SDOT - Earnings call transcript Q2 2024

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Operator

Welcome to the Sadot Group Inc. Q2 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.

Frank Pogubila

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

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

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

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

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

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

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

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

Michael Roper

morning, as best results Frank. to our extremely thank and company's Sadot and the reported we for X-month you positive the I'm second present proud and net year-to-date income strategic This execute our us record-breaking quarter. today Thanks, Group of our quarter delivering Good announce our improvements underscores everyone, joining to resilience history, financial that in against in performance operational notable significant performance as we excellence and vision. our commitment position.

the an almost to as in company's the in into Importantly, model results. are on commodities reflected starting in the market, to as company $X in believe stages efforts our entity in we strategy player transitioning agri early ourselves the larger commodities overall and a trillion we we our consider agri these the global see driving emerging be market change growth business of focus we

For reported X% by million, million XXXX. the second quarter, we QX exceeded to in $XXX,XXX driven $X.X $XXX income Net Sadot the consolidated of revenues increased Agri-Foods.

in is Additionally, compared net XXXX. shortly. of further the detail Jennifer positive loss for million XXXX net period a discuss to cumulative in $XXX,XXX income same year-to-date our financials will the a $X

Overall, challenging QX. market commodity sector conditions in started in to the QX following improve agri a

our to increase a production, as drive on with from was initiatives to they China company results. the growth growth, the other headwind helped remains though this execution, contributed corporate even to $XX focus QX. which our able and markets revenue strong strategic Combined Importantly, demand domestic QX to significantly drive shift million

long-term agri we potential the within Sadot growth success. strategic believe Group's industry In support several global addition the commodity converging are powerful and trends to market, to initiatives

worldwide. trade consumption to demand efficiently positioned Group distribute dietary for heightened this like urbanization originate feed of driver. preferences are contributing dynamic is are companies and commodities First backdrop a for be products Sadot agricultural to crucial agri expected all favorable and evolving increased and to creates believe foremost, a Rising that essential We food global the and growing population, commodities.

for Secondly, are and to emphasis Sadot stable Governments advantages. prioritizing Group. opportunity the integrated our represents farming on mitigate vertically trading model, sustainability food featuring chain initiatives provides and business heightened areas a international organizations substantial ensure food supply supplies and security and where distinct both risks, operations,

diversification the And opportunities finally, Sadot agri and Group. for exciting commodity sector the inorganic ongoing consolidation trends growth within present

value players their initiatives partnerships are position. position chain and as seek growth strategic dynamic model market Sadot product player to market. to well-positioned capitalize aligning leading strengthen in we industry global drivers, integration, As Group believe expand reach, geographic industry our and By commodity and we is acquisitions that proactively and to offerings agri poised on business further essential a with these powerful its our pursue the can

Both in this and and opportunities. subsidiaries more Singapore, Brazil of expansion reflection Miami, significant To as potential such verticals strategically a chain share are supply processing for Canada, and Sadot complement other including Dubai recently exploring continue key further our capture regional into Kyiv. a distribution. this of of greater remain global see We our and verticals, expanding also new opportunity, expansion strategy. engaged shipping, we we The origination these market into are operations existing direct in and platform trading. term, expanding formation actively logistics, Longer Sadot of our operating centers farming,

Sadot appointments At for trade I extensive expand our President, to flows and and in David the Vice almost key August, too, the and extensive both agri commodity to very Hanna President, as in of alongside make experience, members working expensive -- formed growth welcome invaluable them guess as the additions accurate, to and the agenda be Jaime globally. markets that's opportunity Their team. for leadership we advancing this experience dedicated I'd Sadot's will the to deep by team said leadership General but Manager; Ingredients combined Their Miami, Sadot Vice and beginning Feed announced Dubai I Executive Canadian Head company. Brazil like instrumental of management global of Rueda, experience Canada take the newly operation. for knowledge professional together

Next, let's discuss farm the operations.

chain of serve Our operations an farm operation. supply as integral food total part

worldwide and an farm from capabilities our will trading to year an be negative, from crop expand strategic in the farming our collateral commodity underlying these insulate around the point farms. impact with commodity agri company to market allowing helping Increasing to locations as continue turns fluctuations. us security endeavors market company, round important to the trading, focus food perspective, the trade us for community in case allows Importantly,

company the Regarding numerous in potential on origination, farming. commodity our our engaged buyers business, pursuing to actively focus restaurant noncore training been is assets with we've resulting legacy agri shipping as and The these divestiture of step announced the and recently Superfit to restaurant in plan be is transaction overall the strategic three the portfolio business. Foods. our first concepts of to our sales restaurant This of the from exit and is sold first

savings ensure commodities divestiture assets We This to drive aligned operational are of market. potential and will simplification. highest these noncore around firmly the resources company's in agri the expect the opportunities

to base completed Maker owned operated Regarding positioned a believe process to Muscle recently now Muscle We of concept corporate converting we Maker restaurants, and of the this interested is attract Grill have parties. locations wider potentially franchise Grill locations.

several that guarantee. will be is the of the Pokémoto sale of we're likely groups our concept with largest this for detailed concepts discussions no Pokémoto, in three the of which negotiations and For transaction there

simultaneously expenses, enhancing potentially concept cash of sale the the we each while flow G&A to business. expect reduce the generating line occurs, bottom As into

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

Jennifer Black

Mike. you, Thank

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

to of million in second for Our XXXX. the in same consolidated compared revenues to million $XXX.X XXXX increased X% $XXX the quarter quarter

Our XX maize second segment million contributing majority tons The accounted QX, of our X,XXX of across transactions XXX we of harvested full of countries. And different Sadot and for Agri-Foods farm soy. metric year quarter completed eight first metric the revenue, completed over in as $XXX.X its harvest. tons in the

$X.X of which held in legacy restaurant as sale, revenue QX. had million classified operations, Our for are

our to expense offices, of our of which for trading opening increased and versus the million ago, $X.X income the with QX to to a $XXX,XXX the year in million quarter SG&A notable over upfront associated mainly for quarter Agri-Foods Sadot improvement EBITDA $X.X expansion strategy. the integral $XXX,XXX from by was of second million XXXX. compared are of $XXX,XXX due growth $X.X the a costs Net XXXX. was

back a a of cash company capital working This million, balance cash part our to revenues looking a as capital and of into Now financial note ongoing trading March surplus add strategy, commodity balance working and we had XXXX. to Agri-Foods to of as $XX of balance million $XX.X of reflecting a invest important $X.X stability. to at million increase It surplus strategic continually our $XX.X compares is of our assets. the million our strengthened sheet. cash or business XX, The that

fair The mark-to-market are quarter. in are or value, million value of The recorded these measured contracts manage time. entered hedges of is to the any the risks, resulted contracts market income remeasurement. forward changes gain derivative risk we for and commodities. the in as gain To offset approximately primarily to time and company price volatility these carbon initially loss and value to in and related food at exposed $X.X on sales fair fair transactions on The feed into sales units from forward the

to improved and business, in occurring are our capital proud and and performance Significant balance. best surplus across report us our positive to the enabling revenue streams company's We change X-month working increased X- cash is higher history. deliver

also divested restaurant our to while balance concepts. We reducing are we strengthen continuing expenses sheet as the

to that, return the With like back over to Roper. call I'd Michael

Michael Roper

for financial for continued investors our the long-term firmly vision. the remain Sadot executing your made we've Group. and thank committed extremely to proud of I sustainable In growth, for and and in stakeholders to company strategic positioning all the We're we of overview, Thanks want our progress of time closing, support Jennifer.

Supported team combination sheet, performance for I've of our driving compelling innovative global As the tailwinds, our Sadot agri and leadership believe trends the and believe financial we a for Group. our balance to risk provide our improved industry strong experienced value in our today, continue powerful and vast us shareholders. market, by ability case management our outlined growth potential commodity we in approach

assets supply geographic and integrating we time, we'll to will to farm expanding focus ahead, manage allocation our and trading At enhance footprint create our and across disciplined profitability further our same synergies chain. costs the our returns. operations, judiciously the capital Looking maintain diversifying on

time, you continued and ahead. and months Thank you forward your for the updating to progress we in years again look on our

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

Operator

Thank you, Michael.

analysts, questions from received get you from we which address, to you I to the questions our selected some believe Before stakeholders? have

Michael Roper

try of We that Alexa, accumulate that get a to addressing address. do, up I to Yes, normally open and make come questions thanks. kind IR questions get theme our with we're the analysts to we a are to we common lot out that address Everyone, up there. these questions and sure common those submitted before e-mail the of

through. first them question the four So we of to -- have go

opportunities on market? capture The elaborate you I is $X.X have market? the strategy what commodity Group's can a potential larger global first share And question to agri is growth the this trillion Sadot in of

commodity trading new the greater from Indonesia, cetera. actively and such America, Africa, initiatives, entities for represents such Sadot to capture market These estimated share key strategy agri market, big and through value operations announced. North involves of they flows regions hubs that a Sadot market, allow to et Sadot It's with trade we global existing and Brazil annual formation as complement us the So as Sea, trillion. our $X an our Canada this right? strategic facilitate at Black opportunity an Our trading a of nearly expanding it to recently

our By geographic and a aim Sadot agri trading presence position the diversifying global player market. larger commodities in we to our expanding as capabilities,

X talk supply I see kind divided additional actually want components. industry of to horizontal is chain. like we that's segments aspects Now X one that's of we of the on vertically global And the things expanding agri And expansion, of kind into or right? also commodity into the plan the to

That kind kind origins of emerging farming, like of Number the upstream one represents in is product markets. of the segment. the that's

second trading ingredients in The like geographies, know feed midstream. contribute is being infrastructure. I is then segment the and different there's very okay, processing as really technical can right, I'm And which really value. which downstream, is and industries we here, logistics capacity through where classified midstream,

three are those the So like areas.

us and to capabilities as capturing operations to midstream additional to market, upstream allow room Now to we're expand currently in operating integrate the goal within of so the expand fully segments going that's there we and segments, those continue our grow, right? ample vertically evolve our there's overall. is But and

next you the So one? take Jennifer, want to

Jennifer Black

Brazil question line when we revenue? is, top have to contribute the will next The and Canada Sure.

is And supply chain. any for a with Agri-Foods in Brazil that, company geography crucial involved

of a to Our building our in team has this region. Sadot Brazil reported over expansion Since The the goals as into year. involved priority our been the future Brazil several past and formation support through key important our the strategy lining July, is strategic team in foundations we first other well in regions involved transactions other sesame with are as up subsidiary heavily Canadian had Brazil trade been surrounding trades. new and

management our on Building Brazil, network and producers, Brazil ground. understanding to users distribution us and in office relationships expertise. The intermediaries these is and with foundations Sadot risk end establishing deep company's with future, the to and grow the leverage in presence require allow the global professionals connection local the

our our pulses Rueda. local capabilities, and in and focused farmers, financing on a led team counterparties. Canada ensure introducing to facilities currently new strategic Canada trading Sadot is in is partnerships most the to exporters, origination building entity global out market, the by David securing smooth the Canadian addition The Hanna finalizing trading team, Canada process global entry. of to the Sadot its recent Jaime team is market The market,

have Although frequent we Canada and Canada trades that begin QX. executing to It's will that in margins. important specific trades, on more guarantee, model smaller types we usually cannot a focus anticipate container-sized Sadot these will trades provide of are and note higher Sadot

$XXX revenue we what have the remain look does to range anticipating in next And like? you are July is million to question for revenues million the QX? $XXX And

we and our an in $XX to XX% in pleased report of momentum at from saw came million, increase XXXX. that I'm July revenue XXXX the approximately roughly QX July continuing positive

remains and our executing managing growth our our shareholders. initiatives, for risk focused Our increased on strategic value prudently driving team

the Mike, next do to one? you want to go

Michael Roper

the I on question second, one. right another got Hold got Yes. here. to be a sure I

assets? before here So expected company's to on question analysts divestiture last restaurant the on we details is anticipated the the What is the provide and impact live can I have financials? going timeline the on the more of

a is strategic So know, commodity to which Muscle the core business. allows noncore Superfit that's completed stages restaurant worrying on we Foods of already We that service, which assets, as are about And a weeks instead pursuing our focus ago. our We've of the diligence our Grill the part few restaurants. that agri are business, divestiture the guys us meal want prep focus you the plan concepts the key And sale we on announced we restaurants actively to to and of for of Maker Pokémoto. in right? early of due remaining

that mentioned in groups I those earlier, of Pokémoto got think regarding and Maker we're I Muscle talking discussions. several we've stages different to actually

As expect expenses, of our a we do line sale complete performance. restaurant G&A concept, reduction in the each which we enhance our bottom to should see

into will support growth Agri-Foods reinvest that can divestitures we operations Sadot will our initiatives. flow cash Additionally, the generate that

we being working these are diligently complete While our timeline the still divestitures for model. are streamline further finalized, transactions remaining to and business specific

QX the of in together, where final highlight of transactions location, me of occurred Foods here company-owned the recent Let those all converted transaction, with quick all Maker into here. we early a lumping location Superfit restaurant sale underperforming and franchise Grill the and Muscle of kind an closing these the along XXXX

by $XXX,XXX transactions and proceeds moves, And year an annualized will the on well from With into estimated expenses of with these as $XXX,XXX we eliminate believe importantly, business. these associated recent back roughly operating overhead future as these basis reinvested will be an per we cash our the the current about reduce plus locations.

business. higher-margin represents largest. the a likely Superfit and more restaurants the be Foods streamlined completion with Muscle of of the money both Pokémoto and believe important to three take earlier, transaction an transformation towards like smallest groups rid agri concepts the redeploy the into with that I Superfit right? it said Foods we get Sadot Maker company, and multiple we the sales in Again, And view discussions Pokémoto. commodity we strategic And detailed Agri of successful and the we Grill to in for as So are want milestone

we So all summarized that the with questions that, here. I answers kind that think of

So on the over it take Alexa, do line? to analysts want you to the

Operator

Grey I call to Yes. Aaron AGP for would please. Thanks, Michael. like to with the questions open first,

Aaron Grey

in improvement Nice the quarter here.

the So in some there, first terms I pickup business, one can in some be there know me, just of sequentially Agri-Foods there volatility for the commodity business, quarter. nice

of get trajectory yourselves of of go? sight more more believe to better some sales not wanted know still volatility? So a getting terms can markets. sight or diversified of be seeing of the you're Do where terms in you new will line in line entering more I you're there whether

some where just that the top So you business can within line think go here? of terms color more from in

Michael Roper

Aaron. Thanks, Okay.

So a as Jennifer but well, couple of think start I off. jump things, let to and then I'll in here

As we for Jennifer saw over a little the at come mentioned, month. million $XX in July

start that's good So the a quarter. to

to performance continuing China that So which see poor than anything. that right, build after was the -- more to market attributed QX, the we're momentum in

adding future hopefully, has become as the adding that's by to stabilized. think we kind grow production, Canada some move Brazil going have recently as China where us, obviously, more here is as of to and some of other are to a continue be really then parts business revenues forward. of pretty we on of domestic about resilient key a and Sadot So see we lot the but and more move their They And able trades the the focusing of world. company, been to still I

we of some so of that And try out around us now at we you and talked as can think I variations That some gives kind diversification that's well. that happen the fluctuations and that of there. stabilize proved move and might in QX the just QX beginning us more to allows to to

us kind enough move So stability of around those footprint forward. think standpoint, be always have But that like now enough whatever to manage wide that are able and nimble you out there. are there's some of for bodes fluctuations things. we start I a from a to But to we well as I think mentioned, or really

Aaron Grey

Michael. color, that one for second appreciate me. I Okay. the And

nice On the well. gross there as improvement margin,

so improvement? Or benefit I similar gross geographies gross made a are of help over already here in on seeing either couple question were that next really that the So quarter some the of the for the profile should was the more the trade to terms quarters? So via led or financing margin? but trades products with before, similar the the about level, that think would that during you ask different the of on you're how margin making of trades margin we the just

Jennifer Black

really this trades On it those was Aaron. Thanks, generated we that margins. one, quarter this that the did

the We trade haven't able to yet. part really finance into deep been dive

with entering smaller -- the Brazil, And did or money gross that been reason this the when margins. help in so we're I And margins. tend we And Canada. like When to We're has let those where just us the shift And went we're generate new we have then and we said Like blank, when are how -- go done doing generate kind whole with we resources those to better more the and pulses, to into going segments, you're we like all it that entering different you diversifying. smaller containers seeing on the to shift the Brazil which areas. those Canada, that's containers. the could higher are with sesame, of that earlier, sorry comes looking future, sesame, options, opening of said, the markets, organically. new it said, at manage -- we're

Michael Roper

one entire key I model, towards business just we And Jennifer oriented cargo to part there ship is more the bring as the orders. mentioned, container-sized think we I is that that think as online, that orders of move versus forward, reiterate, Canadian as one really

as that. frequency well. happen general a the more through And items do containerships a those so But lot be than higher-margin there's to transactions lot more and tend that in

there. year, we've of products, the of with see larger intermix she some margin different now, we Like containerships fluctuations that obviously different should and right? we into as there, into So margins well. that that in times going sesame different different mentioned, that address et cetera, So help a have gone are then some products the as in

well. So bodes out option base a us wider that's for there having

Jennifer Black

And always secure that, more mitigate their we to in volatility, it it safer being addition hedge too, is of as to also our always, with of risks. kind those risk, hedge does some and do which, lower but

Operator

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

Thomas Kerr

cash right that over that think, may the working and the flow, which quarter. flow of back And Just we really second the were million half And a operating on cash forth where strong, do $X not color how the components was that? they does capital works? question in operating drive the see I year? strong What in cycle and the -- that

Jennifer Black

And payments of timing, and absolutely. are going redeployed. when No, down to Tom, they're to all are when come these received

to generate of like that reinvest sit Our additional bunch use and generate that analysts, I want a cash and will we strategy put us We to and margin. to know want continue be cash especially that, cash of books, people cash the work on have has to into don't cash. company, the to on to our a like margin. been to but lot

yes, those to so the cash high timing earn we'd this we're on due a and payments. earn that balance, trying money of cash. and back receipt that quarter, out And of to deploying revenue and was have And

Thomas Kerr

can little gross back think And commodity publicly a right? Okay. kind long-term That this about not discussed you I want that's but and makes gross margin? goals for where of And it going you X.X%, to maybe talk we was margins, bit, sense. be, to the

Michael Roper

continue sure. every no to look in margin, the right? in company, the the focusing on drive we and the trades. to continue there, question and any and is we've will aspects of about talked move ways beyond the the I'm gross those areas, of that just margin of month other There's overall numbers. not or mean, we we into are and keeps profitability aspect increase some forward But I some Yes, everybody past farming higher So into as even as other if get that to look, shipping right? trades, move help a

margins mentioned well. we about those tend As trades as larger Canada, drive smaller to

they reality that It make should on push come you help So this that. the it's or depends the is, But online, have just out of on there market. industry, you depends happening that in as whatever in the seasonality. it are -- and deals kind products is kind of

So yes, right? margins we'd had past, margins like the We margins. had higher We've the some to see higher in past. in lower

out timing So happening of I again. products want that where doesn't is give that's marketplace. get. do to in just different are range answer, as and whatever I that think probably a can the about the year the in to the we distinct can good know as That's I X% on X% kind depends of be, It that we achieve. or where there

Thomas Kerr

That's helpful.

Jennifer Black

once going to trade optimize, all equity. we will these kicked return provide In and on that, it lines addition and in get finance better

Thomas Kerr

And more ones for the to Back financing. trade quick me. Yes. two

on quarter. last a put You number it

Does up think to to continue or add I change? million Or... increase you $XX availability. that

Michael Roper

that It's still same point. basically at

closer We significantly larger though that options other be finance come multiple they working on through. getting are could we're trade if

work to on continue that. we So

But just well you move far as for accomplish we we have, And right? bringing future of what say, to of forward, have on we part with -- delivered have want it the and more so more been bode we really we what's is today. do trade important online, just deliver we have with to the so we've been what those able able lines to finance think we it. is some that what if I

Jennifer Black

we that looking other are options utilizing other just to allow then that tap that line, having you trade not credits, there's we're without trade And and supplier finance out in and insurances options like actually finance. there are there into

Thomas Kerr

Got it.

for Superfit I one Okay. $XXX,XXX? is, me hear were did you Last proceeds say

Michael Roper

No.

location Maker franchise the So -- last and the Grill between it Maker was one combination Muscle Superfit a over Muscle to converting a location.

proceeds were of range. the those that in total of So two $XXX,XXX kind

coming it's these the in So out forward. divesting moving really step again, material but nothing those, and of things truly first

than Grill three Maker larger, Foods. still The anyway we're And right one big out there. that being Muscle restaurants worked the on that is Pokémoto. on be should Superfit larger will Those of are obviously, going now. are it the working the concepts That's be both

Jennifer Black

kind add did on sales, to of to with on that, take those. those we not loss a And just

Thomas Kerr

items. those two On

Got it. Okay.

Jennifer Black

Yes.

Operator

aren't there If of that more Roper, questions, our concludes any any final Mr. the Q&A portion comments? call,

Michael Roper

to continues company. And in player become recent I that A propel through adventure just good that as good industry. future you've past lot this to think shareholders up. things want seen have that of us being we here well a as have happened the and a in larger are in we I this as thank and grow everybody things of in going us for the that coming lot the

patience thanks everybody all the and and their But again, cooperation everybody and suggestions and whatever comments questions to makes, that's out that I and there. for just appreciate everything

forward. our doing and best moving So

Sadot (SDOT) 14 Aug 242024 Q2 Earnings call transcript