Sadot Group Inc. Reports Fourth Quarter and Full Year 2023 Results
- Revenue surged to $726.7 million in 2023 from $161.7 million in 2022.
- Adjusted EBITDA improved to $0.1 million from a $2.0 million loss year over year.
- The company's assets increased to $178.1 million in 2023 from $27.2 million in 2022.
- Cash balance decreased to $1.4 million in 2023 from $9.9 million in 2022 due to strategic shifts.
- Working capital rose to $8.3 million in 2023 from $4.0 million in 2022.
- Sadot Group is focusing on its Sadot Agri-Foods division and exploring divesting its restaurant operations.
- Engaged Lisiten Associates to explore potential divestment of restaurant and meal prep assets.
- None.
Insights
The reported revenue increase for Sadot Group Inc. from $161.7 million to $726.7 million marks a significant year-over-year growth, demonstrating the company's ability to scale operations, particularly within its Sadot Agri-Foods division. Such a dramatic rise in revenue often signals strong market demand and effective business strategy execution. However, the relatively flat adjusted EBITDA, moving from a $2.0 million loss to a marginal $0.1 million profit, suggests that while top-line growth is robust, the company is still in the early stages of achieving operational efficiency and profitability. This could be a concern for investors looking for sustainable profit margins.
The strategic shift away from the restaurant business, indicated by the potential divestment of restaurant and food prep assets, is a clear realignment of the company's core focus towards agri-foods. This could streamline operations and reduce complexity, potentially leading to improved margins in the future. The engagement of Lisiten Associates to explore this divestment further suggests a proactive approach to capitalizing on the company's strengths and shedding less profitable or non-core segments. Investors might view this move as a positive step towards optimizing the business model for long-term value creation.
From a market perspective, Sadot Group's pivot towards the agri-food sector reflects a strategic response to evolving consumer preferences and global food supply chain dynamics. The agri-food industry is known for its resilience and growth potential, especially considering global population growth and the increasing demand for food commodities. The company's acquisition of a farm and involvement in forward sales contracts could be seen as a move to secure its supply chain and capitalize on market trends. However, the significant deployment of cash reserves from $9.9 million to $1.4 million raises questions about liquidity and the company's ability to withstand market volatility or unexpected downturns.
The increase in working capital from $4.0 million to $8.3 million is a positive indicator of the company's short-term financial health, suggesting improved capability to meet its immediate obligations. However, it is essential to monitor how the potential sale of the restaurant assets will affect the balance sheet and whether the proceeds will be used to bolster cash reserves or reinvested into the core agri-foods business.
Analyzing the company's shift towards agri-foods from an agricultural economics standpoint, the timing of entering the market is critical. Given the recent start of the Sadot Agri-Foods division in late 2022, the division's contribution to net income is noteworthy. This suggests that the company has successfully leveraged market opportunities or achieved efficiencies in its commodity origination and trading activities. For stakeholders, the key will be to assess whether these early successes are due to favorable market conditions or sustainable competitive advantages.
The acquisition of farm assets hints at vertical integration, which can offer control over supply and cost efficiencies. However, this strategy also comes with risks associated with agricultural production, such as exposure to weather events and commodity price fluctuations. Investors should consider the company's risk management strategies, such as crop insurance and diversification of commodity trades, to mitigate these risks.
2023 Revenue Rises to
Adjusted EBITDA Rises to
Engages Third Party to Explore the Potential Divestment of its Restaurant and Food Prep Assets
FORT WORTH, TX / ACCESSWIRE / March 20, 2024 / Sadot Group Inc. (NASDAQ:SDOT) (the "Sadot Group" or the "Company"), an emerging player in the global food supply chain sector, today announced that it disclosed its full year results for the period ending December 31, 2023. Chief Executive Officer, Michael Roper and Chief Financial Officer, Jennifer Black will host a conference call at 11 am Eastern Daylight Time on March 21, 2024, to discuss the results. All interested parties are invited to join this call. The full year financial statements ended December 31, 2023, are available on the "Investors" section of the Company's website (https://www.ir-sadotgroupinc.com/sec-filings) and can also be found on www.sec.gov.
Financial highlights for the year ended December 31, 2023:
- In 2023, the Company's consolidated revenue was
$726.7 million , a significant increase compared to$161.7 million for the year ended December 31, 2023. - Non-GAAP adjusted EBITDA from operations was
$0.1 million in 2023 compared to$2.0 million loss in 2022. - In 2023, the Company's assets increased to
$178.1 million from$27.2 million in 2022. - The Company, as of December 31, 2023, had a cash balance of
$1.4 million compared to a cash balance of$9.9 million in 2022 as cash was deployed to facilitate trades. - In 2023, Sadot Group's working capital increased to
$8.3 million from$4.0 million in 2022.
Review of Key Highlights:
- The Company reported consolidated revenue increase from the prior year is mainly due to sales revenue generated from our Sadot Agri-Foods division which began operations in November of 2022.
- The Company's 2023 non-GAAP adjusted EBITDA from operations was
$0.1 million for 2023 compared to$2.0 million loss in 2022 was mainly due to our Sadot Agri-Foods division which generated$9.3 million of net income. - The Company's total assets increased from
$27.2 million in 2022 to$178.1 million in 2023. This is attributed to strategic initiatives such as the acquisition of the farm, accounts receivable related to trades, and forward sales contracts for future delivery. - As of December 31, 2023, the Company had a cash balance of
$1.4 million compared to a cash balance of$9.9 million as of December 31, 2022. This decline is a deliberate outcome of Sadot Group's strategic shift away from the restaurant business towards the Sadot Agri-Foods division. The deployment of cash is intrinsic to the Company's business model for generating revenue and margins. - The Company is fully focusing on the Sadot Agri-Foods division as we have made the decision to explore alternatives including potentially divesting the Company of its restaurant operations which have had a material impact on earnings over the past year. The Company has engaged Lisiten Associates in New York, specialists in the sale of restaurant concepts, to explore the potential divestment of the Company's remaining restaurant and meal prep assets.
"It has been a truly transformative first 16 months since Sadot Group refocused and retooled the organization to become an emerging player in the global food supply chain," stated Michael Roper CEO of Sadot group. "Beginning with our initial focus on agri-commodity origination and trading, we have embarked on a journey of diversification and growth. Our strategic decision to hire Lisiten Associates to explore alternatives in our restaurant holdings underscores our commitment to focusing on our core operations and driving long-term value for our shareholders."
Webcast Details:
Date: March 21, 2024
Time: 11:00 AM EDT / 8:00 AM PDT
To register, please use the link below:
https://audience.mysequire.com/webinar-view?webinar_id=4f2fc5b6-6d78-4bd4-acc4-ca909e8101f6
* Please note that when logging into the Webcast individuals must, when prompted to, "allow video and audio" access to
your device to view and hear the call.
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 Southeast Asia, China and the Middle East/North Africa region.
Sadot Group is headquartered in Ft. Worth, Texas with subsidiary operations all throughout the United States, Brazil, Colombia, Dubai, India, Israel, Singapore, Ukraine and Zambia. For more information, please visit www.sadotgroupinc.com.
Sadot Group, Inc.
Consolidated Balance Sheets
| December 31, 2023 | December 31, 2022 | |||||||
| $'000 | $'000 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | 1,354 | 9,898 | ||||||
Accounts receivable, net of allowance for doubtful accounts of | 52,920 | 135 | ||||||
Inventory | 2,561 | 298 | ||||||
Other current assets | 56,016 | 317 | ||||||
Total current assets | 112,851 | 10,648 | ||||||
Right to use assets | 1,284 | 2,433 | ||||||
Property and equipment, net | 12,883 | 1,895 | ||||||
Goodwill | 1,798 | 2,626 | ||||||
Intangible assets, net | 2,833 | 4,611 | ||||||
Deposit on farmland | - | 4,914 | ||||||
Other non-current assets | 46,442 | 103 | ||||||
Total assets | 178,091 | 27,230 | ||||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | 50,167 | 1,953 | ||||||
Accrued stock-based compensation expense, related party | - | 3,603 | ||||||
Notes payable, current, net of discount of | 6,531 | 222 | ||||||
Operating lease liability, current | 385 | 560 | ||||||
Deferred revenue, current | 1,229 | 95 | ||||||
Derivative liability | - | - | ||||||
Other current liabilities | 46,270 | 182 | ||||||
Total current liabilities | 104,582 | 6,615 | ||||||
Contract liability, non-current | 46,048 | - | ||||||
Notes payable, non-current | 622 | 759 | ||||||
Operating lease liability, non-current | 1,027 | 2,019 | ||||||
Deferred revenue, non-current | 1,555 | 1,276 | ||||||
Total liabilities | 153,834 | 10,669 | ||||||
Equity: | ||||||||
Common stock, | 4 | 3 | ||||||
Additional paid-in capital | 107,988 | 95,913 | ||||||
Accumulated deficit | (87,179 | ) | (79,355 | ) | ||||
Accumulated other comprehensive income | 8 | - | ||||||
Total Sadot Group, Inc. shareholders' equity | 20,821 | 16,561 | ||||||
Non-controlling interest | 3,436 | - | ||||||
Total equity | 24,257 | 16,561 | ||||||
Total liabilities and equity | 178,091 | 27,230 | ||||||
Sadot Group, Inc.
Consolidated Statement of Operations and Other Comprehensive Loss
| For the Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| $'000 | $'000 | |||||||
Commodity sales | 717,506 | 150,586 | ||||||
Company restaurant sales, net of discounts | 8,053 | 10,300 | ||||||
Franchise royalties and fees | 1,041 | 727 | ||||||
Franchise advertising fund contributions | 73 | 81 | ||||||
Other revenues | 13 | 5 | ||||||
Cost of goods sold | (716,755 | ) | (157,307 | ) | ||||
Gross profit | 9,931 | 4,392 | ||||||
Impairment of intangible asset | (811 | ) | (347 | ) | ||||
Impairment of goodwill | (828 | ) | - | |||||
Depreciation and amortization expenses | (1,808 | ) | (2,015 | ) | ||||
Franchise advertising fund expenses | (73 | ) | (81 | ) | ||||
Pre-opening expenses | (371 | ) | (117 | ) | ||||
Post-closing expenses | (212 | ) | (197 | ) | ||||
Stock-based expenses | (6,192 | ) | (3,716 | ) | ||||
Sales, general and administrative expenses | (9,404 | ) | (6,035 | ) | ||||
Loss from operations | (9,768 | ) | (8,116 | ) | ||||
Other income | 308 | 46 | ||||||
Interest expense, net | (469 | ) | (7 | ) | ||||
Change in fair value of stock-based compensation | 1,339 | - | ||||||
Warrant modification expense | (958 | ) | - | |||||
Gain on fair value remeasurement | 1,491 | - | ||||||
Gain on debt extinguishment | - | 140 | ||||||
Loss Before Income Tax | (8,057 | ) | (7,937 | ) | ||||
Income tax benefit / (expense) | 15 | (25 | ) | |||||
Net loss | (8,042 | ) | (7,962 | ) | ||||
Net loss attributable to non-controlling interest | 218 | - | ||||||
Net loss attributable to Sadot Group, Inc. | (7,824 | ) | (7,962 | ) | ||||
Net Loss Per Share attributable to Sadot Group, Inc.: | ||||||||
Basic and Diluted | (0.22 | ) | (0.28 | ) | ||||
Weighted-Average Number of Common Shares Outstanding: | ||||||||
Basic and Diluted | 34,940,559 | 28,558,586 | ||||||
Sadot Group, Inc.
Consolidated Statement of Operations and Other Comprehensive Loss (Continued)
| For the Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| $'000 | $'000 | |||||||
Net loss | (8,042 | ) | (7,962 | ) | ||||
Other comprehensive income | ||||||||
Foreign exchange translation adjustment | 2 | - | ||||||
Unrealized gain, net of income tax | 6 | - | ||||||
Total other comprehensive income | 8 | - | ||||||
Total comprehensive loss | (8,034 | ) | (7,962 | ) | ||||
Comprehensive loss attributable to non-controlling interest | 218 | - | ||||||
Total Comprehensive loss attributable to Sadot Group, Inc. | (7,816 | ) | (7,962 | ) | ||||
Sadot Group, Inc.
Consolidated Statements of Cash Flows
| For the Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| $'000 | $'000 | |||||||
Cash Flows from Operating Activities | ||||||||
Net loss | (8,042 | ) | (7,962 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Impairment of intangible asset | 811 | 347 | ||||||
Impairment of goodwill | 828 | - | ||||||
Depreciation and amortization expenses | 1,808 | 2,015 | ||||||
Stock-based expenses | 6,192 | 3,755 | ||||||
Change in fair value of stock-based compensation | (1,339 | ) | - | |||||
Warrant modification expense | 958 | - | ||||||
Gain on extinguishments of debt | - | (140 | ) | |||||
Unrealized gain, net of income tax | 6 | - | ||||||
Foreign exchange translation adjustment | 2 | - | ||||||
Loss on disposal of assets | 197 | 274 | ||||||
Bad debt expense | 77 | (48 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (52,863 | ) | (4 | ) | ||||
Inventory | (2,263 | ) | (39 | ) | ||||
Operating right to use assets and lease liabilities, net | (19 | ) | 124 | |||||
Other current assets | (55,698 | ) | 1,472 | |||||
Other non-current assets | (46,339 | ) | 65 | |||||
Accounts payable and accrued expenses | 48,723 | (133 | ) | |||||
Other current liabilities | 46,089 | (104 | ) | |||||
Contract liability, non-current | 46,048 | - | ||||||
Deferred rent | - | (128 | ) | |||||
Deferred revenue | 1,413 | 308 | ||||||
Total adjustments | (5,369 | ) | 7,764 | |||||
Net cash used in operating activities | (13,411 | ) | (198 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Deposit on farmland | - | (4,914 | ) | |||||
Investment from non-controlling interest | 3,654 | - | ||||||
Purchases of property and equipment | (7,533 | ) | (597 | ) | ||||
Disposal of property and equipment | 421 | - | ||||||
Collections from notes receivable | - | 70 | ||||||
Net cash used in investing activities | (3,458 | ) | (5,441 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from notes payable | 11,865 | - | ||||||
Repayments of notes payables | (5,693 | ) | (230 | ) | ||||
Proceeds from exercise of warrants | 2,153 | - | ||||||
Net cash provided by / (used in) financing activities | 8,325 | (230 | ) | |||||
Net Decrease in Cash | (8,544 | ) | (5,869 | ) | ||||
Cash - beginning of period | 9,898 | 15,767 | ||||||
Cash - end of period | 1,354 | 9,898 | ||||||
Reconciliations of EBITDA, Adjusted EBITDA and Other Non-GAAP Measures
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures. We define EBITDA as Net loss, adjusted for depreciation, amortization, interest income / (expense), and income taxes. We define 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 Consolidated Statement of Operations and Other Comprehensive Loss. We believe that EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, (collectively, the "Non-GAAP Measures") are useful metrics for investors to understand and evaluate our operating results and ongoing profitability because they permit investors to evaluate our recurring profitability from our 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 our results of operations as reported under U.S. GAAP. We caution investors that amounts presented in accordance with our 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 year ended December 31, 2023 and 2022:
| For the Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| $'000 | $'000 | |||||||
Net loss | (8,042 | ) | (7,962 | ) | ||||
Adjustments to EBITDA: | ||||||||
Depreciation and amortization expenses | 1,808 | 2,015 | ||||||
Interest expense, net | 469 | 7 | ||||||
Income tax (benefit) / expense | (15 | ) | 25 | |||||
EBITDA | (5,780 | ) | (5,915 | ) | ||||
Adjustments to Adjusted EBITDA: | ||||||||
Impairment of intangible asset | 811 | 347 | ||||||
Impairment of goodwill | 828 | - | ||||||
Other income | (308 | ) | (46 | ) | ||||
Change in fair value of stock-based compensation | (1,339 | ) | - | |||||
Gain on debt extinguishment | - | (140 | ) | |||||
Warrant modification expense | 958 | - | ||||||
Gain on fair value remeasurement | (1,491 | ) | - | |||||
Stock-based consulting expenses | 6,192 | 3,716 | ||||||
Adjusted EBITDA | (129 | ) | (2,038 | ) | ||||
Adjusted EBITDA attributable to non-controlling interest | 218 | - | ||||||
Adjusted EBITDA attributable to Sadot Group, Inc. | 89 | (2,038 | ) | |||||
Gross Profit | 9,931 | 4,392 | ||||||
Gross Profit attributable to Sadot Group, Inc. | 10,149 | 4,392 | ||||||
Net loss Margin attributable to Sadot Group, Inc. | (1.1 | )% | (4.9 | )% | ||||
Adjusted EBITDA Margin attributable to Sadot Group, Inc. | - | % | (1.3 | ) % | ||||
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.
View the original press release on accesswire.com
FAQ
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Who did Sadot Group Inc. engage to explore potential divestment?
