Earnings call transcript: Sadot Group’s Q2 2025 sees revenue drop but strategic pivot

Sadot Group Inc (SDOT) reported its Q2 2025 earnings, revealing a 34% year-over-year decline in revenue to $114.4 million. Despite the revenue drop, the company maintained a positive net income of $400,000 and achieved a gross profit margin improvement of 100 basis points. The stock reflected a negative sentiment, with a premarket decline of 3.49%, trading at $0.8975. According to InvestingPro analysis, SDOT is currently trading below its Fair Value, with the stock down over 80% in the past year. InvestingPro data reveals the company trades at a modest P/E ratio of 0.75x and Price/Book of 0.3x, suggesting potential value opportunity despite recent challenges.

Key Takeaways

• Sadot Group’s revenue fell by 34% compared to Q2 2024.
• The company reported a net income of $400,000, marking five consecutive quarters of positive earnings.
• The strategic shift from a restaurant-based model to a global agribusiness is underway.
• Sadot is investing in AI-driven trading and carbon credit projects.
• The stock price showed a premarket decline of 3.49%.

Company Performance

Sadot Group is undergoing a significant transformation, shifting from its traditional restaurant operations to a focus on global food supply chains. This pivot is part of a broader strategy to capitalize on rising demand for agricultural commodities, particularly in emerging markets. Despite the revenue decline, the company reported a positive net income for the fifth consecutive quarter, indicating resilience in its financial strategy.

Financial Highlights

• Revenue: $114.4 million, down 34% year-over-year
• Net Income: $400,000, maintaining profitability
• Gross Profit Margin: 4.4%, a 100 basis point improvement
• EBITDA: CAD 1.7 million
• Cash Balance: $400,000
• Working Capital Surplus: $24.2 million

Outlook & Guidance

Sadot Group is focusing on five strategic pillars: geographic and vertical expansion, margin optimization, technology infrastructure, management strengthening, and sustainable growth. The company plans continued investment in AI and data-driven technologies to enhance its trading capabilities. Future earnings projections indicate an EPS forecast of -0.14 USD for Q3 2025 and -0.11 USD for Q4 2025, with anticipated revenue growth in subsequent quarters.

Executive Commentary

CEO Hagai Ravid emphasized the importance of financial expertise as Sadot transitions to a global agribusiness. "Sadot is at the stage that it requires strong financial expertise," he stated. Ravid also highlighted the company’s commitment to technology-driven strategies, saying, "We aim to build or partner with platforms that provide algorithmic pricing, predictive supply and demand modeling."

Risks and Challenges

• The strategic shift away from restaurant operations may face execution risks and require significant investment.
• The company’s reliance on emerging markets could expose it to geopolitical and economic instability.
• The ongoing sale of restaurant businesses could impact short-term liquidity and operational focus.
• Fluctuations in agricultural commodity prices could affect profitability.

Sadot Group’s earnings call highlighted a company in transition, balancing short-term financial challenges with long-term strategic opportunities in the global agribusiness sector.

Full transcript - Sadot Group Inc (SDOT) Q2 2025:

Conference Operator: And please note, this conference is being recorded. I will now turn the conference over to your host, Amy Infante, Chief Marketing Officer with Sadock Group Incorporated. Ma’am, the floor is yours.

Amy Infante, Chief Marketing Officer, Sadock Group Incorporated: 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 statements made under the heading Risk Factors in Sadat Group, Inc. Most recently filed 10 ks 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 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 interests.

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 Executive Officer, Hagai Ravid and Chief Financial Officer, Paul Sansom. Hagai and Paul will be presenting prepared remarks related to Sadat Group’s financials filed 08/14/2025, 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 Sadat Group’s CEO, Hagay Ravid.

Hagay?

Hagai Ravid, Chief Executive Officer, Sadat Group: Hi. Thank you, Amy, and good morning, everyone. I’m pleased to welcome everyone to today’s earnings call where we will discuss our Q2 twenty twenty five results, strategic initiatives and various questions were received from our shareholders during the quarter. Let’s get right to it. In Q2 twenty twenty five, Sadat Group posted its fifth consecutive quarter of positive net income and positive EBITDA.

So that has changed dramatically since November 2022. The company’s strategy changed from being a restaurant only concept, which posted prolonged net losses into an emerging player in the global food supply chain, and recently producing positive net income and positive EBITDA. In 2024, Sabote posted its first ever full year positive net income and EBITDA. The company followed that by posting positive net income and EBITDA again in Q1 twenty twenty five. Now Sadat is posting Q2 twenty twenty five, with positive net income and EBITDA, marking the fifth consecutive quarter of positive net income and EBITDA for the company.

It’s important to note that we are a young growing company and will have our ups and downs. What’s key is that while we grow into a larger player in the industry, we were nevertheless able to post positive net income and EBITDA. As you all know, many startup or young companies don’t generate positive net income for quite some time in their evolution. Sadotte on the other hand has been able to turn around net losses as a restaurant based company into five consecutive positive net income quarters despite being in a ramp up period. Before I turn the call over to Paul Sansom, our new CFO, I wanted to take a few minutes and introduce myself in more detail to our shareholders, while also sharing my vision and strategy for the company.

My background includes over fifteen years leading one of the most active mid market investment banks in Israel, Kukerman and Co. I was engaged in over $5,000,000,000 of transaction values, most of which were tech driven and across different continents. I was also involved with seamless group, where I held the CFO position and helped them into the dispatch process in 2023 and 2024, culminating in a NASDAQ listing. I have extensive international business experience, and have held multiple CFO and CEO positions throughout my career. I think it’s important to note that I’m bringing expertise in complex financial transactions and technology solutions into SDOT.

In my opinion, the company under my leadership will benefit from a new thought process into M and A activities, digitization of commodity trading through AI and financial planning. Sadot is at the stage that it requires strong financial expertise. And this is what I intend to bring to the company. As I mentioned, I have a strong background in technology. Being a new and emerging company, I believe Sadot has a unique opportunity to bring new technology into our operations.

We have the chance of modernizing the tools used to manage the entire food supply chain. We’re not locked into legacy system and processes. As a global agribusiness engaged in complex, fast moving commodity markets, Sadat Group stands to benefit significantly from the integration of advanced artificial intelligence and data driven technologies. By leveraging AI, we can enhance our decision making capabilities across the entire trading lifecycle. From market analysis and risk management logistics optimization and pricing strategy.

Predictive analytics models trained on vast datasets, including historical pricing, macroeconomic indicators, weather patterns and geopolitical risk can improve the accuracy of market forecasts and help us anticipate supply chain disruptions before they impact our margins. Moreover, implementing AI driven automation and trade execution, compliance monitoring and contract management can increase operational efficiency and reduce costly human error. Natural language processes or NLP can also streamline the analysis of market news, regulatory updates, and sentiment from global data sources in real time. A forward looking digital strategy has the potential to position Sadat Group, not only as a more agile and resilient player in the global food supply chain, but also as a technology enabled company that can create differentiated value in an increasingly competitive landscape. As we look to the future, Saddleh plans to evolve from a traditional commodity trading operation into a diversified technology enabled global agribusiness.

Our strategy will center around five core pillars, geographic and vertical expansion, operational efficiency, margin improvement, technological integration, and leadership excellence. Let me touch on each strategic pillar briefly. Our first strategic pillar is strategic expansion and new verticals. We will continue to expand our global footprint by deepening our presence in emerging markets, where demand for agriculture commodities is rising. At the same time, we’re exploring vertical integration opportunities from origination to logistics and distribution to create more value per metric ton and strengthen control over the supply chain.

Entering adjacent verticals such as specialty crops, food processing, or sustainable agri inputs is also on the roadmap. Our second strategic pillar is margin optimization and cost efficiency. Margin enhancement will come from both top line innovation and bottom discipline. We are implementing tighter risk controls, optimizing freight and storage costs, and using smart data models to improve trade selection and timing. AI and automation will allow us to reduce overhead, improve operational speed and eliminate inefficiencies across the board.

Our third strategic pillar is technology and digital infrastructure. The adoption of AI and real time data analytics will be central to how we trade, forecast and manage risk. We aim to build or partner with platforms that provide algorithmic pricing, predictive supply and demand modeling, and real time visibility into cargo flows and logistics. This will not only reduce costs, but also give us a strategic edge in responsiveness and market intelligence. Our fourth strategic pillar is strengthening management and culture.

We’re building a high performance culture rooted in transparency, execution and innovation. Strengthening our senior leadership team with experienced professionals from trading, technology, logistics and financial backgrounds, will be key to driving transformation and scaling operations globally. Our last strategic pillar is sustainable and ethical growth. We recognize the increasing importance of ESG and global trade. As we scale, we’re embedding sustainability into sourcing, operations and governance, aiming to become a partner of choice for responsible stakeholders across the food supply chain.

Now, I would like to turn the call over to our new CFO, Paul Sansom, to review the company’s financial performance for Q2 twenty twenty five. Paul?

Paul Sansom, Chief Financial Officer, Sadat Group: Thank you, Hagai. Before I begin, let me take a few moments and introduce myself as Sadock Group’s newly appointed CFO. First, I would like to thank Jennifer Black for all of their efforts and time spent at Sadock. Jennifer has helped transition Sadock Group from a restaurant only concept into an emerging player in the global food supply chain. It’s been a fast turnaround and rapid corporate change, and Jennifer was instrumental in making this change possible.

Jennifer will remain with the company in a consulting role to assist with my transition into the company. Briefly, my background includes over thirty years of international experience as both a board member and CFO of various enterprises in the energy, technology, infrastructure, and private equity sectors. I consider my expertise to include financial strategy, m and a, capital structuring, and value creation for both listed and privately held companies. While I began my career in senior finance roles at PepsiCo, Brightpoint, BMW Group, and Mars, I more recently held senior positions including CFO at the Intergen Group UK Limited and Viking Services. In addition, I’ve been CFO for both Energy Capital Group and Ithmar Capital, overseeing large scale investments, AIM listings, and secondary market transactions.

I’ve also been a member of Setup’s board of directors and audit committee, so I’m familiar with the company and the opportunities and challenges in growing this business into a larger player in the agri food supply chain. Before I begin discussing q two, please note that our financial results for the quarter ending 06/30/2025 on form 10 q were filed with the SEC yesterday, 08/14/2025, along with a press release on the same day. So let’s review Q2. Q2 was our fifth consecutive profitable quarter. Revenue for Sadao Agri Foods came in at 114,400,000.0 in Q2.

This is a decrease of 58,900,000.0 as compared to Q2 twenty twenty four, a decrease of 34% over 2024. This decrease was mostly attributable to the company selectively implementing trades with more favorable margins. The company completed 26 transactions representing over 200,000 metric tons of product shipped in Q2 across seven different countries. Gross profit was 4.4% in q two twenty twenty five versus 3.3% in q two twenty twenty four, an improvement of a 100 basis points due in part of focusing on higher margin trades in specialty items and a larger percentage of trades from our Canadian subsidiary of which these transactions tend to have greater margins in general. Net income attributable to SADAL Group was $400,000 in Q2 twenty twenty five.

EBITDA was CAD1.7 million in Q2 twenty twenty five. Both basic and diluted earnings per share as attributable to SADAL Group was positive at CAD0.07 per share. SG and A expenses were £2,800,000 this quarter, an increase of £1,100,000 compared to last year. This increase in SG and A was mostly attributable to reclassifying some expenses from cost of goods to SG and A, which better reflects the actual cost of goods, shifting wages for admin personnel, insurance and other items into the general SG and A account. Looking at our balance sheet, the company had a cash balance of 400,000 and a working capital surplus of 24,200,000.0.

It’s important to note that as part of our ongoing strategy, we continue to reinvest cash into our AgriFoods commodity trading business to drive revenue growth. Accounts receivable were 44,100,000.0. On July 23, the company announced the strategic investment in a carbon project in Indonesia. Company assigned approximately $13,400,000 of accounts receivable to acquire 37.5% equity stake in the special development group, which is a local entity holding full project rights in formal partnership with 11 indigenous coastal communities across the Rial Archipelago in Indonesia. The project focus on the restoration and long term protection of peatland and mangrove ecosystems.

These are considered some of the world’s most effective natural carbon sinks. The special development group has advised that this carbon project initiative is expected to generate between one point one and one point two million high integrity carbon credits in its first issuance cycle verified under internationally recognized methodologies. Validation is planned under the REDD plus and tidal wetlands restoration methodologies, ensuring full compliance with the highest global standards for nature based carbon projects. Now with that, I would like to turn the call back to Hagai. Hagai?

Hagai Ravid, Chief Executive Officer, Sadat Group: Thanks, Paul. As you can see, Sadat is going through changes. We used to be focused on just restaurants. Now we’re a global agriculture company in the worldwide food supply chain. We’re in several verticals, each carrying a different weight, including commodity trading and logistics, farming and now entering into carbon projects to provide unique opportunities to our clients by offering carbon offsets using high quality nature based carbon credits.

In the past, the company has gathered questions we received from shareholders, banks and analysts and present them as questions and answers during the call. Here are some of those questions and answers. Question one, what is the status on the sale of the restaurants? I will respond to this myself. I’m not happy with the slow progress being made on the restaurant sale process.

While we have had multiple LOIs and continue to work through the due diligence with current potential buyers, we need to refocus our efforts on getting this transaction completed. While the restaurants are only fraction of the overall revenue of the company, the resources to support the business segment are significant and not proportional to the size of the business. It is imperative therefore, that we divest the restaurants to remove shareholder confusion, reduce costs, generate cash to pay off debt and focus all efforts and resources on the agricultural side of the business. I’m refocusing the team to concentrate solely on completing a transaction for the restaurants. With that said, we are once again in the final stages of negotiations and due diligence with several potential buyers.

These are strong candidates looking to acquire both Muscle Maker Grill and the Pokamoto in one combined transaction. Question two, why did the company recently raised 2,500,000.0 and what are the proceeds being used for? We raised the capital as a result of delays in collecting some receivables and closing on the sale of the restaurants. This was a straight equity non toxic deal without any warrants. Question three, tariffs continue to be a concern across the globe.

How do tariffs affect SADAT if at all? Paul?

Paul Sansom, Chief Financial Officer, Sadat Group: Thanks, again. While The US tariffs are a concern across multiple sectors, in reality, only a small percentage of SADAL trades are conducted with The United States. SADAL is a global company with the vast majority of our revenue and trades happening outside The United States. Therefore, Sadock does not have great exposure to tariffs in general. In the cases where product is traded via The United States, because we are a global company with operations worldwide, we have the ability to move transactions around the globe, avoiding US tariffs if clients request.

Hagai Ravid, Chief Executive Officer, Sadat Group: Question four, why has there been so many changes in the board and management over the last quarter and year to date? So as I mentioned earlier, Sadotte is in the process of changing over from a US based restaurant company to an international player in the global food supply chain. This strategic change requires personnel with specific skill sets, not only in the food supply chain, but also in other areas such as finance and technology. We believe these changes are natural as the company grows and completes its strategic pivot into an international company across various verticals in the food supply chain. In closing, I want to express my gratitude to all investors and stakeholders for joining us today and for your continued support.

We have witnessed significant growth, particularly in our Saddam Agri Foods division, despite facing challenges along the way. Our strategic decision to divest our restaurant holdings underscores our commitment to focusing on our core operations and driving long term value for our shareholders. We’re currently evaluating additional opportunities in the global farming, trading, processing, shipping and distribution to increase our market share and operational footprint. I’m proud of the resilience and dedication demonstrated by our team, whose hard work has propelled us forward amidst a dynamic landscape. As we move forward, we remain steadfast in our strategic vision, exploring new opportunities and partnerships to further strengthen our position in the market.

Thank you once again for your trust in Sadgote Group Inc. We look forward to the exciting journey ahead.

Conference Operator: Thank you. Ladies and gentlemen, this does conclude today’s conference, and you may disconnect your lines at this time. And we thank you for your participation.

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