HF Foods (US:HFFG) ZACKSยท2024-08-07 17:45Core 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]