Welcome to the Sadot Group Inc Q3 2024 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, Sadot Group Inc's investor relations contact. 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 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 Sadot Group Inc's most recently filed Form 10-Q and elsewhere in documents that Sadot 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 Sadot 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 Sadot Group Inc and exclude the portion related to non-controlling interests. On this call, we will refer to Sadot Group Inc as Sadot Group, Sadot, or the Company. With me on the call today are Sadot Group's Chief Executive Officer Michael Roper and Chief Financial Officer Jennifer Black. Michael and Jennifer will be presenting prepared remarks related to Sadot Group's financials filed on November 12, 2024, and those documents may be found on the company's website, newswire feeds, and on the SEC's website linked from Sadot's website at www.sadotgroupinc.com under the investor tab. At this point, I would like to turn it over to Sadot's CEO, Michael Roper. Michael. Thanks, Frank, and good morning, everyone. I'm pleased to welcome everyone to today's call, where we'll be discussing our third-quarter results for 2024. I'm extremely proud to report positive net income for the second consecutive quarter, marking a milestone achievement for the company. This accomplishment is accompanied by our best nine-month year-to-date performance in our history, underscoring our ongoing efforts to drive growth and profitability. In Q3, we generated consolidated revenues of $201.7 million, a 10.7% increase over the same period last year. However, the vast majority of our revenue, 99.6% of consolidated revenue, or $200.9 million, was generated by our core agri-commodity group, Sadot Agri-Foods. This division drove an 11.6% revenue increase over the same period last year as we continue to implement and execute against our global expansion strategy. Our net income reached positive $1.2 million for Q3, making Q3 our second consecutive quarter with positive net income. Our Q3 net income of $1.2 million was a substantial improvement from the negative $5.2 million net loss in Q3 2023. This represents an improvement of net income of roughly $6.3 million year-over-year. Our Q3 2024 EBITDA was also positive this quarter at $2.9 million, compared to a negative $4.4 million EBITDA in Q3 last year. This represents an improvement of $7.4 million in EBITDA year-over-year. Notably, our year-to-date through Q3 net income stands at $3.3 million, a marked improvement compared to the $6.1 million net loss recorded for the same period in 2023. This achievement represents the highest net income over the first nine months of any year in our company history. These results demonstrate our ability to operate profitably within a nearly $2 trillion global agri-commodities market and reinforces our strategic vision to expand operations into essential agri-commodities supply chain verticals, including farming, origination, and trading, with further potential for growth into additional areas such as shipping, logistics, processing, and distribution. In addition, we want to widen the types of commodities we trade while also expanding into new geographical trade areas. With that, I'm pleased to announce that we recently placed a deposit and are in negotiations on an agricultural property in Indonesia to expand our portfolio of farming assets, and we look forward to sharing further details upon the successful completion of this transaction. Regarding our legacy restaurant brands, we've been strategically divesting these non-core assets to streamline our focus on core operations, and we remain committed to keeping you updated on any developments related to these restaurant asset transactions. We have closed or converted all company-owned and operated restaurant locations into franchise locations, including SuperFit Foods. We are now a 100% franchise concept and have been able to reduce some overhead expenses accordingly. With that, I'd like to turn the call over to our CFO, Jennifer Black, to review the company's financial performance for the third quarter of 2024. Jennifer? Thank you, Mike. Before I begin, please note that our financial results for the quarter ending September 30, 2024, on Form 10-Q were filed with the SEC yesterday, November 12, 2024, along with the press release on that same day. For the third quarter of 2024, consolidated revenues increased by 10.7% to $201.7 million, up from $182.2 million in the same period last year. Our Sadot Agri-Foods business accounted for the majority of our revenue, contributing $200.9 million in the third quarter as we completed 24 transactions across 14 different countries. Our legacy restaurant operations, which as of September 30 are a 100% franchise system and classified as held for sale, had $0.8 million of revenue from royalties and company operations in Q3. Q3 2024 net income improved significantly to $1.2 million compared to a $5.2 million net loss in Q3 of 2023. For the third quarter, EBITDA rose to a positive $2.9 million compared to a negative $4.4 million in the prior year period. Basic earnings per share improved to $0.25 per share compared to a negative $1.39 per share in the prior year period. Dilutive earnings per share improved to $0.23 per share compared to a negative $1.39 per share in the prior year period. SG&A expenses were $4.2 million this quarter, an increase of about $0.9 million compared to last year, mainly due to initial investments in the opening and expansion of our Sadot Agri-Food trading offices, sorry, a key element of our growth strategy. In addition, there are certain trade-related expenses that we reclassified from cost of goods sold to SG&A starting in Q3 to correctly reflect the operations. Looking at our balance sheet, the company had a cash balance of about $1 million and working surplus of $18.9 million. It's important to note that as a part of our ongoing strategy, we continue to reinvest cash into our agri-food commodity trading business to drive the revenue growth and acquire strategic assets. The company is exposed to market risk primarily due to the volatility in prices of food and feed commodities. To manage these risks, we occasionally enter into forward sales contracts and hedges. These forward sales contracts are initially measured at fair value, with any changes in the fair value recorded as a gain or loss from fair value remeasurement. The mark-to-market gain on these derivative transactions contributed approximately $5.5 million in income for this quarter. We are proud to report Q3 was our second consecutive profitable quarter with significant improvements compared to the previous year. Our Q3 2024 financial results also reflect the best year-to-date, nine-month performance in our company's history. We believe positive changes are occurring across our business, which will help us deliver on our goals of enhanced revenue streams, a larger working capital surplus, and profitability. With that, I'd like to turn the call back over to Mike. Thanks, Jennifer. So everyone, where do we go from here? How do we drive growth? So first, we want to continue to diversify into various verticals within the global food supply chain. This can be farms, logistics, processing, or wholesaling. Second, we plan on expanding our farm operations into new geographies and leverage the farm assets into our trading operations. Third, we want to expand into new geographies, such as our recently announced expansion into Brazil and Canada. And lastly, we want to expand into new commodities themselves. We recently started trading in sesame seeds and lentils, for example, so we want to expand into new commodities. Bottom line is that we believe we've only scratched the surface on growth opportunities within the $1.9 trillion industry. Finally, I want to express my sincere gratitude to all our investors, stakeholders, and team members for your time, trust, and continued support of Sadot Group. This quarter's achievements underscore the strength of our strategy and commitment to growth, profitability, and operational efficiency. We remain focused on advancing our core agri-commodity operations, optimizing our asset portfolio, and driving long-term value for our shareholders. With that, please give us a few moments while we open up the lines for questions. Before we get into questions from our selected analyst, Michael Roper would like to address some questions which we've received from our stakeholders. Michael? Thanks, Alexa. So just before we get into questions, a couple of things I want to talk through here real quick. Just so everybody knows, I do have Kevin Mohan and Benjamin Petel on the phone as well. Just so everyone's aware that they're here in the room with us, with Jennifer and I. Before we get into questions, and these are questions that come in from different shareholders through different mechanisms, either right into the IR site or maybe we read them on StockTwits or something. We do something out there. Yes, we do see some of that, guys, that you're posting. So in any case, we get some of the questions and try to summarize them up to make sure that we're addressing everybody's concerns. Before I get into the questions, though, I do want to make a special announcement here, and it concerns revenue. So before we start with the questions, I want to make this special announcement. This is just coming in this morning, so it's just been finalized, but we are happy to announce that our October revenue was extremely strong, coming in at $87.9 million in revenue for the month. Again, it was $87.9 million for the month of October. That's a great start to the quarter, and we wanted to let everyone know as soon as we could. So that was a special announcement, again, just right off the presses here that came in this morning. So that's something new that we shared with you. So let me jump into some of the questions. I think the first one we are going to have. Who's going through the first one? Kevin is. Kevin? Hey, guys. Thank you. So we had a question regarding Canada, and somebody had asked, "Can you provide an update on progress being made in Canada?" So I want to share some early achievements from our new trading division in Canada. Since its recent launch, the division has not only met but exceeded our initial expectations. So this is marking a pivotal step forward in our growth strategy. So I want to share a couple of highlights with you guys. So to date, the Canada team has facilitated sales of 11 specialty crop commodities. These include items such as lentils and pulses. They've initiated sales with 12 new customer accounts, moving product to five different countries. And most importantly, Canada has been involved in roughly $20 million of transactions across Canada and in collaboration with other company divisions. We're very optimistic about the continued and growing success of our Canada trading division as it strengthens our foothold and contributes to our long-term vision. Okay. So that was some questions and some updates about Canada. Then I think Jennifer now has some questions to review and some information regarding the Indonesian farmland. Yes. The question came in as, "Can you provide some details on the deposit for the new farmland?" The company did place a deposit as part of the negotiations for an acquisition of farmland in Indonesia. We are in detailed negotiations, but in general, we're discussing roughly 9,500 acres, which has vanilla plants and coconut trees, but can also produce other crops such as corn. If completed, this transaction would provide Sadot with new niche commodities to trade, while potentially leading to improved margins. In addition, the new farm would allow the company to control its commodity supplies in important geographies while being able to trade around the projected yields throughout the year. The new farmland would represent a strong addition to our portfolio, offering both immediate operational value and potential long-term growth. Okay. Thanks, Jennifer. And hopefully, we'll be able to make some announcements soon about that being all finalized. But again, we're going to have the deposit down, and we are in the final stages of negotiations there. Another question that we had, which I know a lot of people talk about a lot, is what's going on with the sale of the restaurants for both Pokémoto and Muscle Maker. So let me just kind of walk you through that. So regarding the whole potential sale of Pokémoto and Muscle Maker, we're moving forward, and we're advancing steadily. We currently have multiple interested groups in various stages of due diligence, and we anticipate a formal offer coming up here in the near future. To streamline the process and enhance efficiency, we actually prioritized the closure or conversion of all the corporately owned and operated locations and converted those into franchise locations. As of September 30, we no longer own or operate any corporate restaurants of either Muscle Maker or Pokémoto. As of September 30, we completed that. The company is now a 100% franchise model across all brands. That was key because that helped us reduce some of our overall costs and actually streamlined the process of negotiations. We eliminated some of the confusion out there. It's very straightforward now of just being a franchise model that we're selling. This adjustment not only simplifies the sales process, but it's also allowed us to reduce operating expenses overall. The corporate location has transitioned over to franchise ownership, as I had said. Additionally, as part of our sales strategy, we've implemented a more structured due diligence approach with prospective buyers. This process requires potential buyers to complete nearly all of their due diligence prior to submitting a formal letter of intent or an LOI. This approach allows us to close relatively quickly once an LOI is in place, preventing situations where we're kind of locked into exclusive negotiations prematurely. When you go into an LOI, you have a 30 to 60-day exclusivity period. We don't want to do that. We want to make sure we get as much of the negotiations and all the due diligence done beforehand, so it's a much shorter process. It ensures we remain open to other interested groups as well until a deal is near certainty, allowing for greater flexibility and reducing the risk of needing to restart the process if a buyer doesn't close. We don't want to have a start and stop to the process. So that's a new thing that we've implemented as well. But again, we're moving forward with multiple groups, and they're in various stages of due diligence. Okay. With that, I think, Alexa, it's time to go to the different analysts that are out there with their questions. Let's see. Thanks, Michael. I'd like to open the call to Aaron Grey with AGP with questions. Thank you. Hi, Aaron. Hey, how's it going? Thank you for the questions and thanks for the October numbers, so revenue ticked up nicely in the Q. Looks like it continued in October with $88 million you just announced. Curious if you could maybe provide some color on the gross margin related. Looks like it was about 1%, 1.1%. So are you getting better line of sight of margin improvement? What are some things that we should be watching for out there, either geographically or types of sales? It's hard to see more margin improvement on the sales momentum that you're getting. Sure. I'll take this one, guys. So the gross margins that we're seeing out there, Aaron, are really in line with other companies similar to us in the bulk commodity trading business. So you have the bulk portion, which we're kind of experiencing what we expect in that area. Now, as we bring on more and more trades with Canada and Brazil and other pieces of the business, there are ways to improve the margins through that. So I'm just going to use Canada as an example. When we trade in lentils and pulses, while Canada has smaller-sized trades, they're not the big giant bulk cargo ships, but they are way more frequent, and they turn much quicker. Those have much higher margins normally with those trades. So as we bring Canada on and they continue to improve or increase their number of trades every month, every quarter, that should help in driving some of the margin numbers. So I think one of the things to look for is how much Canada gets involved overall with this whole process. And so that's what I'd be looking for from a margin perspective. Okay. That's helpful there. Same question for me. Just on the Indonesia farms, can you just maybe walk us through again and provide a bit more detail with some of the rationale there? Is it different crops than the Zambia farm? Were you looking to diversify geographically? Just some more color on the rationale with the farm purchase there. Thank you. Yeah. So a couple of things with the farm, and I'll let others jump in as well. First off, we're still in negotiations. So I need to be a little bit careful of what we say or whatever on some things as we finalize that. But yes, it's different crops that are more specialized. So the area that we're looking at has more niche products in it than your typical corn and soy and all that stuff. However, they can still do corn and soy and those things as well. So it'll be a combination of those different products that are there. But yeah, so that's a little bit different than Zambia. It also allows us to have a different geographical area, different parts of the world, different needs, different shipping routes, and trading partners and everything that are there as well. So that's one of the reasons why we do it. And ultimately, we are still looking at expanding into other areas for farming as well. This will just be our second farm that we bring up online. We've already talked in the past some of the advantages of having some of the farm. Let's just trade around some of the commodities. Let's just do your own supply of your products that are there. Let's kind of control your own destiny to a certain degree with some of those products that are there. So there's a lot of advantages to the farm. It's all part of the vertical integration process that we've told the street about, so I think we're going to continue to move that narrative. Okay. Great. Appreciate that. Last quick one for me. Looks like SG&A increased a bit in the quarter. So just what were some of the drivers there? Were there some more things one-time in nature, or is that the base rate we should expect going forward? I'll take that one. It's financial related, right? As we continue to expand in our different geographical areas, we've got to build out these teams, so as a result, there's going to be an increase in SG&As for items like salary, benefit, rent. These costs will always precede the growth as we're building this business, and we expect SG&A to increase as the company grows for those exact reasons. But there will be some one-time expenses, Jennifer, right? Yes. I mean, there's always one-time expenses, but for the most part, we've got to think about growth and building the personnel and the people to grow the business, and that growth always comes before the revenue does. Okay. Great. Thanks for the call. I'll jump back into the queue. Awesome. Thanks, Aaron. Thanks, Aaron. I'd like to open the call to Tom Kerr with Zacks for questions. Good morning, guys. Can you hear me? Morning, Tom. Yep. Just a quick follow-up on that last SG&A question. I think you mentioned in the presentation some items were moved from cost of goods sold. Was that something different than what you just mentioned in terms of building out, or what was moved from? It's kind of all related. There are some items that we did. There's some salaries that we reclassified for certain personnel that we reclassified from Cost of Goods Sold to SG&A because they're truly SG&A people now. It's been some movement and changes in the business, and we wanted to make sure that our financials correctly reflected the way our operations were being driven. Okay. Great. Back to the revenue growth. You mentioned Canada was a good contributor. Was Brazil also a major contributor? Or what else contributed to the growth? Was it different commodities or pricing or just give more color on that? Yeah. Okay. So a couple of things there, right? I want to make a quick distinguishing comment between Brazil and Canada. There are different models, basically. Canada is coming across as more trading, and you're seeing some of the results of them being integrated with the rest of the business as they help facilitate trades across the world for different things, be their own products or just helping other areas. And as you bring more traders on and more divisions or groups like that, you're going to continue to grow revenue through that as well. So Canada is kind of into the trading portion of it. Brazil is a little bit different. Brazil does have some trading. But reality is, Brazil is building different types of relationships, and they're working on different, I'll call it, infrastructure throughout Brazil and agreements with different companies there to be a company that actually can move products up and down from the farms and everything else out to the shipping lanes and things. And so there's some infrastructure areas inside Brazil where there's opportunities. So they're focusing on more of those types of areas than they are pure trades. So a little bit of difference between Brazil and Canada. When you take a look at the revenue numbers that we just reported, a lot of that was just increasing our overall normal trades as our team continues to grow and our team continues to build. But Canada did play a certain portion of that. They're probably involved in, I'm going to rough the number here a little bit, call it about $20 million worth of trades for the quarter that they were involved in. Now, they didn't all necessarily go through Canada, but they were involved with the trade, helping facilitate it and go from there. So like I said, as you get more and more traders, for lack of a better definition of the role, involved in the business, the more and more revenue you should be able to generate. All right. Sounds good. On a different note, can you provide any more color on the Yorkville debt retirement transaction? Was that just a cash payoff? Because I thought there were shares involved. Yeah. I'll take that. Yeah. Hey, Tom, Kevin Mohan, I'll take that one. So if you're talking about, was there any additional shares? You kind of asked two pieces. Could you repeat that question for me? I know there was share issuance in the past related to the Yorkville deal. Did that go away, or did they sell, or do they still own? Yeah. They sold. Okay. We'll call it detailed. Sorry. No problem. Yeah. What we did is we did a prepaid advance with them, and then they were selling shares into the market to repay that debt. The last piece of that debt, we actually paid off with cash on hand. And so we have met our obligation with them. And it is my understanding, based on my last conversation, which the last conversion was done in September, but the last conversation that I had with Yorkville was that they are flat. So they do not own any stock. We do not owe them any money. And so we're in good shape. Okay. Thanks. Last one for me. It looks like if it's the middle of November, the restaurant deal closing would likely be a 2025 event. Is that fair to say? Here's what's happening, Tom, on stuff. As I mentioned, we've got multiple groups in various stages of due diligence. We're getting very close to the end with several groups as they go through. We expect to get a formal LOI here shortly. However, one of the things to consider in there is we did give incentives to the group that we talked to about wanting to close before the end of the year. So we gave them some decent incentives to do that. And so they are pushing hard to see if they can complete it by the end of the year. I think another important note too, as Mike mentioned earlier in the call, the process that we're using, Tom, to get people all the way to the end before we get to LOI, I think is going to help this thing close quickly when the LOI is signed. So I think that's really important. I think if you look back at this company's history, you're going to find that we don't ever announce LOIs. We're not a company that likes to do that. And so we want to make sure that we have concrete deals in place before we make those announcements. So I think it's important for the investors to understand that when we do make the announcement, that's going to be the actual sale and the definitive docs being done. Great. That makes sense. That's all I have for now. Thank you. Thanks, Tom. Great. Thanks, Tom. That concludes our Q&A portion of the call. Mr. Roper, any final comments? Yeah. I just want to thank everybody again for believing in the company and seeing where we're going and understanding our strategy. We do consider ourselves a growth company, and so with that, there's always a lot of announcements and change and things that happen throughout the process. So I appreciate everybody with their questions. I appreciate the patience. I appreciate everybody believing in the company.