Group 1 - HF Foods Group Inc. will participate in the 2025 ICR Conference in Orlando, FL, hosting meetings with investors on January 13-14, 2025 [1] - The company is a leading distributor of food products to Asian restaurants across the United States, focusing on fresh produce, frozen and dry food, and non-food products [2] - HF Foods aims to meet the growing demand for Asian American cuisine by leveraging its distribution network and strong relationships with growers and suppliers [2] Group 2 - HF Foods is headquartered in Las Vegas, Nevada, and trades on Nasdaq under the symbol HFFG [2] - The company has a nationwide network of distribution centers and sources high-quality specialty food products from the US, South America, and Asia [2]

Core Viewpoint - HF Foods Group Inc. has appointed Felix Lin as the permanent CEO effective January 1, 2025, as part of its strategic transformation plan [1][2][3] Leadership Changes - Felix Lin has been with HF Foods for five years and will transition from COO to CEO, with his previous responsibilities being distributed among the senior management team [2] - Jason White has been appointed as Senior Vice President, People and Technology, to lead the digital transformation and new ERP program [3] - Paul Guan will take on the role of Vice President, Distribution Center Operations, bringing over 20 years of industry experience [3] Strategic Transformation Plan - The strategic transformation plan is ongoing, focusing on enhancing service quality and expanding the company's market position as a leading provider of Asian cuisine [2][3] - The company aims to leverage its nationwide distribution network and strong supplier relationships to meet the growing demand for Asian American restaurant cuisine [4]

Financial Performance - Net revenue for the three months ended September 30, 2024, was $298,389, an increase of $16,936 compared to $281,453 for the same period in 2023, representing a growth of approximately 6%[103] - Adjusted EBITDA for the three months ended September 30, 2024, was $8,305, a decrease of $1,792 from $10,097 in the same period of 2023[103] - The net loss for the three months ended September 30, 2024, was $(3,837), compared to a net income of $1,974 for the same period in 2023, reflecting a decline of $5,811[111] - Gross profit for the three months ended September 30, 2024, was $50,163, a slight decrease of $762 from $50,925 in the same period of 2023[111] - Net revenue for the nine months ended September 30, 2024 increased by $28.8 million, or 3.3%, compared to the same period in 2023[124] - Gross profit for the nine months ended September 30, 2024 was $153.0 million, an increase of $1.3 million, or 0.8%, with a gross profit margin of 17.1%[125] - Net loss attributable to HF Foods Group Inc. was $4.6 million for the nine months ended September 30, 2024, compared to a net loss of $4.9 million for the same period in 2023[129] Expenses and Costs - Distribution, selling, and administrative expenses increased to $49,652 for the three months ended September 30, 2024, up from $48,841 in the same period of 2023, an increase of $811[111] - Distribution, selling and administrative expenses increased by $0.8 million, or 1.7%, for the three months ended September 30, 2024, with expenses as a percentage of net revenue decreasing to 16.6%[116] - Distribution, selling and administrative expenses decreased to $150.0 million for the nine months ended September 30, 2024, from $154.0 million in the prior year[126] - Interest expense for the nine months ended September 30, 2024 increased by $0.2 million, or 2.0%, primarily due to an increase in the average daily line of credit balance[127] Operational Initiatives - The company has initiated a comprehensive operational transformation plan focused on centralized purchasing, fleet and transportation improvements, digital transformation, and facility upgrades[102] - The company aims to expand its distribution network, having acquired two frozen seafood suppliers in 2022, enhancing its reach in multiple states including Illinois and Texas[100] - The company is implementing a modern ERP solution across all distribution centers to enhance operational efficiency and data-driven decision-making[102] - The centralized purchasing program has yielded positive results in margin expansion for seafood products, with plans to expand to other categories[102] Cash Flow and Liquidity - The net cash used in operating activities for the nine months ended September 30, 2024, was $(3,299,000), a decrease of $23,923,000 compared to $20,624,000 for the same period in 2023[138] - The company’s liquidity is influenced by economic conditions and competitive pricing in the foodservice distribution industry, which may affect future cash flow[136] - The company’s net cash provided by financing activities was $8,935,000 for the nine months ended September 30, 2024, a decrease of $37,000,000 compared to $(28,018,000) for the same period in 2023[141] Risks and Challenges - The company is focused on addressing risks such as low margins in the foodservice distribution industry and potential disruptions in global supply chains[98] - The company performed a quantitative goodwill impairment assessment as of September 30, 2024, concluding that the estimated fair value exceeded carrying value by approximately 1% or $5 million[144] - The company has floating rate debt of $69.1 million, representing 39% of total debt, with a potential $0.7 million change in interest expense per year for a 1% change in applicable rates[156] - The company has no off-balance sheet arrangements that are likely to have a material effect on its financial position as of September 30, 2024[137] Fuel Costs - In Q3 2024, average diesel fuel prices decreased by 14.6% compared to Q3 2023[157] - The company currently has adequate supplies of diesel fuel, but future availability and pricing remain unpredictable[157] - Diesel fuel price fluctuations are influenced by external factors such as geopolitical developments and supply and demand dynamics[157] - Increased diesel fuel costs could raise the company's cost of goods sold and operating expenses[157] - The company does not actively hedge against diesel fuel price fluctuations[158] - Fuel cost risk is minimized through delivery route optimization and fleet utilization improvements[158]

Financial Performance - Net revenue for Q3 2024 increased by 6.0% to $298.4 million compared to $281.5 million in the prior year[2]. - Gross profit for Q3 2024 decreased by 1.5% to $50.2 million, with a gross profit margin decline to 16.8% from 18.1% in the prior year[2][6]. - The company reported a net loss of $3.8 million in Q3 2024, compared to a net income of $2.0 million in the prior year[2][8]. - Adjusted EBITDA for Q3 2024 decreased by 17.7% to $8.3 million compared to $10.1 million in the prior year[2][9]. - For the nine months ended September 30, 2024, net revenue increased by 3.3% to $896.4 million compared to $867.6 million in the prior year[3][10]. - Gross profit for the nine months increased by 0.8% to $153.0 million, with a gross profit margin decrease to 17.1% from 17.5% in the prior year[3][11]. - The net loss for the nine months improved to $4.2 million from a loss of $5.4 million in the prior year[3][13]. - Adjusted EBITDA for the nine months increased by 13.9% to $27.6 million compared to $24.2 million in the prior year[3][14]. - Net revenue for the three months ended September 30, 2024, was $298,389,000, a 6.9% increase from $281,453,000 in the same period of 2023[23]. - Gross profit for the three months ended September 30, 2024, was $50,163,000, slightly down from $50,925,000 in the prior year, resulting in a gross margin of 16.8%[23]. - The company reported a net loss of $3,837,000 for the three months ended September 30, 2024, compared to a net income of $1,974,000 in the same period of 2023[23]. - Net loss for 2024 was $4,161 thousand, an improvement from a loss of $5,383 thousand in 2023, reflecting a change of $1,222 thousand[26]. - The net loss attributable to HF Foods Group Inc. for the nine months ended September 30, 2024, was $4,617 thousand, an improvement from a loss of $4,899 thousand in 2023, reflecting a change of $282 thousand[28]. Cash Flow and Assets - Cash used in operating activities was $3.3 million for the nine months ended September 30, 2024, compared to cash provided of $20.6 million in the prior year[15]. - Cash at the end of the period was $11,445,000, a decrease from $15,232,000 at the beginning of the period, reflecting a net cash used in operating activities of $3,299,000[24]. - Total current assets increased to $192,919,000 as of September 30, 2024, up from $178,827,000 at the end of 2023, primarily driven by higher accounts receivable and inventories[22]. - The company had a cash balance of $11.4 million and access to approximately $27.3 million in additional funds through its $100.0 million line of credit[15]. Liabilities and Debt Management - Total liabilities rose to $327,140,000 as of September 30, 2024, compared to $308,537,000 at the end of 2023, reflecting an increase in current liabilities[22]. - The current portion of long-term debt remained stable at $5,410,000, compared to $5,450,000 at the end of 2023, showing effective debt management[22]. - The company reported a decrease in accumulated deficit to $(313,305,000) as of September 30, 2024, from $(308,688,000) at the end of 2023, indicating ongoing financial challenges[22]. Adjusted Metrics and Expenses - Adjusted EBITDA for the three months ended September 30, 2024, was $8,305,000, down from $10,097,000 in the same period of 2023, indicating a decrease of 17.8%[25]. - Adjusted EBITDA increased to $27,568 thousand in 2024 from $24,203 thousand in 2023, showing a growth of $3,365 thousand[26]. - Non-GAAP net income attributable to HF Foods Group Inc. for the three months ended September 30, 2024, was $2,210 thousand, down from $5,114 thousand in 2023, a decrease of $2,904 thousand[27]. - Stock-based compensation expense decreased to $1,961 thousand in 2024 from $2,605 thousand in 2023, a reduction of $644 thousand[28]. - Change in fair value of interest rate swaps improved to $959 thousand in 2024 from a loss of $2,094 thousand in 2023, a positive change of $3,053 thousand[28]. - Business transformation costs for 2024 were $1,180 thousand, an increase from $402 thousand in 2023, reflecting a change of $778 thousand[28]. - Other non-routine expenses decreased to $584 thousand in 2024 from $1,850 thousand in 2023, a reduction of $1,266 thousand[28]. - Amortization of intangibles remained relatively stable at $12,210 thousand in 2024 compared to $12,213 thousand in 2023[28]. - SEC settlement recognized in 2024 amounted to $3,900 thousand, with no prior year comparison available[28].

Financial Performance - Net revenue for the three months ended June 30, 2024, was $302,342, an increase of $10,030 compared to $292,312 in 2023, representing a growth of approximately 3.4%[81] - Net income for the three months ended June 30, 2024, was $235, a significant improvement of $1,795 compared to a loss of $1,560 in 2023[81] - Adjusted EBITDA for the three months ended June 30, 2024, was $10,561, up by $2,204 from $8,357 in 2023, reflecting a growth of approximately 26.4%[81] - Net revenue for the six months ended June 30, 2024 increased by $11.8 million, or 2.0%, compared to the same period in 2023, driven by product cost inflation and improved pricing[104] - Gross profit for the six months ended June 30, 2024 was $102.9 million, an increase of $2.1 million, or 2.0%, with a gross profit margin remaining flat at 17.2%[105] - Net loss attributable to HF Foods Group Inc. was $0.7 million for the six months ended June 30, 2024, an improvement of $6.1 million compared to a net loss of $6.8 million for the same period in 2023[109] - For the six months ended June 30, 2024, the company reported an EBITDA of $20,313,000, a significant increase of 114.4% compared to $9,470,000 for the same period in 2023[111] - Adjusted EBITDA for the same period was $19,263,000, up 36.5% from $14,106,000 in the prior year[111] Operational Efficiency - The company has initiated a comprehensive operational transformation plan focused on centralized purchasing, fleet and transportation improvements, digital transformation, and facility upgrades to drive growth and cost savings[80] - The centralized purchasing program has already yielded positive results in margin expansion for seafood products, with plans to expand to other categories[80] - The company aims to enhance operational efficiency through the implementation of a modern ERP solution across all distribution centers[80] - Distribution, selling, and administrative expenses decreased by $2,403 to $49,840 for the three months ended June 30, 2024, compared to $52,243 in 2023[89] - Distribution, selling and administrative expenses for the six months ended June 30, 2024 decreased to $100.3 million from $105.2 million, with expenses as a percentage of net revenue decreasing to 16.8%[106] Revenue and Cost Analysis - The cost of revenue increased by $8,231 to $249,877 for the three months ended June 30, 2024, compared to $241,646 in 2023[89] - Gross profit for the three months ended June 30, 2024 was $52.5 million, an increase of $1.8 million, or 3.6%, with a gross profit margin of 17.4%[94] - Distribution, selling and administrative expenses decreased by $2.4 million, or 4.6%, for the three months ended June 30, 2024, resulting in a decrease in expenses as a percentage of net revenue to 16.5%[95] Debt and Financial Obligations - Interest expense for the three months ended June 30, 2024 was $3.1 million, consistent with the previous year, while average daily line of credit balance increased by $19.2 million, or 51.7%[96] - Income tax expense for the three months ended June 30, 2024 was $1.6 million, compared to $0.2 million for the same period in 2023, primarily due to discrete tax items[97] - As of June 30, 2024, the company's floating rate debt was $68.6 million, representing 38.5% of total debt[124] - A 1% change in the applicable rate would result in an approximate $0.7 million change in annual interest expense on floating rate debt[124] Cash Flow and Investments - The net cash used in operating activities was $(17,000) for the six months ended June 30, 2024, a decrease of $8,749,000 compared to $8,732,000 provided in the same period in 2023[116] - The company had cash of approximately $14.0 million and access to an additional $29.9 million through a $100.0 million line of credit as of June 30, 2024[112] - Net cash used in investing activities increased by $4.8 million primarily due to increased capital project spending in the six months ended June 30, 2024[118] Market and Strategic Focus - The company acquired two frozen seafood suppliers in 2022, expanding its distribution network across multiple states including Illinois, Texas, and along the eastern seaboard[78] - The company is focused on serving the increasing demand for Asian American restaurant cuisine, leveraging its nationwide distribution network and strong supplier relationships[79] Regulatory and Risk Management - The company incurred a civil monetary penalty of $3.9 million as part of an SEC settlement, which was paid during the three months ended June 30, 2024[114] - Average diesel fuel prices decreased by 1.6% in the second quarter of 2024 compared to the same period in 2023, although future prices remain unpredictable[125] - The company does not actively hedge diesel fuel price fluctuations but seeks to minimize risks through delivery route optimization and fleet utilization improvements[126]

Core Viewpoint - HF Foods Group Inc. reported breakeven earnings per share in Q2 2024, a significant improvement from a loss of 2 cents in the same period last year [1] Revenue Details - HF Foods generated revenues of $302.3 million in Q2 2024, reflecting a 3.4% year-over-year increase [2] - The revenue growth was driven by product cost inflation, volume increases, and improved pricing in categories like chicken and seafood, although partially offset by deflation in commodities such as cooking oils and a $3.1 million revenue loss from exiting chicken processing businesses in 2023 [2] Gross Margin Analysis - Gross profit for the quarter rose by 3.6% to $52.5 million, with gross margin expanding by 10 basis points to 17.4% [3] Operating Expenses - Distribution, selling, and administrative expenses decreased by 4.6% to $49.8 million, mainly due to a $5.5 million reduction in professional fees, though this was partially countered by higher payroll and labor costs [4] Profitability Metrics - Income from operations in Q2 totaled $2.6 million, a turnaround from an operating loss of $1.6 million in the prior year [5] - Net income for the quarter was $0.2 million, compared to a net loss of $1.6 million year-over-year, driven by a $4.2 million increase in operating income and a $5.3 million reversal of lease guarantee liability, despite setbacks from a $3.9 million SEC settlement and other factors [6] Adjusted EBITDA - Adjusted EBITDA for the quarter was $10.6 million, marking a 26.4% increase from the same quarter last year, primarily due to higher income from operations [7] Liquidity and Debt Management - At the end of Q2 2024, HF Foods had cash of $13.9 million, down from $18.2 million at the end of Q1 2024 [8] - Total debt at the end of Q2 2024 was $111.4 million, slightly down from $112.8 million at the end of Q1 2024 [8] - Cumulative net cash used in operating activities was $0.02 million, a decline from $8.7 million in net cash provided by operating activities a year ago [8] Overall Assessment - HF Foods showed encouraging results in both top-line and bottom-line metrics for Q2 2024, with promising volume increases and improved pricing [9] - However, the deflation in commodities during the quarter presents a concern [9]

Revenue Performance - Net revenue for Q2 2024 increased by 3.4% to $302.3 million compared to $292.3 million in the prior year[1]. - For the first six months of 2024, net revenue increased by 2.0% to $598.0 million compared to $586.2 million in the prior year[2][7]. - Net revenue for Q2 2024 was $302,342, an increase of 3.5% compared to $292,312 in Q2 2023[17]. Profitability - Gross profit for Q2 2024 rose by 3.6% to $52.5 million, with a gross profit margin of 17.4%, up from 17.3% in the prior year[1][4]. - Gross profit for the first six months of 2024 was $102.9 million, a 2.0% increase from $100.8 million in the prior year, with a flat gross profit margin of 17.2%[2][7]. - Gross profit for the six months ended June 30, 2024, was $102,876, up from $100,838 in the same period of 2023, reflecting a growth of 2.0%[17]. - Adjusted EBITDA for Q2 2024 increased by 26.4% to $10.6 million, compared to $8.4 million in the prior year[1][6]. - EBITDA for the six months ended June 30, 2024, was $20,313, significantly higher than $9,470 in the same period of 2023, representing an increase of 114.5%[20]. - Adjusted EBITDA for Q2 2024 was $10,561, compared to $8,357 in Q2 2023, marking a growth of 26.3%[19]. Net Income - Net income improved to $0.2 million in Q2 2024, compared to a net loss of $1.6 million in the prior year[1][5]. - Net income attributable to HF Foods Group Inc. for Q2 2024 was $17, a recovery from a loss of $850 in Q2 2023[21]. - Non-GAAP net income attributable to HF Foods Group Inc. for the six months ended June 30, 2024, was $4,632, compared to $3,248 in the same period of 2023, an increase of 42.5%[22]. Expenses - Distribution, selling, and administrative expenses decreased by $4.8 million to $100.3 million for the first six months of 2024[8]. - Distribution, selling, and administrative expenses decreased to $49,840 in Q2 2024 from $52,243 in Q2 2023, a reduction of 4.8%[17]. - Interest expense increased to $5,953 for the six months ended June 30, 2024, from $5,715 in the same period of 2023, reflecting a rise of 4.2%[20]. Cash Flow and Liquidity - Cash flow from operating activities decreased to $0.0 million for the first six months of 2024, down from $8.7 million in the prior year[10]. - The company reported a net cash used in operating activities of $17 for the six months ended June 30, 2024, compared to $8,732 provided in the same period of 2023[18]. - As of June 30, 2024, the company had a cash balance of $14.0 million and access to approximately $29.9 million through its line of credit[10]. - Cash at the end of the period was $13,968, a decrease from $14,946 at the end of the same period in 2023[18]. Operational Improvements - The company is implementing a modern ERP solution across its distribution centers, with completion expected by the end of the year[3].

Core Viewpoint - HF Foods Group Inc. has appointed Maria Ross to its board of directors, replacing Dr. Hong Wang, which maintains the board's composition of four independent directors and the CEO, Peter Zhang [1][2]. Company Overview - HF Foods Group Inc. is a prominent food distributor catering primarily to Asian restaurants across the United States, providing fresh produce, frozen and dry food, and non-food products [4]. - The company aims to meet the growing demand for Asian American cuisine by leveraging its extensive distribution network and strong relationships with growers and suppliers in the US, South America, and China [4]. New Board Member Profile - Maria Ross brings over 30 years of experience in supply chain management, having held significant roles in companies such as Nike, The Fresh Market, BJ's Wholesale Club, Oldcastle, Inc., and The Home Depot [3]. - Her expertise in supply chain and logistics is expected to be a valuable asset to the company [4].

As a result of the appointments of Ms. Lim and Ms. Westfall, the Company's board of directors will now include four independent directors and Mr. Peter Zhang, the CEO of the Company. Ms. Westfall is a corporate partner based in the San Francisco office of a US global law firm. As a corporate and securities attorney, Ms. Westfall counsels public companies on corporate governance, securities compliance and mergers and acquisitions. In addition, Ms. Westfall advises clients on US-China cross-border business tr ...

LAS VEGAS, June 10, 2024 (GLOBE NEWSWIRE) -- HF Foods Group Inc. (NASDAQ: HFFG) ("HF Foods", or the "Company"), a leading food distributor to Asian restaurants across the United States, today announced the appointment of Lisa Lim and Charlotte Westfall to the Company's board of directors effective June 7, 2024. Forward-Looking Statements Ms. Westfall is a corporate partner based in the San Francisco office of a US global law firm. As a corporate and securities attorney, Ms. Westfall counsels public companie ...