Earnings call transcript Q4 2022

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Operator

Hi, everyone. Thank you for joining today's call. We're going to give it a few minutes just for everybody to funnel in, and then we will go ahead and begin. Thank you.

Unidentified Company Representative

Thank you, operator, and welcome, everyone, to Muscle Maker, Inc.'s Year-End 2022 Earnings Call.

I forward-looking to safe statements of U.S. started, call that harbor get the include may pursuant we would say like this provisions Before to the Act Private of Litigation Reform Securities XXXX. information presented extent the call financial may business or operations, that statements results information markets make forward-looking. or To future on or events, about expectations such otherwise the can this discuss of products plans, projections, statements be about anticipates, as believes, by identified projects, the of should, be may, and can such intends, plans statements forward-looking expects, Such estimates, the forecasts, use words proposes.

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

consider including Factors other time statements time and You that with any in cautionary the from SEC. made Risk heading are Maker, disclosures, urged and the Elsewhere Muscle to the under documents and carefully files statements to Inc. review

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

call, all closest and the have have been numbers rounded thousand to to closest been the rounded disclosed percentages percent. this For

IR from XX, prepared the call presenting Maker Maker's the linked fees and and remarks Financial Michael those Roper; related website, Officer, Muscle Newswire With the today and XXXX, are maker's me be found Chief on to on filed SEC's Chief Jennifer Muscle documents pages. and Jennifer the Muscle Executive on March on will IR Officer, may Black. be financials website Michael

Maker's Michael Michael? to to At this turn call Roper. the over point, CEO, Muscle like would I

Michael Roper

our to welcome Sadot on transformative wholly efforts healthy business. today. and subsidiary, everyone company new owned franchising to restaurants consumers an was focused a agri on In sourcing LLC. Maker Muscle we by strategically our into manufacturers diversifying and by high-quality, Maker XXXX, a call as delivering and Pokemoto farming our us we and QX to Muscle food food-focused , launched Thanks, international year through for shipping, XXXX began evolving joining commodity our

discussing Our shipping, farming, and Sadot comprehensive meal financial goal consumers of on a production supply prep we'll with from commodity of create franchising results agri our diversification is emphasis global companies. Pokemoto. the through of impact an Today, performance new chain company, distribution, and be operational sustainable ultimately strategy and and the the spanning restaurant goal division and to with on our reaching food restaurant our

to subsidiary our attention want our [indiscernible] chain. wholly supply Sadot, turn to new strategic owned in I global Now and the its food

I'm seen means sure, all recent of to to fully announcements what many the have understand Muscle you this want Maker. and As

the Let by year was XXXX recapping me start from a beginning. transformative why

upwards to Muscle XXXX October operations a in company's and formed was of of of chain. subsidiary Sadot the is Sadot Inc. wholly and lines local and financial food supply the Inc. Its to restaurant the company, business All owned and Maker, Maker, purpose U.S. was consolidated global franchising performance into us catapult from Muscle is the parent diversify business

when and franchise ask can events food war in world Some our how is food that's has the security what We've near become only sustainable and the all other the global food like will on farming do local chains into lies Food in approach landscape and this trajectory, company a be answer market imagine choose world's future why order food XX we the come. look of disruptive years a sustainable to as and forward, today institutional bring the terms, might world's the understanding restaurant few departing come. billion household to going today as we supply apply past to you investors level. months, have legacy laying COVID over we can to value committed and that to very healthy and move in groundwork The and populations of food private chain. from practices, in Ukraine in invest supply the and to and understand the for agriculture the need such We the people. seen business

global On seasoned manage an chain. is managed food November XXXX, operations day manages professionals the day AGGIA we of announced with to to in company operations day-to-day Sadot. of AGGIA FZ various XX, consulting by AGGIA an LLC agreement international aspects the of the Sadot. supply

of also income management. of which nominate Maker to knowledge directors The up premium subsidiary. positions a by its the that agreement Our would a fact per in calculation $X.X price shares net Board in confidence AGGIA million with net AGGIA AGGIA net X X members, forces Muscle million nominated paid new of the joining has only to really Sadot. to right agreement uses they earned and common this and income, generate More final well earn of stock, of require consultancy shares shares in was at Muscle the the $XX.XXX directors to as common when drive confidence net at is into stock are million generated a income where net AGGIA and new of balance perform abilities is divided performance $X.X for X additional in share certain in with AGGIA thresholds. new a $X.XXXX net than generated Sadot its board up to income directors of The reflects was X AGGIA of this which goal. net of a execution These on as thresholds income them per in $X.X as and agreement, based nomination million nominate can share income Maker's upon and the Sadot. allow in can at $X.XXXX is pay-for-performance to common X new approximately earns share. income Sadot model, upon designed shares XX,XXX,XXX of the

typical more XX, required a with with portion electronic hold actually commodities. XXXX, began shares To sitting we own shipping the accompanying executing future items trading with of starting physical shareholders. the computer approved and Muscle the with Instead, rice, Directors, shareholder food shipment per formation of all Upon of such the are by have the AGGIA, outstanding XX,XXX approval meeting official as the the and potential commodities contain February as and the countries. $XX AGGIA cargo to our can control with on these commodity million by our agreement corn, which be we the tons transaction of our wheat to the metric associated chain. and implementing and as between to $X trading AGGIA the values than Sadot with million the we're We shipping that provisions. XX,XXX transported Maker may loaded launch that approved strategy well diversification shipment. XX% we're each revenue our shareholders of strategy. between and On not trading of our around of of supply ships view Board as new range Because agri clear, our agreement A of shareholders agreement

QX through in the second management XXXX. $XXX,XXX,XXX day-to-day revenue. the executed Sadot of in generated was half basically with mid-November shipment half first end From AGGIA's November of December, Our of

alone, revenue Muscle as extensive XX This operations. the commodity O Benjamin Hannah income and QX AGGIA agricultural and agreement, achieving agreement experienced in in $X,XXX,XXX Ray welcome to sustainability Benjamin net global Board the well field Board whole across has who generated agri-food was supply and Directors. for over years' of an professional experience To business experience partner for $X,XXX,XXX. bring final legal to Sadot the upon the nominated Maker trading threshold X% leader spans a and as of members of Muscle put new firm And and chain a and of execution a AGGIA office the with trading, Shankar wealth the margin. over a X finance, that Ray Maker food $XXX,XXX,XXX his originally income prior is revenue profit in commodity in acknowledged wealth our worked into the the certified decade Muscle Directors addition Patel, family weeks this X M&A and help where he bring Board entire was execution of year business. manages in to and Hannah Science international Maker like private perspective, the generated a net $XXX,XXX,XXX with in as international of brings elevate Bayer experience the These Sadot of and law practice. new Crop a the Manto. expertise and of subsidiary. Board X as the in Directors of revenue. who By expertise I'd the with or members approved nominated to

can The own We products improve This high from agri control farm and us revenue, is overtime quality shipping will the business and farms. the to lower-margin we sustainable level on the supplying at increased chain. margins on these our enjoy only margins sustainability by transactions. commodity to allow products centered of supply and managing the believe

types the the plans In alone, future. the even us longer cultivating we conduct physical our possession banking or instruments, to developing by for and of to process ways own many with with area financiers addition, increase allowing international financial different the owning of of cargo we're margins this in to elaborate commodities these of more relationships are believe periods areas goal There transactions address time our have in ships. of in we taking

since of million. generated over This brings generated revenue in through February over additional mid-November Sadot the to In $XXX the end XXXX total XXXX through XXXX revenue. has million February, $XXX

shareholders forward. can a that executing pace have Now begin believe we moving at faster transaction, approved the we

margins Our as management be initial goal with our farming as company. environmental farm next on enhancing value and well focused the the the sustainable phase control will stage social, and commodities and of Sadot entering financial increasing to with at

Recently, net generated a Africa, and against be part development. of supply food over reinvested by in $X,XXX,XXX income in all our placed income in in agreement, by of the executing strategy. acres will on deposit proceeds QX, growing Sadot future net XX,XXX we chain the from undeveloped representing As generated using proceeds farmland

potentially a profit to in this road, versus or specific either more agri further the is which down XXXX providing margins use is in a the could the While this intent core negotiation, the developed improve billed business. revenue generate commodity also shipping deposit fully land opportunity our potential in transaction while to property, develop on

excited supply the food are the to and results potentially we our believe strategy in chain and further advancement out Sadot been building encouraging, very We have supply the our date to potential chain. about against margins. company's improving in executing global forward We of look

our call Now Black, CFO, XXXX. the company of performance turn financial Jennifer? Jennifer like the the I'd over review to for to to

Jennifer Black

Thanks, Mike, and today. us thank you, everyone, joining here for

Form XX-K for press SEC on begin, filed same I overview of like and XX results with give March note to day. in were like the to XXXX. release that I'd financials that, the a Before I would that financial our an on With

and company-led sales servicing of due year commodity to commodity ended XX, was and totaled Franchise the were over royalties Sadot generated in by The the the to $XXX represents AGGIA the in the income XXXX. $XXX,XXX,XXX life commodity company year. compared significantly XXXX million for December fees physical ended $XX,XXX,XXX food-related for to the sales year year December revenue XX, the is of $XX,XXX,XXX XXXX XXXX. agreement. the Sadot formation XXXX, $X,XXX,XXX agreement due of ended XXXX, to from of an increase a which for The date division for mainly restaurant fees December year end XX, which generated generated XX, the of represented our revenues $XXX,XXX,XXX ended these recognized sales decrease its to the restaurant prior XXXX $XXX,XXX,XXX and respectively. was from and revenue with increase $XX,XXX ended XXXX was full the Superfit with November attributable increased the compared For year a December generated is The servicing Sadot XX, of $XXX,XXX, or are of segments AGGIA. sales to restaurants Foods through This discounts ended for franchise compared December the year XX, $XXX,XXX of sales finalized XX%, or December commodities. year and XXXX. XX, Pokemoto net when generated $XXX,XXX agreement acquired. X%. This was revenue the the for mainly totaled of Franchise

will As our franchise full for reason, deferred agreement the be terminated revenue is time. at the closes, location franchise any in recognized remaining that

is there were mainly narrowed loss to several due franchise in In This that fees Grill Muscle Sadot. closed, Maker XXXX, Overall, recognized. our higher franchises $X,XXX,XXX. from by resulting operations XXXX

expense onetime by XXXX credit as in income $X,XXX,XXX, recorded in impacted for XXXX an in labor In XXXX our we Maker and light XXXX. that finite in and recorded light follows; asset, XXXX, were the amortization employee expenses resulting results affected our onetime trademark transactions a in or our The not the to XXXX, that increase we are recorded of $XXX,XXX However, were expenses. infinite onetime of XXXX Grill transitioning asset net Muscle gains due reduced from that in expense. amortization retention an to

XXXX. remove the effects you Sadot the operations. these XX% paid would prior in are XXXX. expense AGGIA, consulting the by XX, is stock for This on at was expense The stock-based the is from change net of from If company's expected the events, the consulting year of generated year $X,XXX,XXX the significant consulting $X,XXX,XXX, business $X,XXX,XXX at disclosed. compared approximately improved expenses by service result onetime the segment. operations the with have fees The income Sadot to expense December be loss most that consulting fees ended in for of AGGIA calculated to agreements Based these to is in due stock-based

To generated income It net segment. further on the Sadot $X,XXX,XXX. elaborate a little of

in to will the issuance AGGIA this Once Muscle income by $XX,XXX,XXX is debt by However, AGGIA the price Sadot. equivalent of Muscle due Sadot can Maker the net income has with premium the expense $X.XXXX number net per In XX,XXX,XXX of as in per Sadot fees which shares agreement to share acquire, the share as earn of reached consulting generating can of Sadot. shares offset and and shares to of maximum service to AGGIA to for of terms a shares, earns up they AGGIA. management AGGIA, the Maker the payable this agreement at AGGIA AGGIA was accrue between

actually common Therefore, mentioned, future investment we clearly Sadot goal. agreement we joining how previously to is forces an Mike as a the towards expense our As see the with view towards AGGIA growth.

XXXX, December to like and I'd had $X,XXX,XXX. XX, of that, turn call As of the to $X,XXX,XXX Roper. balance capital of working surplus cash over Michael we a back With

Michael Roper

[indiscernible] all Thanks, of Jennifer, for to kind overview me and go actually to twisted so numbers didn't get amazes the and that financial that's through good.

in income Maker of QX our evolving. new put, division on okay, and revenue Sadot believe the food-based $XXX reported strategy, as we will an Sadot feed our impact we a a So diversification example, has date, Simply company. have net our To significant generated in over Muscle people, is in company. and million is $X,XXX,XXX. company

Inc., changing. division. Sadot Our Maker, company strategy We We've parent which with our Sadot. as we newly is a of our like about created Basically, of restaurant chain operational and the divisions. is have think more supply division, multiple company to Muscle spoken holding then

restaurant an Now let overview the division me through of has everyone how walk performed.

is division performance restaurant in improvements key Our seeing our continued metrics.

is As up our a revenue net company percentage sales, by of restaurant XX.XX%.

Our X.XX%. labor expense was credits XXXX the adjusting by -- reduced for percent ERC after

by reduced percent -- expense rent X.XX%. Our

percent restaurant up increased costs, X.XX%, reduced our slightly, operating and paper were X.XX%. although other Our they're by expenses food and by as a

However, I year, good pressures considering think the inflationary on job the here. and paper in faced industry consider the our that products did we actually costs food this I pretty a we managing --

So we're food paper up in slightly costs. and

And our finally, XX.XX%. was by then reduced SG&A

all basically are environment. our inflationary are metrics improving So or flat the in of performance key

we potential restaurant on are So focused performance there. stuff Sadot, and we division. of remain pretty Not excited only the happening that's good about the growing

Grill division Superfit Foods Muscle X consists Pokemoto, meal brands: restaurant and Hawaiian prep Our of Maker restaurants, Poke.

years. is have our options. open Muscle on focus restaurant our We a Grill and construction. in company Florida XX Superfit brands under the Foods in been Jacksonville, have market. Superfit key performance over throughout is prep facility restaurant locations assembled the pickup in legacy on the growth currently X model placed locations new business franchise open Pokemoto with is and that tied a the brand healthier-for-you XX the XX operating locations Maker temperature-controlled to We has of Pokemoto believe focuses and our and All prepurchased fitness for the brand XX based subscription-based are meal premade in corporate branded market. Meals in currently through leveraging menu location a and Jacksonville today. growing in the background growth franchising. delivered division facilities directly is and coolers We and into team's meals,

We been new have agreements also have that sold XX franchise an additional not yet open. and

In to and variety restaurant restaurant Muscle to Maker also addition these combo infrastructure while working excited we'll both wide same of location, consumers. operate Pokemoto stores a our on and offering the the in XX franchise roof we're agreements, reducing where a a to new leveraging the existing be overall same Grill options costs under several

test in in Chelsea, New Lawton, be first Oklahoma. Sill will Our Fort locations York, X and

the Our poke in corporate-owned signing strategic generate our fee fees up franchise open. franchise each agreement Hawaiian upon XX additional franchisee then largest revenue once is $XX,XXX and franchise strategy of X-year and month franchise up the to initial locations. has typical location one of sales industry renewal become of agreement model chain net the placement with franchising years locations A royalty they're Pokemoto option. X% through of franchise per

we we're Indiana, In all be sold added Hawaii. where to South in aside and Dakota, franchises are than right? Virginia going Some Dakota, out include XX and or coming New Texas, now Mississippi, to Carolina, These Florida, Jersey, soon as Virginia, additional Pokemoto Pennsylvania. Pretty Maryland, York, in, from soon Washington. be now South Massachusetts, I'd Connecticut, to North say in Rhode highlights are California, Illinois, in where we Maryland, it's like Minnesota, Oklahoma Pokemoto Tennessee, XXXX, Kansas, not states is easier Island, New to states. available point states open California,

We in Rico. get expanded at facility Superfit to of We locations We and up locations. production Foods able our Superfit pickup fully Foods. also to Puerto XX are refrigerated pickup District launched the Columbia to sell

menu actually rolled including Hawaiian enhance on dessert finally, and menu the Texas. choices. franchise full Superfit We theme. a new We out and across lobster the meal Fort seafood the Foods offices sales expanding our and which a salad Muscle new package cost food we and meal option for protein completed provides team personnel option, location focusing We our Grill for integrated the multiple items and expanded Pokemoto to transition plan of And as the Pokemoto, created moving near Worth, options. lower to into consumer a interior accounting teams Maker new finance design beverage menu, plan we

lot happening the So things of year. a throughout

division restaurant the of the I'm Our in franchising XXXX. our look so accomplished far. forward and through efforts, is on proud what I team do can they've growing Pokemoto and franchising Pokemoto what and to to focus continuing team

just is To think global the being executing conclude, strategy around the relations future relationships and supply Muscle done what assist from chain of these we've on growth look our I to messaging into now diversified to getting We messaging efforts. this strategy We've forward new job in Maker building brings. received. forward a the investor food companies evolution out hired masses to look the our believe to great and and new

I and thank our want the to company shareholders and of the for support initiatives. our stakeholders

team of be for and got what built want have our employees our an Finally, here. part incredible we've who all credit deserve will thank here for I be to to we proud do, they success

Unidentified Company Representative

prepared us comments on conclude you, call. That ladies for will today's Thank management's gentlemen, today. and joining

us out reach please or website comments us direct new them company's the to questions, or phone through any or via e-mail. at www.ir.musclemakergrill.com, have to you If IR

Operator

Goodbye.

Sadot (SDOT) 22 Mar 232022 Q4 Earnings call transcript