Sadot Group Inc.

Welcome to the Sadat Group, Inc. Q4 Fiscal Year 2023 Earnings Conference Call. Today's call is being recorded and all participants will be in listen-only mode. After management's prepared remarks, we will take questions. At this time, for opening remarks and introductions, I would like to turn the call over to Frank Pogubila, Sadat Group, Inc.' 's Investor Relations Contact.

Thank you operator and welcome everyone to Sadat Group Inc's Q4 Physical Earnings 2023 conference call and webcast. 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 that 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 Sadat Group Inc.' 's most recently filed Form 10-K and elsewhere in documents that Sadat 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 Sadat 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 thousand and percentages have been rounded to the closest percent. Unless otherwise noted, all numbers disclosed in this report are the amounts attributable to Sadat Group Inc. and exclude the portion related to non-controlling interests. On this call, we will refer to Sadat Group Inc. as Sadat Group or the company. With me on the call today are Sadat Group's Chief Executive Officer, Michael Roper, Chief Financial Officer, Jennifer Black, and Chief Investment Officer and Chairman of the Board of Directors, Kevin Mohan. Michael and Jennifer will be presenting prepared remarks related to Sadat Group's financials filed on March 20th, 2024, and those documents may be found on the company's website, Newswire Feeds, and on the SEC's website linked from the Sadat Group's website at www.sadatgroupinc.com under the Investors tab. At this point, I'd like to turn the call over to Sadat Group's CEO, Michael Roper. Michael.

Thanks, Frank. Good morning, everyone, and thank you for joining us today as we present the results of our fourth quarter and full year earnings ending December 31st, 2023. Before diving into Q4 and the 2023 full year results and highlights, I'd like to acknowledge that it has been a truly transformative first 16 months since Sadat Group refocused and retooled the organization to become an emerging player in the global food supply chain. Beginning with our initial focus on agro-commodity origination and trading, we've embarked on a journey of diversification and growth. Allow me to give you a few headlines before we dive into the specifics. First, our 2023 total company revenue rose to $727 million from $162 million in 2022. Second, our 2023 full year adjusted EBITDA was slightly positive compared to a $2 million loss year over year for 2022. Third, our total assets increased from $27 million in 2022 to $178 million at the end of 2023. And lastly, we are now fully focusing the company on the agro commodities business as we've made the decision to explore alternatives, including potentially divesting the company of its restaurant operations. So let's jump into the details. I'm pleased to announce that Sadat Group Inc. achieved CHOP line revenue of $727 million for the full year of 2023. This marks a significant increase over the $162 million generated in 2022, noting that we had only commenced our Sadat Agri-Foods subsidiary operations in November of 2022. To be more precise, the Sadat Agri-Foods division accounted for 98.7% of our total company revenue for 2023. This is an extremely significant point, given where we were a year ago, where we are today and where we're heading. So, where are we heading? Our vision is to become a global food supply organization focused on origination and trading of agri commodities along with investments that have the potential to help improve our trading margins. Aligning to this goal, I can announce that we have formally engaged listed and associates in New York, specialists in the sale of restaurant concepts to facilitate and exploring the divestment of our remaining restaurant and meal prep assets, which have had a material impact on earnings over the past year. With our remaining restaurants still weighing on our P&L for 2023, I am pleased to report that we recorded full-year positive adjusted EBITDA of $89,000 for 2023 compared to a $2 million adjusted EBITDA loss for 2022. Pretty significant change. The adjustments to EBITDA were a series of non-cash items related to the restructuring of our legacy restaurant brands, our corporate name change to Sadat Group Inc., and overall financing strategies, among other items. While these charges did impact our bottom line, they were one-time charges essential for helping to fortify our long-term financial strength and growth opportunities for the company. We anticipate further non-cash items to affect our bottom line in the near future as we proceed with the sale of our restaurant operations, along with stock-based performance expenses as part of our consulting agreement with Agia FZ LLC with respect to our agricultural operations. Focusing on Sadat AgriFoods, The business unit serves as our economic engine, characterized by high dollar volume with narrow margins, which is typical for the agri-commodity trading industry. In 2023, Sadat AgriFoods generated $718 million in revenue and $9.3 million in net income for the company. You may have noticed that we've transitioned from disclosing monthly revenue numbers to a quarterly reporting cadence to better align revenues with the company's margins and profitability to present a more precise financial overview. It is also important to note that we trade exclusively in agri-foods for human and animal consumption, including soy, corn, wheat, oils, and oilseeds. The trades typically range in physical size from 130 to over 78,000 metric tons or 35,000 to 45 million per trade, and we averaged over 20 trades per quarter over the past year. In order to expand our global reach, we've recently increased our trading offices, adding Sadat Lattam in Miami, Florida, and Sadat Brazil in Sao Paulo, sorry if I mispronounced that, Sao Paulo, to our existing locations in Singapore and Dubai. Moreover, we remain open to exploring additional expansion opportunities in the future. While expanding our global presence is essential, our growth hinges on access to trade financing capital. The growth of our top line revenues and bottom line margins is directly linked to increasing our access to trade financing, particularly to execute larger trades. With a year of financial reporting behind us, we are now in a better position to potentially access new and larger trade financing facilities. I cannot emphasize how important these trade financing facilities are to our growth. Access to such financing would provide us with the flexibility to pursue more and larger agro-commodity trading opportunities, thereby increasing our top-line revenue and potentially enhancing our margins and net income. In August 2023, the company expanded its footprint in the global food supply chain with the acquisition of approximately 5,000 acres of farmland in the Makushi region of Zambia through our majority-owned subsidiary. This strategic move enables us to produce in-demand grains and tree crops such as soybean, wheat, corn, mango, and avocado, complementing our origination and trading operations to bolster our supply chain resilience and efficiency. Sadat's farm operations not only stand alone as a profit center, but it also serves as an integral part of the total supply chain operation. The farm crop allows the company to trade year round and the underlying commodity as a collateral in case the market turns negative to help insulate the market fluctuations. I'm happy to report that we have recently signed an agreement with the Republic of Zambia's Food Reserve Agency, reaffirming the company's dedication to combating global food security challenges. This agreement aims to support the Zambian government's efforts to safeguard national food security and bolster the supply and production of maize, a key staple in the region amidst growing demand. The agreement will facilitate the cultivation of high quality maize. In support of this agreement, we have started our fall harvest of both maize and soybeans and has, as of this recording, delivered over 96 metric tons of maize from 24 hectares with a full maize harvest of the remaining 513 planted hectares anticipated to take approximately seven to eight weeks to complete. The harvest for more than 348 hectares of soybeans will begin approximately three weeks from now and be completed in the mid to late May timeframe. In addition to the Sadat Agri-Food's current ongoing harvest, the company has also initiated the pilot program to help small farm owners in the region receive essential farm inputs such as seeds, fertilizers, et cetera, that they need in order to plant and farm their land. This contract farming program is in its pilot stage, engaging approximately 140 local farmers, covering over 1,400 Hextars. It's estimated that there are close to 3 million hectares, which actually converts to about 7 million acres of land in Zambia alone, belonging to small owners that are all in need of help to acquire the inputs needed to farm. The program allows for Sadat AgriFoods to secure the inputs from local suppliers on credit terms, allowing the small farmers to pay for them at a later date with the farm product at time of harvest. The company in turn collects a minimal management fee and increases its presence in the region. This initiative marks a significant contribution to local communities and the positive impact we can create as a large international company in rural Africa. Another new and exciting business line we've engaged in is carbon credits. Earlier this year, the company acquired a forward contract for carbon credits from an ongoing mangrove planting project in Indonesia. This move is aligned with Sadat Group's sustainability values and diversifies our product portfolio to open new markets and new opportunities. Carbon credits have become an inseparable part of agriculture and industry across the world, playing a major part in regulating and managing global environmental pollution. This asset is also part of the company's vision to potentially offer carbon neutral commodity trades in the future. Overall, for 2023, Sadat Group reported a net loss of approximately $7.8 million, in contrast to the net loss of approximately $8 million in the previous year ending December 31, 2022. As previously mentioned, there were a number of one-time charges that significantly impacted our results. While these charges necessitated short-term financial adjustments, they are essential steps towards our long-term objectives. What is important to understand is that our economic engine, Sadat AgriFoods continued to perform, generating $9.3 million in operating income in 2023, further validating the company's strategic direction to focus on this business moving forward. While some tough strategic decisions were made this year that have impacted our financial results, we recognize their necessity in order to potentially impact the long-term benefits for the overall strength of the company and our valued stakeholders. We remain dedicated to executing our strategic vision and harnessing the opportunities the global food supply chain presents, and we eagerly anticipate building upon this momentum as we move forward. Now I'd like to turn the call over to our CFO, Jennifer Black, to review the financial performance of the company for the fourth quarter and full year results for 2023. Jennifer?