HF Foods (HFFG) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results HF Foods Group Inc. reports strong Q2 2025 financial results, driven by strategic initiatives and operational efficiencies Management Commentary Management reported record net revenue and gross profit for Q2 2025, attributing success to transformation initiatives, ERP implementation, and active M&A evaluation - Reported record quarterly net revenue and gross profit, demonstrating momentum from transformation initiatives[3] - Successfully completed the implementation of its ERP system across the entire network, creating a unified platform to enhance operational efficiency[3] - Actively evaluating attractive M&A opportunities to expand geographic footprint and enhance product capabilities[3] Second Quarter 2025 Results Summary HF Foods achieved strong Q2 2025 growth with net revenue up 4.1% to $314.9 million, gross profit up 5.1% to $55.1 million, and Adjusted EBITDA up 31.1% to $13.8 million Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $314.9M | $302.3M | +$12.6M | +4.1% | | Gross Profit | $55.1M | $52.5M | +$2.6M | +5.1% | | Gross Margin | 17.5% | 17.4% | +13 bps | - | | Net Income | $0.5M | $0.2M | +$0.3M | +117.0% | | Adjusted EBITDA | $13.8M | $10.6M | +$3.2M | +31.1% | | GAAP Diluted EPS | $0.02 | $0.00 | +$0.02 | - | | Non-GAAP Diluted EPS | $0.12 | $0.04 | +$0.08 | +200.0% | Detailed Financial Performance Revenue growth was driven by higher volumes and pricing in Meat & Poultry and Seafood, with improved operational efficiency leading to a 117.0% increase in net income - Revenue growth was primarily driven by volume increases and improved pricing in Meat & Poultry and Seafood[4][6] - Distribution, selling and administrative expenses as a percentage of net revenue decreased from 16.5% to 16.2% year-over-year, mainly due to increased net revenue and lower professional fees[7] - The significant increase in net income was driven by a $1.5 million rise in income from operations[8] Cash Flow and Liquidity Operating cash flow significantly increased to $10.5 million for the six months ended June 30, 2025, with strong cash reserves and available credit Cash Flow and Liquidity Summary (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash from Operating Activities | $10.5M | $1.9M | | As of June 30, 2025 | | | | Cash | $15.7M | - | | Available Line of Credit | ~$57.8M | - | Consolidated Financial Statements (Unaudited) Unaudited consolidated financial statements provide a detailed overview of the company's balance sheet, income statement, and cash flows for Q2 2025 and the six-month period Condensed Consolidated Balance Sheets Total assets increased to $593.5 million by June 30, 2025, driven by inventories, while liabilities also rose due to accounts payable and line of credit increases Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $202,166 | $178,103 | | Inventories | $127,240 | $97,783 | | Total Assets | $593,537 | $549,991 | | Total Current Liabilities | $169,699 | $145,199 | | Line of credit | $60,815 | $57,483 | | Accounts payable | $68,251 | $50,644 | | Total Liabilities | $352,420 | $308,697 | | Total Shareholders' Equity | $241,117 | $241,294 | Condensed Consolidated Statements of Operations For Q2 2025, net revenue was $314.9 million and net income $0.5 million, while the six-month period recorded a net loss of $1.0 million Statement of Operations Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net revenue | $314,853 | $302,342 | | Gross profit | $55,132 | $52,465 | | Income from operations | $4,119 | $2,625 | | Net Income | $510 | $235 | | Diluted EPS | $0.02 | $0.00 | Statement of Operations Summary (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net revenue | $613,281 | $597,996 | | Gross profit | $106,091 | $102,876 | | Income from operations | $5,273 | $2,540 | | Net Loss | $(1,020) | $(324) | | Diluted EPS | $(0.01) | $(0.01) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was $10.5 million for the six months ended June 30, 2025, resulting in a $1.2 million net increase in cash Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,468 | $1,941 | | Net cash used in investing activities | $(6,592) | $(6,331) | | Net cash (used in) provided by financing activities | $(2,693) | $3,126 | | Net increase (decrease) in cash | $1,183 | $(1,264) | | Cash at end of the period | $15,650 | $13,968 | Non-GAAP Financial Measures and Reconciliations This section explains and reconciles non-GAAP financial measures, including EBITDA, Adjusted EBITDA, non-GAAP net income, and EPS, to GAAP results Explanation of Non-GAAP Measures Non-GAAP measures like Adjusted EBITDA and non-GAAP EPS provide investors with a clearer view of core operating performance by excluding non-recurring items - The company uses non-GAAP measures to provide additional tools for investors to evaluate ongoing operating results and trends[15] - Adjusted EBITDA is used to measure operating performance, excluding items like interest, taxes, depreciation, amortization, and other non-recurring or non-cash expenses[16] - Non-GAAP net income and EPS exclude items not reflective of core operating performance to facilitate period-over-period comparisons[17] Reconciliation of Net Income to EBITDA and Adjusted EBITDA Adjusted EBITDA for Q2 2025 increased to $13.8 million, reconciled from net income by adjusting for interest, taxes, D&A, and specific non-recurring items Adjusted EBITDA Reconciliation for Q2 (in thousands) | Description | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $510 | $235 | | Interest expense, net | $2,775 | $3,119 | | Income tax expense | $521 | $1,599 | | Depreciation and amortization | $7,261 | $6,590 | | EBITDA | $11,067 | $11,543 | | Lease guarantee income | — | $(5,433) | | SEC settlement | — | $3,900 | | Executive transition | $829 | — | | Adjusted EBITDA | $13,845 | $10,561 | Reconciliation to Non-GAAP Net Income and EPS Non-GAAP net income for Q2 2025 was $6.4 million, leading to a Non-GAAP diluted EPS of $0.12, after adjusting for various non-core items Non-GAAP Net Income & EPS Reconciliation for Q2 (in thousands, except per share) | Description | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income attributable to HF Foods | $1,216 | $17 | | Amortization of intangibles | $4,021 | $4,070 | | Lease guarantee income | — | $(5,433) | | SEC settlement | — | $3,900 | | Non-GAAP net income | $6,383 | $2,329 | | GAAP diluted EPS | $0.02 | $0.00 | | Non-GAAP diluted EPS | $0.12 | $0.04 | Company Information and Disclosures This section provides an overview of HF Foods Group Inc.'s business and includes important disclosures regarding forward-looking statements Company Overview HF Foods Group Inc. is a leading distributor of food and non-food products to Asian restaurants across the United States - HF Foods is a leading distributor of foodservice products to primarily Asian restaurants throughout the United States[12] - The company aims to supply the increasing demand for Asian American restaurant cuisine via its nationwide distribution network[12] Forward-Looking Statements The report contains forward-looking statements subject to risks and uncertainties, and readers are cautioned against undue reliance - The report includes forward-looking statements based on current expectations, which are subject to risks and uncertainties[14] - Key risks include the ability to execute the operational transformation plan, impacts of demographic trends, and potential tariff-related costs[14]