Sadot Group, Inc. Reports Second Quarter 2024 Results

August 13, 2024 at 13:00 PM EDT

Record Quarterly Net Income of $2.4 million

FORT WORTH, TX / ACCESSWIRE / August 13, 2024 / Sadot Group Inc. (NASDAQ:SDOT) (the "Sadot Group" "Sadot" or the "Company"), an emerging player in the global food supply chain sector, today announced its financial results for the second quarter ended June 30, 2024.

Second Quarter 2024 Financial Highlights

Consolidated revenues of $175.0 million, a 9% increase over the prior year period
Net income of $2.4 million compared to $0.2 million in the prior year period. This was the highest quarterly income in the Company's history
EBITDA of $3.2 million compared to $0.7 million of EBITDA in the prior year period
Cash balance of $10.0 million, up from $1.4 million at December 31, 2023
Working capital surplus of $16.1 million compared to $8.3 million at December 31, 2023

"We delivered record net income in the second quarter as we continued to execute well against key initiatives to transform our business and drive growth and profitability," said Michael Roper, Chief Executive Officer of Sadot Group. "Our goal is to continue to seek to expand the scope and capabilities of our platform and to remain well positioned for significant growth in the nearly $2 trillion global agri-commodities market. I am extremely proud of our results, underscoring our resilience and commitment to operational excellence and our strategic vision."

Strategic and Operational Highlights

Completed 21 transactions of over 525,000 metric tons of agri-commodities throughout eight different countries during the second quarter.
Shipped 2,500 metric tons to date of maize and over 690 metric tons of soya from the Company's farming operations in Zambia during the second quarter.
Established Sadot Canada, a wholly-owned subsidiary of Sadot LLC based in Toronto, Canada, in the second quarter. Canadian operations are led by David Hanna as Executive Vice President/General Manager and Jaime Rueda as Vice President/Head of Feed Ingredients. Both executives bring extensive experience and deep knowledge of the agri-commodity markets, making them invaluable additions to the Company. Their combined leadership will be instrumental in advancing Sadot's global growth agenda by guiding the team in facilitating trade flows to and from North America, Africa, the Black Sea, Indonesia, and Brazil.
Finalized the sale of Superfit Foods, the first of three legacy restaurant concepts the Company is in the process of divesting. Sadot is currently in discussions with potential buyers for the remaining restaurant assets, including Pokémoto and Muscle Maker Grill. Sadot will continue to expect that the divestiture of these non-core assets will drive operational savings and simplification along with ensuring that the Company's resources are firmly aligned around the highest potential opportunities in the agri-commodities market.

Webcast Details

Date: Wednesday, August 14, 2024
Time: 10:30 am EDT/ 7:30 am PDT
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About Sadot Group Inc.

Sadot Group Inc. has rapidly established itself as an emerging player in the global food supply chain. Sadot Group provides innovative and sustainable supply chain solutions that address the world's growing food security challenges.

Sadot Group currently operates within key verticals of the global food supply chain including global agri-commodity origination and trading operations for food/feed products such as soybean meal, wheat and corn, and farm operations producing grains and tree crops in Southern Africa.

Sadot Group connects producers and consumers across the globe, sourcing agri-commodity products from producing geographies such as the Americas, Africa and the Black Sea and delivering to markets in Central and South America, Southeast Asia, China and the Middle East/North Africa region.

Sadot Group is headquartered in Ft. Worth, Texas with subsidiary operations throughout the United States, Brazil, Canada, Colombia, Dubai, India, Israel, Singapore, Ukraine and Zambia. For more information, please visit www.sadotgroupinc.com. For additional updates, news and general knowledge related to the global Agri-commodity supply-chain, please visit our website at: www.sadotgroupinc.com and our social media postings on Facebook and X (Twitter).

Sadot Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

	June 30, 2024			December 31, 2023
	$'000			$'000
ASSETS
Current assets:
Cash		9,956			1,354
Accounts receivable, net of allowance for doubtful accounts of $0.3 million and $0.2 million as of June 30, 2024 and December 31, 2023, respectively		24,907			52,920
Inventory		2,528			2,561
Assets held for sale		6,335			-
Other current assets		110,004			56,016
Total current assets		153,730			112,851
Right to use assets		142			1,284
Property and equipment, net		11,888			12,883
Goodwill		-			1,798
Intangible assets, net		-			2,833
Other non-current assets		14			46,442
Total assets		165,774			178,091
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses		30,548			50,167
Notes payable, current, net of discount of $0.1 million and $0.2 million as of June 30, 2024 and December 31, 2023, respectively		3,708			6,531
Operating lease liability, current		21			385
Deferred revenue, current		7,932			1,229
Liabilities held for sale		3,111			-
Other current liabilities		92,278			46,270
Total current liabilities		137,598			104,582
Contract liability, non-current		-			46,048
Notes payable, non-current		-			622
Operating lease liability, non-current		123			1,027
Deferred revenue, non-current		-			1,555
Total liabilities		137,721			153,834
Equity:
Common stock, $0.0001 par value, 200 million shares authorized, 45,965,155 and 40,464,720 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		5			4
Additional paid-in capital		109,962			107,988
Accumulated deficit		(85,075	)		(87,179	)
Accumulated other comprehensive (loss) / income		(175	)		8
Total Sadot Group Inc. shareholders' equity		24,717			20,821
Non-controlling interest		3,336			3,436
Total stockholders' equity		28,053			24,257
Total liabilities and stockholders' equity		165,774			178,091

Sadot Group, Inc.
Condensed Consolidated Statement of Operations and Other Comprehensive Income/ (Loss)
(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	$'000			$'000			$'000			$'000
Commodity sales		173,293			157,559			279,800			367,925
Company restaurant sales, net of discounts		992			2,487			2,149			4,788
Franchise royalties and fees		741			238			997			522
Franchise advertising fund contributions		13			20			28			36
Other revenues		-			13			-			13
Cost of goods sold		(172,527	)		(157,239	)		(280,804	)		(365,535	)
Gross profit		2,512			3,078			2,170			7,749
Depreciation and amortization expenses		(92	)		(441	)		(372	)		(1,074	)
Franchise advertising fund expenses		(13	)		(20	)		(28	)		(36	)
Pre-opening expenses		-			-			-			(36	)
Post-closing expenses		(10	)		(19	)		(29	)		(113	)
Stock-based expenses		(1,921	)		(1,175	)		(2,717	)		(4,593	)
Sales, general and administrative expenses		(2,429	)		(1,783	)		(4,524	)		(3,864	)
Loss from operations		(1,953	)		(360	)		(5,500	)		(1,967	)
Other income		19			251			19			251
Interest expense		(761	)		(22	)		(1,251	)		(19	)
Change in fair value of stock-based compensation		1,214			324			1,691			865
Gain on fair value remeasurement		3,275			-			6,534			-
Gain on sale of trading securities		528			-			518			-
Income / (Loss) Before Income Tax		2,322			193			2,011			(870	)
Income tax expense		(5	)		(3	)		(7	)		(6	)
Net income / (loss)		2,317			190			2,004			(876	)
Net loss attributable to non-controlling interest		52			-			100			-
Net income / (loss) attributable to Sadot Group Inc.		2,369			190			2,104			(876	)

Net Income / (Loss) Per Share attributable to Sadot Group Inc.:
Basic		0.05			0.01			0.05			(0.03	)
Diluted		0.05			0.01			0.04			(0.03	)

Weighted-Average # of Common Shares Outstanding:
Basic		44,234,315			33,362,887			43,058,217			31,407,362
Diluted		50,092,282			33,567,719			48,987,759			31,407,362

Sadot Group, Inc.
Condensed Consolidated Statement of Operations and Other Comprehensive Income/ (Loss) (Continued)
(Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2024			2023		2024			2023
	$'000			$'000		$'000			$'000
Net income / (loss)		2,317			190		2,004			(876	)
Other comprehensive income / (loss)
Foreign exchange translation adjustment		3			-		3			-
Unrealized loss, net of income tax		(126	)		-		(186	)		-
Total other comprehensive loss		(123	)		-		(183	)		-
Total comprehensive income / (loss)		2,194			190		1,821			(876	)
Comprehensive income attributable to non-controlling interest		52			-		100			-
Total Comprehensive income / (loss) attributable to Sadot Group Inc.		2,246			190		1,921			(876	)

Sadot Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

	Six Months Ended June 30,
	2024			2023
	$'000			$'000
Cash Flows from Operating Activities
Net income / (loss)		2,004			(876	)
Adjustments to reconcile net income / (loss) to net cash used in operating activities:
Depreciation and amortization		372			1,074
Stock-based expenses		2,717			4,593
Change in fair value of compensation		(1,691	)		(865	)
Unrealized loss, net of income tax		(186	)		-
Foreign exchange translation adjustment		3			-
Loss on disposal of assets		188			53
Bad debt expense		-			34
Transfer to assets held for sale		(198	)		-
Changes in operating assets and liabilities:
Accounts receivable, net		27,876			(47,401	)
Inventory		(78	)		(9	)
Other current assets		(53,473	)		(1	)
Other non-current assets		46,375			-
Accounts payable and accrued expenses		(19,166	)		39,166
Other current liabilities		46,241			22
Contract liability, non-current		(46,048	)		-
Operating right to use assets and lease liabilities, net		(68	)		(21	)
Deferred revenue		6,175			17
Total adjustments		9,039			(3,338	)
Net cash provided by (used in) operating activities		11,043			(4,214	)
Cash Flows from Investing Activities
Deposit on farmland		(672	)		(3,888	)
Purchases of property and equipment		(31	)		(247	)
Disposal of property and equipment		57			110
Net cash used in investing activities		(646	)		(4,025	)
Cash Flows from Financing Activities
Proceeds from notes payable		3,580			3,500
Repayments of notes payable		(5,375	)		(69	)
Net cash (used in) provided by financing activities		(1,795	)		3,431
Net Increase (Decrease) in Cash		8,602			(4,808	)
Cash - beginning of period		1,354			9,898
Cash - end of period		9,956			5,090

Reconciliations of EBITDA, Adjusted EBITDA and Other Non-GAAP Measures

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures. The Company defines EBITDA as Net loss, adjusted for depreciation, amortization, interest income / (expense), and income taxes. The Company defines Adjusted EBITDA as Net loss, adjusted for depreciation, amortization, net interest (income) expense, income taxes, impairment expenses, stock-based consulting expense, derived from amounts presented in the Unaudited Condensed Consolidated Statement of Operations. The Company believes that EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, (collectively, the "Non-GAAP Measures") are useful metrics for investors to understand and evaluate its operating results and ongoing profitability because they permit investors to evaluate its recurring profitability from its ongoing operating activities.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, have certain limitations, and you should not consider them in isolation or as a substitute for analysis of its results of operations as reported under U.S. GAAP. The Company cautions investors that amounts presented in accordance with its definitions of any of the Non-GAAP Measures may not be comparable to similar measures disclosed by other issuers, because some issuers calculate certain of the Non-GAAP Measures differently or not at all, limiting their usefulness as direct comparative measures.

The following table presents a reconciliation of EBITDA and Adjusted EBITDA from the most comparable U.S. GAAP measure, Net loss, and the calculations of the Net loss margin and Adjusted EBITDA Margin for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
	$'000			$'000			$'000			$'000
Net income / (loss)		2,317			190			2,004			(876	)
Adjustments to EBITDA:
Depreciation and amortization expenses		92			441			372			1,074
Interest (income) / expense, net		761			22			1,251			19
Income tax expense		5			3			7			6
EBITDA		3,175			656			3,634			223
Adjustments to Adjusted EBITDA:
Other income		(19	)		(251	)		(19	)		(251	)
Change in fair value of stock-based compensation		(1,214	)		(324	)		(1,691	)		(865	)
Gain on fair value remeasurement		(3,275	)		-			(6,534	)		-
Stock-based expenses		1,921			1,175			2,717			4,593
Gain on sale of trading securities		(528	)		-			(518	)		-
Adjusted EBITDA		60			1,256			(2,411	)		3,700
Adjusted EBITDA attributable to non-controlling interest		52			-			100			-
Adjusted EBITDA attributable to Sadot Group Inc.		112			1,256			(2,311	)		3,700
Gross Profit		2,512			3,078			2,170			7,749
Gross Profit attributable to Sadot Group Inc.		2,564			3,078			2,270			7,749

Net income / (loss) margin attributable to Sadot Group Inc.		1.3	%		0.1	%		0.7	%		(0.2	)%
Adjusted EBITDA margin attributable to Sadot Group Inc.		0.1	%		0.8	%		(0.8	)%		1.0	%

Forward-Looking Statements

This press release may include "forward-looking statements" pursuant to the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. To the extent that the information presented in this press release discusses financial projections, information, or expectations about our business plans, results of operations, products, or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as "should", "may," "intends," "anticipates," "believes," "estimates," "projects," "forecasts," "expects," "plans," and "proposes." Although we believe 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" and elsewhere in documents that we file 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.

Investor Relations:

Frank Pogubila
SVP
Integrous Communications
W - 951.946.5288
E - IR@sadotco.com

SOURCE: Sadot Group Inc.

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