, markets products the may of presented or statements about To events, this otherwise such business the statements make information financial call projections, operations, or results or about forward-looking. future

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

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

review other time files statements carefully elsewhere XX-Q under any are in Group in made statements Form that urged disclosures, Inc. with the heading most Sadot and and from Risk the Factors and to SEC. documents Inc.'s time Sadot to cautionary the consider filed including recently You Group

speak may as update Sadot in and date they the not which by only required except of of contained, document Inc. statements, as any forward-looking the duty are any does undertake to be law. Group statements Forward-looking

and we related or exclude Sadot Inc. this report will Sadot Group portion are Sadot noted. been otherwise disclosed All all this all attributable company. the a to as the the amounts the numbers Inc. to call, percentages in this For have noncontrolling Group rounded unless the numbers refer disclosed rounded interests. Sadot to to disclosed -- closest have to been and of $XXX,XXX, On call, closest percent tenth Group,

XX, Jennifer financials Officer, under feeds from website, filed tab. SEC's be Sadot Group's found are at the XXXX, With Sadot's to and website www.sadotgroupinc.com the Financial me remarks on may Jennifer be will and Executive documents call and link Chief and Michael Chief Newswire on Michael on Investor November those the Sadot on company's Black. related website the Roper; presenting prepared Group's today Officer,

to to turn Michael? this I At it like CEO, Michael Roper. Sadot's would over point,

pleased today's Thanks, quarter where I'm be everyone. Frank, and we'll good welcome our morning, XXXX. discussing call, third everyone results to for to

I'm for to accomplishment milestone achievement accompanied best profitability. second drive X-month a by and the company. quarter, consecutive net marking income the extremely positive report growth proud for our our underscoring year-to-date in is efforts ongoing to This our history, performance

period In QX, consolidated we of last increase $XXX.X generated a same over million, revenues XX.X% the year.

Agri-Foods. core the and revenue, or implement consolidated group, commodity of Sadot the vast drove we as an same million, XX.X% increase revenue agri our of XX.X% This revenue by generated our global to $XXX.X expansion last strategy. majority continue division our However, was against year period execute over

income positive reached second $X.X income. positive QX, QX Our net quarter making our million net with consecutive for

from income million This net improvement QX XXXX. income Our improvement substantial was of year-over-year. negative of a an represents $X.X loss the of million net $X.X $X.X million QX roughly net in

of to $X.X million EBITDA EBITDA was negative QX last improvement This represents EBITDA this also at year. in QX million a compared XXXX million $X.X Our $X.X an quarter positive in year-over-year.

history. any $X.X period same income net for recorded represents over the in year-to-date XXXX. of our net achievement million million, in stands highest through first year QX $X.X our improvement loss at the net the to the months marked X Notably, This compared a income company

and shipping, farming, verticals, $X and agri such logistics, operations commodity market with additional into our within distribution. a nearly commodities reinforces demonstrate to trading, for global chain operate and to including trillion our supply further areas essential into expand strategic vision results potential origination These agri ability profitably as processing growth

commodities widen into new expanding geographical trade the to we we addition, trade areas. also In types want of while

agricultural an a the successful pleased deposit that of upon to negotiations I'm property in details our farming further transaction. announce assets, completion expand that, placed this forward we recently we and sharing are to look to Indonesia of With on and portfolio in

Regarding core operations, our these we developments brands, legacy these keeping and updated asset committed remain restaurant noncore streamline to any you on restaurant focus we've on divesting assets our related to been to transactions. strategically

We closed all locations and company-owned operated including locations, have restaurant converted Superfit into Foods. or franchise

We are accordingly. reduce franchise been concept able overhead XXX% now to a expenses some have and

Jennifer? call With financial that, the I'd performance like Black, to for to of Jennifer review the our quarter company's to XXXX. over turn the third CFO,

Thank you, Mike.

the our that XXXX, with I Form quarter financial Before the XX, September ending release XXXX, yesterday, that XX-Q November on results for day. filed on same the SEC begin, note XX, press were along please with

increased third quarter in up the year. from the For same million, $XXX.X last by of period million revenues to XXXX, XX.X% consolidated $XXX.X

Our Sadot contributing countries. million majority XX of business we transactions quarter in different $XXX.X our third the Agri-Food for XX the accounted as completed revenue, across

from XXX% royalties in September Our operations million and are company sale, operations, as XX, legacy for QX. restaurant system as franchise had $X.X which, of and revenue held of classified

significantly to million to $X.X XXXX. million QX loss improved income net $X.X XXXX QX compared net of in a

negative to For the the third $X.X million positive a quarter, EBITDA prior rose year in a million period. $X.X to compared

Basic the compared to a share per earnings prior to share per earnings share per share the period. negative dilutive to year $X.XX in period. prior share $X.XX improved a improved per year in compared per to $X.XX negative And per share $X.XX

million officers compared key of last growth mainly trading investments strategy. $X.X expansion initial to this Agri-Food our $X.X about due Sadot opening -- were element to of sorry, offices, quarter, increase the million expenses year, in of and a an our SG&A

QX reflect addition, certain In trade-related starting operations. correctly from that we are cost sold goods expenses there the of in SG&A reclassified to to

surplus our into our million. reinvest balance note a as and $X acquire revenue drive about assets. had at that growth working of cash of ongoing balance part trading It's and strategic business the million $XX.X Looking continue we commodity of to our a to important Agri-Food to the strategy, company sheet, cash

contributed hedges. into To contracts sales feed we are these company gain and any enter The in value, exposed fair these on at due fair prices from gain income to value These measured to and The for risks, value primarily forward recorded in commodities. is derivative manage initially a market the occasionally in of as quarter. contracts sales this $X.X with million risk, approximately mark-to-market remeasurement. volatility food or the transactions forward loss fair changes

our profitable QX proud We significant the quarter, report are second improvements with was year. consecutive to compared to previous

on our history. QX the results us in capital year-to-date goals company's best Our financial also which help XXXX changes our enhanced are working believe reflect revenue a will occurring business, profitability. X-month streams, deliver positive of performance larger our We and surplus across

to over back With call turn Mike. that, like to the I'd

Thanks, Jennifer.

we do we diversify farms, first, food go various where everyone, This drive How or want wholesaling. be can continue verticals to So to we So from processing growth? the into global within do chain. logistics, here? supply

our expanding new farm into into leverage our Second, farm operations assets we geographies operations. trading the plan and on

want expansion seeds Third, recently Canada. recently and we we into want Brazil And as such to example. lastly, announced into expand new expand and in We commodities our new lentils, themselves. into for to geographies sesame trading started

want new we the surface commodities. to is believe that the into opportunities trillion expand So Bottom on industry. we've $X.X within line we growth only scratched

to Sadot your stakeholders time, support express to I want and Group. sincere and of Finally, gratitude team trust continued for all investors, members our my

optimizing operational to This quarter's for focused long-term our strategy our commitment portfolio and our advancing and shareholders. achievements profitability of value commodity driving underscore We asset growth, core on efficiency. remain strength operations, and our the agri

open while few for lines give With that, a please moments the us we up questions.

into get would to questions, some our we our selected questions stakeholders. like analysts, we received Roper from Before address Michael from which Michael?

Thanks, Alexa.

through to get a of talk we here real want things I couple before just questions, into quick. So

well. Just everybody knows, Benjamin do I the phone Kevin Mohan and have Petel as on

aware is they're room everyone Jennifer that in and so Just I. us -- the with with here

different mechanisms, into the see guys, we and either we there. IR we read into questions are on or out that posting. We shareholders different Before through do site get or that right you're some Yes, that, of questions these do them Stocktwits in come something something. -- from maybe

So case, addressing them everybody's sure the we of some to make that up to concerns. in and we're questions summarize any try get

want million in million get it's been was our right, in came $XX.X the So to start strong, this just at start before want the questions, I finalized, month announcement revenue, this $XX.X happy announcement for great October. the could, questions, morning. special the was we we right morning, but know a off a So coming that let though, so wanted here. I in here, with for concerns that soon of okay? to revenue October That's right? and to revenue was that again, right, are to as the extremely make we is This okay? as we Again, in presses everyone quarter, just it month, a announcement. into Before this It special special announce just do coming make to I the

that's we with So something that new you. shared

So me questions. of let some the into jump

to So Kevin? first first through have okay? going who's -- one? one, I think the we going -- Kevin are is the

you. Thank

So we Canada? had had made progress Canada, update being regarding in and on asked, can you a provide question somebody an

to some initial not our the Since launch, but expectations. division I has met new recent So its share division in achievements from early want our trading exceeded Canada. only

So -- growth strategy. pivotal forward this forward is a marking a pivotal step our in

with I So couple you of share guys. highlights a to want

million has countries. facilitated importantly, They've the with date, These sales in new product such in of been across lentils customer different and pulses. accounts roughly specialty as XX include divisions. team X crop moving items transactions other to has $XX collaboration of sales Canada So involved company XX most initiated commodities. and Canada to Canada with And

our continued of our strengthens our to contributes division optimistic as we're long-term foothold growing and the about and vision. So it success trading very Canada

Okay.

think about information farmland. So review some questions I regarding updates Canada. that Jennifer some questions Indonesian was the some and now and Then some to has

is, deposit some new for Yes. the The came the on provide in you farmland? details can question

deposit a of in negotiations The company Indonesia. did an of acquisition farmland place part the as for

general, completed, also trees, other improved as has such detailed to coconut We would provide while and transaction roughly niche Sadot we're trade but to new crops X,XXX are in can this potentially margins. vanilla corn. If acres, negotiations. in with commodities leading But plants discussing which produce

to to supplies new projected the strong year. long-term and being yields new the its to would the addition farm important growth. addition, throughout allow around both farmland represent our operational control potential the would portfolio, In in The value while geographies a immediate commodity company offering able trade

and able the stages are And the be announcements we'll make down, finalized. we of Jennifer. we in being again, final all But have negotiations deposit about to Thanks, some that hopefully, Okay. there. soon

we know of going is of Pokémoto sale and a Another people had, talk I for both right, restaurants, what's the which the with a lot Maker? lot, about question on that Muscle

let you just kind me through that. of So walk

whole currently and diligence, due moving Pokémoto we forward, here near of interested up and and the We offer So advancing multiple stages a we're potential anticipate sale Maker, in have coming the of steadily, future. various groups regarding Muscle okay? we're in formal

Maker conversion or into owned closure restaurants own all or the And operate XXX% prioritized okay? Muscle actually as -- and XX, locations we we XX, any right? And the all operated efficiency, corporate September of corporately now the as converted enhance corporately And across of is of or franchise those longer Pokémoto. and process we the completed no locations. September company streamline To model any and brands, that, franchise of either

was costs key our and that that expenses We to it's the also us transitioned franchise sales the reduce the actually locations reduce streamline there. corporate that out I selling. eliminated simplifies but over only ownership, we're overall of because franchise And This helped not very just negotiations. being operating to confusion us straightforward as some process, now model said. adjustment a some of as It's of the had overall allowed process

due a exclusive We a of kind of intent allows structured we into nearly This -- of We part or is sure diligence as sales diligence in LOI, prematurely. of into formal want negotiations go complete you all don't an an When and quickly to as process prospective negotiations much potential make want due approach diligence where their implemented to approach buyers. relatively exclusivity an This submitting strategy, all you do preventing closely have done LOI. due we're XX-day with to that, more to once buyers letter place, LOI prior to situations to we've close Additionally, the our us the XX- of right? beforehand. period. get a to locked requires

So it's a much shorter process.

and other needing risk reducing stop interested a restart until doesn't to buyer we is We deal ensures start of don't close, if and certainty, open remain right? to allowing have for flexibility want process. well a near as to the the the greater groups process It to a

So implemented well. moving various that's a again, we're groups, But of and with due new as forward thing that they're multiple diligence. we've stages in

Okay.

their questions. different the Alexa, are out there go to With that, I think, time analysts to it's with that

I'd open call with to like the to with AGP questions. Grey Aaron

the October for Thanks numbers.

nicely with -- in like looks if Curious So Q. million It continued revenue X%, on could some you just X.X%. the about October was like provide it it announced. color $XX maybe gross you looks related ticked up in margin the it

sight getting the types things So of line are out sales for margin are getting? see watching start some either of better you margin What momentum be there of that geographically on to should sales improvement? you're improvement to or that we more

I'll guys. one, take this Sure.

to Brazil the you on other more experiencing right? pieces what gross we we're trading area, and So right, with are Aaron, the bulk improve the line more are which business, ways we similar bulk as Now expect in through with the the of bring margins business, Canada margins that of there, other that. and portion, kind and have out trades there to that in right? really companies seeing So in commodity we're us

as I'm with lentils big cargo normally we turn they're quicker, more pulses, okay, has trades. giant When and use much in bulk Those they okay? example. higher trade margins So but while just smaller-sized to and much not they Canada are have Canada an way frequent, trades, ships, going those the

Canada -- improve they numbers. should as every increase of their or margin to So month, continue in bring every number some of on the we help and quarter, driving trades that

of okay, things look with involved how I the much whole overall, process. think Canada one for this So is to gets

so a be from what looking I'd for And perspective. margin that's

Okay. That's helpful there.

me. Second question for

with bit purchase again more some with looking you Zambia Is diversify there. the the on it different the Just walk a detail some or the through more color just Just provide farm? rationale to can there? farm, the of crops than rationale Were maybe us you farm geographically? Indonesian on

Yes.

negotiations, of couple careful we off, jump we are to bit right? and a it's as in farm, I need well, finalize be right? But whatever that. little we're in things of still that as different crops So So with First things I'll say the or specialized. a let yes, on what more others

products, than we're So soy okay, niche in your that area that the looking all stuff. more and and has at typical corn it

as soy do can However, and they those in still well. corn things

are So different that little than there. of be different combination it a those yes, a bit products will Zambia. But that's so

and It as well. different partners different have also are different right, routes of a and trading geographical different allows shipping everything us to and parts area, world, that there the needs

do So that's one it. of the reasons why we

And degree lets own of some the for our up farming looking farm just that at having areas of talked products online. of right? commodities, of that We've there, of destiny the do a those kind own This are some control are just of well, other lets ultimately, expanding your let's still we would farm: as into in trade of supply the you around second there. be past to some advantages your your certain with bring that we the some are you already products

farm. the advantages lot of a to there's So

that of It's the all about. the we've part vertical Street integration told process

that to think I going move continue we're narrative. to So

that. one looks SG&A for It quick like appreciate bit Last Q. a increased in I Great. the me. Okay.

more onetime rate nature? what just there? were Or of the So should Were some some that expect we going drivers base things forward? the in is there

to I'll one. expand areas, take in we continue got financial that right? teams. It's related, geographical these like out our As different build we've to

always in increase grows SG&A reasons. for business. to we're salary, So SG&A costs as an those as the benefit, expect this company for be as there's And result, building increase the precede going exact we to like rent. These a will growth items

onetime there expenses, right? some will Jennifer, But be

to to we've the personnel grow and and the does. think expenses. growth But I that revenue business. the before building growth always comes about people Yes. most onetime mean the part, And got the for always there's

to like Kerr the open for Tom call I'd to Zacks with questions.

Can me? you hear

Yes.

quick last SG&A Just the follow-up a question. on

was out? some think different Or just cost building items that I moved of something what move? the of goods presentation, you what sold. mentioned the mentioned in terms Was from in than were you

people of way we that it's kind the they're we because make SG&A of that movement items changes to our to reclassified we sold some wanted correctly some -- did been reflected our were goods that there's operations sure for was salaries from There that SG&A truly in and related. certain the cost driven. It being are business, It's and financials -- reclassified now. some personnel all we

Back different Great. Or pricing? commodities contributed a on the more to Was color growth? Canada Okay. you Or it a give revenue was just also Brazil growth, major Was mentioned the contributor? good else contributor. that. or to what

Yes.

Okay.

So a They're and make Brazil basically. models distinguishing between there, quick right? couple of want right? to Canada, comment things different a I

areas. right? coming And with facilitate their them across of the rest other more that, right, of as the you're continue across like trading, more business, And right, seeing results the the and grow of products trading help is bring as be is integrated own So of as to kind as helping of you groups different you're just the world that things, into going Canada being well, or more to traders on right? portion Canada trades for through some revenue they to divisions it. or

is and company inside so to of And does Brazil things, there working be bit Brazil that on the Brazil companies opportunities. from actually up areas reality the and throughout a different, and Brazil is move little there's different. and down where a building trading, some can some right? and I'll But shipping lanes else to agreements there's everything different farms products is infrastructure out with different they're okay? infrastructure it, call type relationships, have Brazil

more on areas So pure they're are those than trades. focusing they of type of

look bit, of number our about right? go overall a involved there. at they in all increasing $XX a it continues When necessarily didn't they the quarter that a team portion of were They're grow with facilitate our from going that. here just trades little and our and and the that Brazil Now rough it lot but continues as million -- team I'm But call a that Canada, worth helping just revenue bit were play to to a we little build. probably for the go they reported, the Canada trades through did in, was involved to of involved normal take of certain trade, So difference numbers Canada. you between

role, revenue better a lack to So like more I the and able more be should you traders, as more business, you generate. the more and said, get in of of definition the for involved

All right.

good. different color the Yorkville a On more cash I Because that debt provide you Sounds a just note, can there any shares transaction? on involved. retirement were payout? Was thought

take that. Yes, one. it's I'll that I'll take Tom, Kevin Mohan. Yes.

So pieces. of about repeat Could me? additional question X kind if that were you're there there talking any for asked -- was you shares, you

Well, they the past share did in the Yorkville that all to you know Did do go still sell? ] details, the [ Or there's I related they issuance own? Or sorry. us gave If away? deal.

did No shares and The that debt, they a off They last we we then debt. with problem. is of Yes. selling market on -- were into piece with cash them, prepaid that repay to what we the did advance hand. actually paid

in last last are And that them, and with obligation they the met my so had conversation which conversation, done that But September. the flat. my on is understanding was have conversion based last Yorkville I our with was we it

any We stock. not any money. them not So do owe they do own

shape. good in we're so And

be closing like It Okay. say? likely looks would Is XXXX middle that restaurant the one a event. me. Last fair November, it's to deal the for of

Well, Tom, stuff. on here's what's happening,

the through. we've with mentioned, close end multiple they We're stages as right, I go groups of diligence. getting groups, very due several to As various in got

in to we that. to okay? of We group them things do one the talked did shortly, is the a we give some the to expect to gave to However, wanting So that get before decent incentives year, end about consider close to we there the of here LOI formal okay? incentives

And of to can it the end year. if see so by hard they are complete they pushing the

get we're important mentioned I end signed. help Mike LOI, when to the way all as before too, note, people is think the process the to using, another quickly call, think, LOI that I this the thing is going we to earlier And in close get to Tom, the

that's So I think really important.

don't think not at back I announce to you LOIs. going that. a to look find company's that if this you're do company likes We're that ever we history,

to place in make we And so deals concrete sure announcements. make want we before that have we those

do the done. for we it's to think I when the actual be definitive the being So that's announcement, investors going the docs that understand important make sale to and

any That final concludes our Q&A comments? portion of the call. Roper, Mr.

in company. Yes. We going, I want thank and a believing consider strategy. company everybody for do to ourselves we're understanding just seeing growth our again the

with change there's and the a always of happen that, And throughout and things so announcements lot process. that

their everybody company. patience. So I I appreciate with the everybody in believing I the questions. appreciate appreciate