HF Foods (HFFG) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net revenue for Q4 2023 decreased 3.8% to $280.9 million from$291.9 million in Q4 2022, primarily due to deflationary pressures and the exit from chicken processing businesses [6] - Gross profit margin increased 20 basis points to 17.8% from 17.6% in the prior year [9] - Net income for Q4 2023 increased to $2.7 million compared to a net loss in the prior year [16] - Adjusted EBITDA for Q4 2023 increased approximately 376$20.5 million compared to $4.3 million in the prior year [30] - For the full year 2023, net revenue decreased 1.9$1.15 billion from $1.17 billion in 2022 [16] - Total interest expense for the full year increased to$11.5 million from $7.5 million in the prior year [17] Business Line Data and Key Metrics Changes - Gross profit for the full year decreased 0.7$204.0 million compared to $205.5 million in the prior year, driven by declines in Meat and Poultry and Packaging categories [31] - Distribution, selling, and administrative expenses decreased approximately 24.3$41.0 million for Q4 2023 from 54.1 million in Q4 2022 [15] - The Seafood category showed improvement due to successful execution of a centralized purchasing plan [28] Market Data and Key Metrics Changes - The revenue decrease for the full year was partially offset by higher volume and Seafood revenue generated from the Sealand acquisition [16] - The company has established itself as a preferred acquirer for many Asian food distributors, exploring M&A opportunities to expand into new markets [23] Company Strategy and Development Direction - The company is focused on an operational transformation plan to achieve growth targets and improve efficiency [33] - A partnership with a national 3PL provider was announced to enhance operational efficiency and establish a unified transportation system [20] - The company is converting certain distribution centers to full broadline facilities to capitalize on cross-selling opportunities [21] - Digital transformation efforts include implementing a modern ERP solution across all sites [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current liquidity position with available capacity of 37.6 million through the line of credit [33] - The company is committed to executing its transformation plan diligently to achieve sustainable long-term growth and deliver value to shareholders [37] - Management believes the financial metrics will reflect the success of their transformation in upcoming quarters [38] Other Important Information - The company divested its two poultry processing businesses to refocus on core operations [37] - The operational transformation plan is expected to expand into centralized purchasing initiatives in 2024 [34] Q&A Session Summary - No specific questions or answers were provided in the content regarding the Q&A session [40]