Sadot's Q1 2025: Unraveling Contradictions on Tariffs, Restaurant Sale, and Margin Strategies

Tariff impact on business, sale of restaurant division, gross margin improvement strategy, and long-term gross margin goals are the key contradictions discussed in Sadot's latest 2025Q1 earnings call.



Financial Performance and Growth:
- Sadot Group reported revenue of $132.2 million in Q1 2025, an increase of 24.1% over Q1 2024.
- The company improved net income to $0.9 million compared to a net loss of $0.3 million in Q1 2024.
- EBITDA rose to $2.5 million compared to $0.1 million in the prior period, and basic and dilutive earnings per share were positive $0.18 per share.
- Growth was primarily driven by increased transactions and expansion into new markets.

Sustainable Financial Strategy:
- SG&A expenses increased by over $1.7 million, primarily due to reclassifications and strategic shifts in expenses.
- The company maintained a cash balance of $1.9 million and a working capital surplus of $21.9 million.
- Sadot Group continues to reinvest cash into its aggregate commodity trading business for revenue growth and strategic asset acquisition.

New Leadership and Strategic Focus:
- David Hanna was appointed interim CEO, effective June 2, 2025, with a focus on improving balance sheet and income statements within a controlled growth plan.
- His extensive experience in global agri-foods, commodity trading, and financial acumen will be crucial for driving shareholder value.

Tariff Environment and Global Diversification:
- The company remains vigilant about global tariffs but does not anticipate a significant material impact on its business.
- Over 99% of Sadot Group's revenue is generated from agri-commodity trades between countries outside the U.S., reducing the impact of U.S. tariffs.
- The company adapts to changes in trade dynamics, such as China's shift from U.S. to Brazil's soybean market, to capitalize on new opportunities.

Restaurant Division and Strategic Sales:
- The restaurant division reported a positive net income of $107,000 in Q1, indicating progress despite the delayed sale of restaurant chains.
- The company has multiple parties interested in acquiring the Pokémoto and MMG chains, with new franchise agreements and openings in various locations.