Greetings. Welcome to the Sadot Group Inc. Q4 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this this conference is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to your host, Michael Roper, Chief Governance & Compliance Officer. You may begin.

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. To the extent 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-looking. Such forward-looking statements can be identified by the use of the 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. 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. 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 noncontrolling interests. On this call, we will refer to Sadot Group Inc. as Sadot Group, Sadot or the company. With me on the call today are Sadot Group's Chief Executive Officer, Catia Jorge; and Chief Financial Officer, Jennifer Black. Catia and Jennifer will be presenting prepared remarks related to Sadot Group's financials filed on November 12, 2024, and those documents may be found on the company's website, Newswire feeds and on the SEC's website link from Sadot's website at www.sadotgroupinc.com under the Investor tab. At this point, I would like to turn it over to Sadot's CEO, Catia Jorge. Catia?

Thanks, Michael, and good morning, everyone. I'm pleased to welcome everyone to today's earnings call, where we'll be discussing our fourth quarter and full year 2024 results. Let's get right to it. 2024 was a milestone year for Sadot Group. We achieved positive net income for the full year for the first time in company's history, reflecting the success of our strategic transformation into an emerging player in the global agri commodities market. Some key financial highlights include for Q4 2024, the company generated consolidated revenue of $216.2 million. Achieved net income of $0.7 million and EBITDA of $2.2 million. For the full year ended December 31, 2024, the company generated consolidated revenue of $700.9 million, achieved net income of $4 million and EBITDA of $8.9 million dollars. This number represents substantial improvements from 2023, demonstrating our ability to execute efficiently and drive sustainable profitability. To put this in perspective, Q4 net income improved by $2.6 million over Q4 2023. Q4 EBITDA improved by $4.3 million over Q4 2023. Full year net income improved by $11.8 million over full year 2023. Full year EBITDA improved by $15.1 million over full year 2023. These results validate the strategic shift we made in late 2022, establishing Sadot Group as a global player in agri commodities. Before I turn the call over to Jennifer Black, our CFO, for more specifics, since this is my first earnings call as CEO, I'd like to take a moment to introduce myself. I consider myself an agri industry expert. I was born and raised in Sao Paulo, Brazil and began my career managing raw material supply for one of Brazil's largest milling groups. I later joined Cargill, where I spent 13 years executing high value trading strategies, exporting over 7 million metric tons of grains annually. In…

Thank you, Catia. Before I begin, please note that our financial results for the year ending December 31, 2024, on Form 10-K, were filed with the SEC yesterday, March 11, 2025, along with the press release on the same day. Sadot agri foods revenue was $216.2 million in Q4 and $700.9 million for the full year. The company completed 75 trade related transactions in Q4 across 20 different countries and 144 trade related transactions for the full year across 33 countries. Net income improved to $0.7 million in Q4 and $4 million for the full year. For the full year, this is a significant improvement of $11.8 million over 2023. EBITDA rose to $2.2 million in Q4 and $8.9 million for the full year. For the full year, this marked an improvement of $15.1 million over 2023. Basic earnings per share from continuing operations improved to $1.28 per share compared to a negative $1.45 per share in 2023. Dilutive earnings per share for continuing operations improved to $1.26 per share compared to a negative $1.45 per share in 2023. SG&A expenses were reduced by $1.3 million to $9 million in Q4, mainly due to reclassifying Sadot food service's SG&A expenses for the year to discontinued operations, while also closing or converting all corporate owned and operating restaurants to franchise locations. Looking at our balance sheet, the company had a cash balance of $1.8 million and a working capital surplus of $20.5 million. It is important to note that as a part of our ongoing strategy, we continue to reinvest cash into our agri food commodity trading business to drive revenue growth and acquire strategic assets. The company is exposed to market risk primarily due to the volatility in prices of food and feed commodities. To manage these risks, we occasionally enter into forward sales contracts and hedges. These forward sales contracts are initially measured at fair value with any changes in fair value recorded as a gain or loss from fair value remeasurement. The mark-to-market gain on these derivative transactions contributed approximately $5.1 million in income for the quarter and $17.1 million for the year. We are proud to report Q4 was our third consecutive profitable quarter and our first profitable full year. We believe positive changes are occurring across our business. With that, I would like to turn the call back over to Catia.

Thank you, Jennifer. Before moving to questions, I would like to provide an update regarding our Canadian operations and the potential effect on tariffs between The U.S. and Canada. It's our view that this current development in tariffs will have no material effect on our Canadian and U.S. operations. Financials or growth plans. As a matter of fact, our core Canadian products pulses such as lentils, peas, chickpeas and beans are minimally affected by cross-border trade between the U.S. and Canada as both countries primarily produce pulses for global export markets rather than bilateral trade. Our flexibility commodity trading model will allow Sadot to adapt quickly to any concerns if they arise. Sadot Group remains vigilant in monitoring the situation and will provide updates if any significant material change arise. For now, the tariffs should be considered as a non-mature event concerning Sadot's Canada business operations. So where do we go from here? Looking ahead, we are laser focused on scaling Sadot through: one, driving operation efficiencies. We intend to optimize our supply chain to maximize margins. Two, strengthening investors' relations, we plan on enhancing shareholder communication while driving awareness to our company. Three, expanding into new markets, aggressively establishing a presence in new global markets on both the supply and demand sides. Four, diversifying our commodity portfolio by adapting to market trends creating stability. Five, strategic growth initiatives including expanding our farm assets and integrating them in to our trading operations. Bottom line is we believe we have only scratched the surface on growth opportunities within the nearly $2 trillion industry. Finally, I want to express my sincere gratitude to all our investors, stakeholders and team members for your time, trust and continued support of Sadot Group. This quarter's achievements underscore the strength of our strategy and commitment to growth, profitability and operational efficiency. We remain focused on advancing our core agri commodity operations, optimizing our asset portfolio and driving long-term value for our shareholders. With that, please give us a few moments while we open up the line for questions.

Thank you. [Operator Instructions] Before we go to questions from our selected analysts, Jennifer Black would like to address some questions, which have been received from our stakeholders. Jennifer?

Thanks, Paul. I'd now like to run through a few questions we previously received from shareholders. First question we have is, can you provide an update on the sale of the restaurants? Mike, can you address this question and where we stand on this?

Yes, I got it, Jennifer. Thanks. The restaurant sale process continues to move forward. While this process has taken a bit longer than originally expected, we now have the restaurant group positioned as a full franchise concept without any corporately owned and operated locations. This allows us to streamline the sales process removing negative impacts and confusion on the overall performance. This actually should help streamline the due diligence process. However, we do have multiple parties in advanced stages of negotiations and the due diligence process. With the addition of new managerial resources and adjusting responsibilities, we can now have a more focused effort on completing the restaurant sale process. This remains a top priority to divest the restaurants and continuing to focus all efforts on the strategic plan concentrating on the global food supply chain.

All right. The second question we have is there continues to be the threats of tariffs and announcements of new and different levels of tariffs. How do these affect Sadot in general? And I'm going to go ahead and take that one. Sadot is a global trading company. We initiate trades between a multitude of countries. As a matter of fact, most of our trades are initiated outside the U.S. and are not subject to the recently announced U. S. trade tariffs. In 2024, we conducted trades between 33 different countries. And SEDOT has a flexible trading model, ideally posed to capitalize on the changes in various trade flows. We'll continue to monitor the situation and we'll provide updates should any significant material changes arise. For now, tariffs should be considered a nonmaterial event. The third question we have is the company has reported a lot of changes to its board and executive management lately. Are all these changes conducive with the company's current business and future strategy? Catia, will you take this one?

Sure. All of those recent change have been in line with the company's divestment from the legacy U. S. centric restaurant business and its strategic focus on its core business of the global agri commodities supply chain. The current growth stage of the company allows us to bring in more agri commodity industry specific experts who should complement this active team and help propel Sadot forward. Starting from the most recent, the appointment of Mark McKinney as the Chairman of the Board. Mark has extensive experience as an executive in multinational agri commodity companies including Dole Packaging Goods, Sunkist Growers, Al Ghurair Foods and Local Bounti. Secondly, in the recent appointment of Mr. Claudio Torres to the Board of Directors, Mr. Torres is a seasoned professional with top managerial experience multinational agri companies includes Syngenta Seeds, Advanta Seeds and Monsanto. On the C level, I've recently taken the drive seater as a new CEO and we are restructuring the internal management team to reflect the current business focus and the strategy. We'll continue to optimize the teams and make any necessary changes to it that are in line with our strategy and will bring value to the company and its shareholders.

Thank you, Catia. The fourth question we have is how do you plan to enhance the company's IR and PR efforts? Mike, will you take this one?

Got it. Thanks, Jennifer. With the new management in place, we believe the company will have a clear trajectory which investors can engage with and appreciate. We plan on increasing the IR efforts in order to reach new investors and capital market professionals as well as working in parallel channels to increase the overall exposure and recognition of the company. We plan on enhancing shareholder communication while driving awareness to the company. This sounds straightforward, but let me emphasize a few key points here. First, we plan on more frequent announcements and updates to shareholders. This may come through press releases, shareholder update letters, conference calls, etc. Second, to help drive awareness, we are launching non deal roadshows and presentations to the investment community. We plan on attending more conferences, participate in more presentations, social media, etc. We now have refocused internal resources to drive this initiative. Finally, we're evaluating our current IR and PR strategy to determine if we need a new approach to drive awareness. We believe Sadot is currently undervalued. We need to not only execute against the business strategy, but we also need to communicate our strategy and build awareness in the investment community. And before I kind of give it back to Jennifer, just real quick, if you guys don't know, if you want frequent investor updates, you can go off to our website sedotgroupinc.com under the Investment tab or Investor tab. And there's a section there where you can enter in or register to receive all of our press releases and other announcements as well. Jennifer?

All right. Thanks, Mike. For Catia, what do you see as the next step for Sadot? Which markets and our products you believe Sadot should focus on?

Thanks, Jennifer. As I said before, we are in the process of our organization instructor review to make sure the right talents are in place, aligned with our strategies and bring operations optimization. This involves moving resource to the most critical areas while also bringing in new talent if needed to support our strategy. As part of this organizational review, we will be analyzing our current SG&A expenses to ensure we deploy resources in the most critical areas while also looking to reduce expenses in general. Regarding markets and products, we will strengthen our presence in Brazil and Argentina, which are both big brands and pulses producers. While we focus on Brazil and Argentina, we also have expansion geared towards growing consumption markets like MENA and Asia. Jennifer?

Thank you. Okay. Our last question. Catia, as a new CEO, can you please tell us how you see the company succeeding to grow in this highly competitive and centralized business with some of the competition being the largest companies in the world? Catia?

As I mentioned earlier, I see tremendous opportunity in Sadot specifically because of its size, its team and its global presence. Sadot has done a lot in a very short period of time and has already reached profound achievements. My plan is to leverage this spirit and the foundations already in place, streamline the operations and discard any inefficiencies and redundancies in an effort to continue growing the company one step at a time while increasing the business and shareholder value.

Thank you, Catia. That is the end of our preselected questions. Paul, we would now like to open the line up for questions.

Thanks, Jennifer. And now I would like to open up the call to Aaron Grey with Alliance Global Partners for questions.

Hi. Thank you for the questions. Catia, welcome aboard and thank you for everyone else for joining the call today. First question for me, just in terms of the quarter, I want to get some more detail in terms of some of the transactions, particularly on the margin front. Just if I back into the fourth quarter, it does look like they were a little bit lower margin potentially than we had seen earlier in the year. So just want some commentary on that, whether or not that was just a function of the commodities traded, the geographic mix, or just any commentary there and maybe some expectation on that going forward, particularly, if you could give any color on the quarter now that we're halfway through March and mostly through first quarter, that'd be helpful. Thank you.

So, Aaron, thank you for the question. In terms of the margins and EBITDA, all those change I can anticipate are focused on restructuring and focus on the right talents to negotiate in higher margin markets than we were trading before, intensified risk management. So all these new focus will bring more results to the company. In particular for the last quarter of last year, Jennifer can I invite you on board to comment on this specific period?

Yes, of course. I mean, kind of like what we've talked about in the past, Aaron, these will fluctuate depending on the group that is trading the areas that is trading the types of trades. It will also fluctuate based off of seasonality and cyclical variance. Our Q4 was in line with some of our other quarters. And as Catia said, we're restructuring things and looking at things to evaluate our margins and looking for ways to constantly increase those.

Okay, great. Thanks for that. Second question for me, just any updates in terms of the farm, potential crop harvest and how we should think about the timing and cadence for that, for 2025?

Thanks, Aaron. Mike, do you want to answer about the farm?

I'm going to go ahead and jump in here, if you don't mind. Sorry about that. On the farm, we actually are not harvesting in Africa right now because there was a severe drought during the period of when we needed to plant. And based off of looking at what our cost was going to be, what our profit was going to be, it did not make sense to plant a crop. It would have cost us more money than we would have made and it did not make operational sense to plant this fall. However, we are looking to open that up in 2025.

Okay, great. Thanks for color. Yes, and Catia, thanks for all the commentary you gave in terms of your March working for Sadot and we'll dive deeper into that into next quarter. But thank you. I'll jump back in the queue.

Thank you, Aaron.

Thanks, Aaron. Now I would like to open up the call to Tom Kerr with Zacks for questions.

Good morning, everybody. A quick follow-up on the restaurant group sale. Is there any changes in the values you guys are expecting that we talked about five, six months -- or six, nine months ago? We're looking at $5 million or $6 million or something. I don't realize the exact number, but has the valuation expectations changed in the last nine months?

Thank you, Tom, for your question. Mike, you can jump in.

Yes, got it. Okay, sorry. Didn't mean to cut you off. Yes, so as we've talked before in the restaurant sale, look, there's multiple parties that are involved, right? And we've got multiple offers that are out there. We are honing in on a few, right, that are closer. The process has taken a little bit longer than anticipated because it's a little bit more of a complex transaction when you combine two restaurant chains into one that you're trying to sell. Right? So it wasn't just a straightforward and then you had the corporate locations versus a full franchise system. So now that the corporate locations are out of the system, we're full franchise and we're moving ahead as we planned, right. Just take a little bit longer time, but we are getting much closer. The valuations that are in there are in line with what we've talked about before, through this whole process. What we're really trying to look at now is more of the fine tune type of areas, how much cash at closing versus some loans or any of that type of stuff that might have to be carried. Those type of things are all still in negotiation right now, but that's about as detailed as I can get you at this stage.

No worries. Thanks. Back to the margin discussion for a little bit on the commodity business and we've talked about getting the gross margins up to the 2% to 3% range. I mean, without giving guidance, is that the 2025 event that we can dynamically increase those gross margins to the 2% to 3% range?

Thanks, Tom, for the question. That is our major focus. It's a commodity market, it's volatile. So we cannot guarantee it's going to be this or that, but that's going to be our focus. And also we are increasing our participation in markets like pulses, which bring us better margins compared to the normal grains business like soybean, corn and wheat. So we are increasing our participation on that too with the main objective to increase the company's value and EBITDA.

Got it. And then one more financial. I know you guys aren't giving guidance, but are we still expecting $150 million to $200 million of revenues each quarter? Is that what can be done or what can derail that I guess is the question?

It's also our focus. Of course, the quarters, they vary from each other, but we are pretty aligned to get that.

Okay. All right. And last one, just a quick one on this pet food announcement. So what is the ingredients there and why is that a good opportunity? Could you go over that real quickly?

Can you just repeat the question for me, please? For some reason, my connection, please.

You guys made an announcement you were getting in the pet food trading business. Just a little color on that new opportunity.

Okay. Yes. We're still evaluating that. But Mike, if you want to jump in and give more info.

Sure. Yeah. So it's a new line, okay, that's coming on board. I don't know the actual ingredient per se. Do you know Jennifer what the ingredient was? I don't I don't know what the ingredient was per se. Right? But it's not -- put it this way, it's a great opportunity for the company to get into. It's a burgeoning market that's out there with a lot of demand. It's going to remain relatively small for us in the short term. So I wouldn't expect any real impact from it for a few quarters of significant impact, right. But we are getting into that area as we start growing it out.

All right. Sounds good. I'll get back in the queue. Thank you.

Thank you. That concludes our Q&A portion of the call. Ms. Jorge, any final comments?

Thanks, Paul. No, I'd just like to thank you, everyone, for being here and participating with questions.

Thank you. And this does conclude today's conference. [Operator Closing Remarks].