Sadot Group Inc.

Welcome to Sadat Group Inc. Q1 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Amy Infante, Chief Marketing 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 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 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 Siddharth Group Inc.' 's most recently filed Form 10-K and elsewhere in documents that Siddharth 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 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 Sadat Group Inc. and exclude the portion related to the non-controlling interest. On this call, we will refer to Sadat Group Inc. as Sadat Group, Sadat, or the company. With me on the call today are Sadat Group's Chief Financial Officer, Jennifer Black, and Interim Chief Executive Officer, David Hanna. Throughout this presentation, we will be referring to David Hanna as CEO, which his appointment begins June 2, 2025. Jennifer will be presenting prepared remarks related to Sadat Group's financials filed on May 14, 2025, 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 Investor tab. At this point, I would like to turn it over to Siddharth Group's CFO, Jennifer Black.

Jennifer? Thank you, Amy. Before I begin, please note that our financial results for the quarter ending March 31, 2025 on Form 10-Q were filed with the SEC yesterday, May 14, 2025, along with the press release on that same day. Our Siddharth AgriFoods revenue was $132.2 million in Q1. the company completed 76 transactions in Q1 across 17 different countries. Revenue increased by 25.7 million as compared to Q1 2024, an increase of 24.1% over 2024. Net income attributable to Siddharth Group improved to 0.9 million in Q1 2025 compared to a 0.3 million net loss in Q1 of 2024 This is an improvement of $1.2 million over Q1 of 2024. EBITDA rose to $2.5 million compared to $0.1 million in the prior period. Both basic and dilutive earnings per share, as attributable to Siddharth Group, was positive $0.18 per share compared to a negative $0.06 per share in the prior year. SG&A expenses were $3.1 million this quarter an increase of over $1.7 million compared to last year. The increase in SG&A was mostly attributable to reclassifying some expenses from cost of goods sold to an SG&A, which better reflects the actual cost of goods sold, shifting wages for administrative personnel, insurance, and other items into the general SG&A account. Looking at our balance sheet, the company had a cash balance of $1.9 million and working capital surplus of $21.9 million. It is important to note that as a part of our ongoing strategy, we continue to reinvest our cash into agri-food commodity trading business to drive revenue, growth, and acquire strategic assets. We are proud to report Q1 was our fourth consecutive profitable quarter and an improvement versus Q1 of 2024. which was our last negative quarter we reported. We believe positive changes are occurring across our business. With that, I would like to turn the call over to David to introduce himself.

Thank you, Jennifer. As has been previously announced, I'm assuming the interim CEO position effective June 2nd, 2025. I'd like to spend a few minutes introducing myself to everyone. I joined Siddharth in June of 2024, and I'm currently the executive vice president and head of Siddharth Canada. I will also be performing the dual role of interim CEO for Siddharth Group. There are many moving parts of Siddharth. We are a rapidly growing company. What's unique is this expansion is happening on a global basis, making it even more complex than a typical emerging company, where we handle the complexities of international rules, customs, time zones, translations, etc., However, through our vast network of employees and consultants, we have been able to manage this growth to date. With this growth, it is natural for companies to experience inefficiencies between new divisions, countries, etc. Sadat is no different. Sadat is at a point where we need to take a hard look at how we improve our balance sheet and income statements within a controlled growth plan. I believe my background and skill set will be key in attacking these challenges head on. I have been involved in rapid growth companies in the past and fully understand the challenges. I even founded my own business focused on pulses, especially crops, distribution and trading of ingredients for the plant-based protein sector. I grew this business to over 80 million in containers, truckloads and rail cars to over 35 countries around the world. We developed a plant-based pet food ingredient division with sales into leading pet food manufacturers across North America. while also becoming the leading Canadian exporter of specialized peas for the pea protein extraction industry. I bring a unique skill set to the CEO role for SADAT. Not only will I bring global agri-foods and commodity trading experience from building agri-food businesses in excess of $500 million annually, I will also be combining this experience directly with extensive financial experience in M&A, public and private equity, and debt financing. where I was involved in transactions totaling more than $1 billion. I believe I am a leader who can bring all the components of the Satav business together, both the international commodity trading business and agri-foods operations, plus the financial acumen and experience to drive shareholder value through various mechanisms, including trade finance, M&A, debt financing, operational efficiencies, and cost cutting. On a different note, if you are interested in receiving press releases and other company information automatically, please visit our website at www.sadatgroupinc.com, go under investor relations, and then investor alerts, and sign up for these announcements, which will be sent to your email. It's a great way to keep informed of all announcements. I'd like to turn the call back over to Jennifer to review a few questions that we have recently been asked by various parties.

Thanks, David. The company receives questions or comments from the investor community during the quarter, and we like to summarize and address these questions during our calls. The first one we have is, can you comment with an update on the general tariff environment and how it affects Siddharth's business? David?

There has certainly been a lot of movement on tariffs globally over the past few months. While the U.S. tariffs cover a wide range of products, industries, and countries, we can say confidently that we do not believe tariffs will have a significant material impact on Sadat. Sadat is a global company. We have conducted agri-commodity trades with 33 countries. The large majority of our revenue is generated outside of the United States, between other countries of origin or destination, having no impact from the new tariffs. For the full year 2024, only a marginal portion of Sadat Group's global trade revenue was directly related to trades originating from or delivering into the United States. Our revenue is mostly generated by agro-commodity trades between countries all over the world. For example, we recently announced a trade to our new South Korea subsidiary between Australia, Kenya, and other countries. Because this trade was not originating from or delivering into the United States, it was not subject to the new U.S. tariffs. In addition, our commodity trading business model and products, which represents over 99% of total company-wide revenue, are not considered consumer discretionary items. Everyone has to eat, and tariffs, if they apply, are costs that are usually passed through 100%. What tariffs can impact are what countries become more competitive as origins. We believe the company can manage in almost any environment due to the nature of the food-related products we trade, as well as the global sourcing and distribution of our operating network. Tadak Group remains vigilant in monitoring the situation. and will provide updates should any significant material changes arise. For now, the tariffs should be considered a non-material event concerning Sadaf's global business.

All right. Thanks, David. The second question we have is kind of a continuation on the tariff subject. How have the tariffs between U.S. and China impacted the business directly?

Again, we have a flexible trading model where we can source products from different countries to satisfy demand. What we've seen is that China's demand for major products like soybeans has shifted from U.S. origin product to other markets such as Brazil. We're studying this trade flow to capitalize on new opportunities created by the change in market dynamics, particularly where we can leverage our inland origination capabilities.

Thanks, David. The third question we have. The company's gross margins have been less than 1%. How are you going to improve those margins?

We're looking at a number of areas where higher margins are more achievable, specifically containerized specialty crops like pulses, such as lentils and beans, and sesame seeds. These are lower volume products, so this strategy won't drive sales growth, but will contribute to higher gross margins as we develop those business lines. Both the Canadian and Brazilian teams are focusing primarily on these product lines. We also signed a management services agreement for a pet food ingredients processing business in Canada. While relatively small, this is a fee-based contract that has no related cost of goods sold and contributes fully to gross margin. We're continuing to look for more opportunities like this as part of our development as a company.

All right, the last question we have. Please provide an update on the sale of the restaurant process.

While the sale of restaurants is taking longer than anticipated, we are making progress and we have multiple parties interested in acquiring the Pokemoto and MMG chains. We are finalizing a new LOI with a qualified buyer. The Pokemoto chain continues to open new locations with recent openings in California, Alabama, Florida, Connecticut, and Massachusetts. We also have new locations opening over the next few months in Claremont and Fort Lauderdale, Florida, Kingstown, Rhode Island, and Puerto Rico. We currently have 41 open locations and another roughly 60 franchise agreements that have been sold but not open to date. We continue to expand Bokimoto. The restaurant division in Q1 reported positive $107,000 net income. While we want to complete the sale as quickly as possible, we're also trying to get the maximum value throughout the sale process. We thank all of our investors, stakeholders, and team members for your time and continued support of Sadat Group.

Thank you. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.