LAS VEGAS, May 12, 2025 (GLOBE NEWSWIRE) -- HF Foods Group Inc. (NASDAQ:HFFG) ("HF Foods" or the "Company"), a leading distributor of international foodservice solutions to Asian restaurants and other businesses across the United States, reported its unaudited financial results for the quarter ended March 31, 2025.
First Quarter 2025 Financial Results
- Net revenue increased 0.9% to $298.4 million compared to $295.7 million in the prior year period.
- Gross profit increased 1.1% to $51.0 million compared to $50.4 million in the prior year period. Gross profit margin remained consistent at 17.1% compared to the prior year period.
- Net loss of $1.5 million, mainly due to unfavorable fair value changes in interest rate swap contracts, compared to net loss of $0.6 million in the prior year period.
- Adjusted EBITDA increased 12.3% to $9.8 million compared to $8.7 million in the prior year period.
Management Commentary
Felix Lin, President and Chief Executive Officer, stated, "We are pleased to report that HF Foods delivered stable top-line growth in the first quarter of 2025, with net revenue increasing 0.9% year-over-year to $298.4 million. This performance reflects strength in our core customer base, continued expansion in wholesale, and pricing discipline, despite one fewer day of operations and inflationary cost pressures in the first quarter of 2025.
"Gross profit increased by $0.5 million year-over-year to $51.0 million, maintaining a 17.1% gross profit margin. We continue to navigate a challenging external environment that includes potential tariff-related cost increases within certain categories of our business.
"Operating expenses were well-managed, down slightly year over year, and represented 16.7% of net revenue. Net loss increased to $1.5 million, primarily driven by non-cash changes in interest rate swap contracts. Adjusted EBITDA increased to $9.8 million, reflecting the combined impact of external factors and the continued efforts of our business transformation initiatives.
"We remain focused on enhancing margins, streamlining operations, and executing strategic technology investments to support long-term profitability. While macroeconomic and trade policy dynamics remain fluid, we believe HF Foods is well positioned to deliver sustained growth through operational discipline, targeted customer growth, and an agile distribution network."
First Quarter 2025 Results
Net revenue was $298.4 million for the first quarter of 2025 compared to $295.7 million in the prior year period, an increase of $2.8 million, or 0.9%. This growth was achieved despite one fewer operation day compared to the prior year period. The increase was primarily attributable to volume increases and improved pricing in Commodity, Meat & Poultry and Seafood, offset by a decrease in volume within other categories.
Gross profit was $51.0 million for the three months ended March 31, 2025, compared to $50.4 million in the prior year period, an increase of $0.5 million, or 1.1%. The increase was primarily attributable to an increase in margins in Commodity and Seafood during the quarter. Gross profit margin for the three months ended March 31, 2025, of 17.1% remained consistent compared to 17.1% in the same period in 2024.
Distribution, selling and administrative expenses decreased by $0.7 million, or 1.4%, for the three months ended March 31, 2025, primarily due to a decrease of $1.6 million in professional fees. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.7% for the three months ended March 31, 2025, from 17.1% in the prior year period, primarily due to increased net revenue and lower professional fees, partially offset by increased payroll, insurance, rental and other expenses.
Net loss was $1.5 million for the three months ended March 31, 2025, compared to net loss of $0.6 million for the three months ended March 31, 2024. The increase in net loss was primarily driven by the change related to the fair value of interest rate swap contracts of $3.2 million partially offset by the change in income from operations of $1.2 million.
Adjusted EBITDA increased $1.1 million to $9.8 million compared to $8.7 million in the prior year, which was due to various items noted in the Adjusted EBITDA table below.
Cash Flow and Liquidity
Cash provided by operating activities was $6.9 million for the three months ended March 31, 2025, compared to cash provided by operating activities of $11.2 million in the prior year period. The decrease in cash flow from operating activities was primarily due to the timing of working capital outlays such as the increase of accounts receivable due to sales growth and inventory purchases to counter potential tariff increase partially offset by decreases in prepaid expenses. As of March 31, 2025, the Company had cash of $16.1 million, checks issued not presented for payment of $5.0 million and access to approximately $60.0 million in additional funds through the $125.0 million line of credit, subject to a borrowing base calculation. The Company has funded working capital and other capital requirements primarily by cash flow from operations and bank loans. Cash is required to pay purchase costs for inventory, salaries, fuel and trucking expenses, selling expenses, rental expenses, income taxes, other operating expenses and to service debts.
Earnings Call and Webcast
A pre-recorded call and webcast with HF Foods' management team discussing the Company's first quarter 2025 financial results is now available on the Investor Relations section of the Company's website at https://investors.hffoodsgroup.com/.
About HF Foods Group Inc.
HF Foods Group Inc. is a leading marketer and distributor of fresh produce, frozen and dry food, and non-food products to primarily Asian restaurants and other foodservice customers throughout the United States. HF Foods aims to supply the increasing demand for Asian American restaurant cuisine, leveraging its nationwide network of distribution centers and its strong relations with growers and suppliers of fresh, high-quality specialty restaurant food products and supplies in the US and Asia. Headquartered in Las Vegas, Nevada, HF Foods trades on Nasdaq under the symbol "HFFG". For more information, please visit www.hffoodsgroup.com.
Investor Relations Contact:
ICR
Investors: Anna Kate Heller
Media: Keil Decker
Forward-Looking Statements
All statements in this news release other than statements of historical facts are, or may be deemed to be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and contain our current expectations about our future results. We have attempted to identify any forward-looking statements by using words such as "aims," "continues," "expects," "plans," "will," and other similar expressions. Although we believe that the expectations reflected in all of our forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Such statements are not guarantees of future performance or events and are subject to known and unknown risks and uncertainties that could cause the Company's actual results, events or financial positions to differ materially from those included within or implied by such forward-looking statements. Such factors include, but are not limited to, risks relating to our ability to consummate our operational transformation plan as anticipated, risks relating to the impact of our operational plan on our sales and efficiencies, risks relating to the impact of demographic trends on demand for the products we distribute, risks related to potential increases in tariff-related costs, statements of assumption underlying any of the foregoing, and other factors including those disclosed under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 and other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to disclose any revision to these forward-looking statements.
Non-GAAP Financial Measures
Discussion of our financial results includes certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA, non-GAAP net income (loss) attributable to HF Foods Group Inc. and non-GAAP EPS ("earnings per share"), that we believe provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial performance with other companies in the same industry, many of which present similar non-GAAP financial measures to investors. The definitions of EBITDA, Adjusted EBITDA, non-GAAP net income (loss) attributable to HF Foods Group Inc. and non-GAAP EPS may not be the same as similarly titled measures used by other companies in the industry. EBITDA, Adjusted EBITDA, non-GAAP net income (loss) attributable to HF Foods Group Inc. and non-GAAP EPS are not defined under GAAP and are subject to important limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our financial results as reported under GAAP.
We use non-GAAP financial measures to supplement our GAAP financial results. Management uses EBITDA, defined as net income (loss) before interest expense, interest income, income taxes, and depreciation and amortization to measure operating performance. In addition, management uses Adjusted EBITDA, defined as net income (loss) before interest expense, interest income, income taxes, and depreciation and amortization, further adjusted to exclude certain unusual, non-cash, or non-recurring expenses. We believe that Adjusted EBITDA is less susceptible to variances in actual performance resulting from non-recurring expenses, and other non-cash charges, provides useful information for our investors and is more reflective of other factors that affect our operating performance.
We believe non-GAAP net income (loss) attributable to HF Foods Group Inc. and non-GAAP EPS are useful measures of operating performance because these measures exclude certain items not reflective of our core operating performance. Non-GAAP net income (loss) attributable to HF Foods Group Inc. is defined as net income (loss) attributable to HF Foods Group Inc. adjusted for amortization of intangibles, change in fair value of interest rate swaps, stock based compensation, transaction related costs, transformational project costs and certain unusual, non-cash, or non-recurring expenses. We believe that non-GAAP net income (loss) attributable to HF Foods Group Inc. and non-GAAP EPS facilitates period-over-period comparisons and provides additional clarity for investors to better evaluate our operating results. We present EBITDA, Adjusted EBITDA, non-GAAP net income (loss) attributable to HF Foods Group Inc. and non-GAAP EPS in order to provide supplemental information that we consider relevant for the readers of our consolidated financial statements included elsewhere in its reports filed with the SEC, including its most recent Annual Report on Form 10-K, and such information is not meant to replace or supersede U.S. GAAP measures. Reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measures are included in the schedules attached to this press release.
| HF FOODS GROUP INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| March 31, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | 16,099 | $ | 14,467 | ||||
| Accounts receivable, net | 58,137 | 54,346 | ||||||
| Inventories | 106,048 | 97,783 | ||||||
| Prepaid expenses and other current assets | 7,842 | 11,507 | ||||||
| TOTAL CURRENT ASSETS | 188,126 | 178,103 | ||||||
| Property and equipment, net | 160,412 | 149,572 | ||||||
| Operating lease right-of-use assets | 29,266 | 13,944 | ||||||
| Long-term investments | 2,327 | 2,350 | ||||||
| Customer relationships, net | 133,973 | 136,615 | ||||||
| Trademarks, trade names and other intangibles, net | 23,683 | 24,911 | ||||||
| Goodwill | 38,815 | 38,815 | ||||||
| Other long-term assets | 5,248 | 5,681 | ||||||
| TOTAL ASSETS | $ | 581,850 | $ | 549,991 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Checks issued not presented for payment | $ | 4,991 | $ | 5,687 | ||||
| Line of credit | 58,594 | 57,483 | ||||||
| Accounts payable | 62,634 | 50,644 | ||||||
| Current portion of long-term debt, net | 5,410 | 5,410 | ||||||
| Current portion of obligations under finance leases | 5,808 | 3,797 | ||||||
| Current portion of obligations under operating leases | 4,294 | 4,177 | ||||||
| Accrued expenses and other liabilities | 15,883 | 18,001 | ||||||
| TOTAL CURRENT LIABILITIES | 157,614 | 145,199 | ||||||
| Long-term debt, net of current portion | 101,967 | 103,324 | ||||||
| Obligations under finance leases, non-current | 26,605 | 19,929 | ||||||
| Obligations under operating leases, non-current | 25,637 | 10,125 | ||||||
| Deferred tax liabilities | 28,308 | 29,392 | ||||||
| Other long-term liabilities | 1,581 | 728 | ||||||
| TOTAL LIABILITIES | 341,712 | 308,697 | ||||||
| Commitments and contingencies | ||||||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 5 | 5 | ||||||
| Treasury stock | (7,750 | ) | (7,750 | ) | ||||
| Additional paid-in capital | 604,609 | 604,235 | ||||||
| Accumulated deficit | (358,844 | ) | (357,199 | ) | ||||
| TOTAL SHAREHOLDERS' EQUITY ATTRIBUTABLE TO HF FOODS GROUP INC. | 238,020 | 239,291 | ||||||
| Noncontrolling interests | 2,118 | 2,003 | ||||||
| TOTAL SHAREHOLDERS' EQUITY | 240,138 | 241,294 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 581,850 | $ | 549,991 | ||||
| HF FOODS GROUP INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (In thousands, except share and per share data) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net revenue | $ | 298,428 | $ | 295,654 | ||||
| Cost of revenue | 247,469 | 245,243 | ||||||
| Gross profit | 50,959 | 50,411 | ||||||
| Distribution, selling and administrative expenses | 49,805 | 50,496 | ||||||
| Income (loss) from operations | 1,154 | (85 | ) | |||||
| Other expenses (income): | ||||||||
| Interest expense | 2,609 | 2,834 | ||||||
| Other income, net | (177 | ) | (94 | ) | ||||
| Change in fair value of interest rate swap contracts | 1,184 | (1,970 | ) | |||||
| Lease guarantee income | — | (115 | ) | |||||
| Total other expenses (income), net | 3,616 | 655 | ||||||
| Loss before income taxes | (2,462 | ) | (740 | ) | ||||
| Income tax benefit | (932 | ) | (181 | ) | ||||
| Net loss | (1,530 | ) | (559 | ) | ||||
| Less: net income attributable to noncontrolling interests | 115 | 135 | ||||||
| Net loss attributable to HF Foods Group Inc. | $ | (1,645 | ) | $ | (694 | ) | ||
| Loss per common share - basic | $ | (0.03 | ) | $ | (0.01 | ) | ||
| Loss per common share - diluted | $ | (0.03 | ) | $ | (0.01 | ) | ||
| Weighted average shares - basic | 52,737,650 | 52,155,968 | ||||||
| Weighted average shares - diluted | 52,737,650 | 52,155,968 | ||||||
| HF FOODS GROUP INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,530 | ) | $ | (559 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization expense | 6,758 | 6,676 | ||||||
| Provision (credit) for expected credit losses | 619 | (40 | ) | |||||
| Deferred tax benefit | (1,084 | ) | (471 | ) | ||||
| Change in fair value of interest rate swap contracts | 1,184 | (1,970 | ) | |||||
| Stock-based compensation | 374 | 738 | ||||||
| Non-cash lease expense | 1,220 | 935 | ||||||
| Lease guarantee income | — | (115 | ) | |||||
| Other non-cash (income) expense | (129 | ) | 39 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (4,314 | ) | (2,141 | ) | ||||
| Accounts receivable - related parties | (96 | ) | 13 | |||||
| Inventories | (8,265 | ) | (2,290 | ) | ||||
| Prepaid expenses and other current assets | 3,665 | 782 | ||||||
| Other long-term assets | 283 | 368 | ||||||
| Checks issued not presented for payment | (696 | ) | 4,169 | |||||
| Accounts payable | 11,653 | 6,074 | ||||||
| Accounts payable - related parties | 337 | (254 | ) | |||||
| Operating lease liabilities | (913 | ) | (897 | ) | ||||
| Accrued expenses and other liabilities | (2,118 | ) | 167 | |||||
| Net cash provided by operating activities | 6,948 | 11,224 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (3,574 | ) | (2,585 | ) | ||||
| Proceeds from sale of property and equipment | 10 | — | ||||||
| Net cash used in investing activities | (3,564 | ) | (2,585 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from line of credit | 315,008 | 345,697 | ||||||
| Repayment of line of credit | (313,714 | ) | (349,082 | ) | ||||
| Repayment of long-term debt | (1,366 | ) | (1,414 | ) | ||||
| Payment of debt financing costs | (213 | ) | — | |||||
| Repayment of obligations under finance leases | (1,467 | ) | (857 | ) | ||||
| Net cash used in financing activities | (1,752 | ) | (5,656 | ) | ||||
| Net decrease in cash | 1,632 | 2,983 | ||||||
| Cash at beginning of the period | 14,467 | 15,232 | ||||||
| Cash at end of the period | $ | 16,099 | $ | 18,215 | ||||
| HF FOODS GROUP INC. AND SUBSIDIARIES | ||||||||||||
| RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA | ||||||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2025 | 2024 | Change | ||||||||||
| Net loss | $ | (1,530 | ) | $ | (559 | ) | $ | (971 | ) | |||
| Interest expense | 2,609 | 2,834 | (225 | ) | ||||||||
| Income tax benefit | (932 | ) | (181 | ) | (751 | ) | ||||||
| Depreciation and amortization | 6,758 | 6,676 | 82 | |||||||||
| EBITDA | 6,905 | 8,770 | (1,865 | ) | ||||||||
| Lease guarantee income | — | (115 | ) | 115 | ||||||||
| Change in fair value of interest rate swap contracts | 1,184 | (1,970 | ) | 3,154 | ||||||||
| Stock-based compensation expense | 374 | 738 | (364 | ) | ||||||||
| Business transformation costs (1) | 237 | 973 | (736 | ) | ||||||||
| Other non-routine expense (2) | 100 | 306 | (206 | ) | ||||||||
| Executive transition and organizational redesign (3) | 973 | — | 973 | |||||||||
| Adjusted EBITDA | $ | 9,773 | $ | 8,702 | $ | 1,071 | ||||||
| ________________ | ||||||||||||
| (1) Represents costs associated with the launch of strategic projects including supply chain management improvements and technology infrastructure initiatives. | ||||||||||||
| (2) Includes contested proxy and related legal and consulting costs and facility closure costs. | ||||||||||||
| (3) Includes severance and related expenses for the Company's transition of executive officers and organizational redesign. | ||||||||||||
| HF FOODS GROUP INC. AND SUBSIDIARIES | ||||||||||||
| RECONCILIATION OF NET LOSS ATTRIBUTABLE TO HF FOODS GROUP INC. | ||||||||||||
| TO NON-GAAP NET INCOME AND NON-GAAP EPS ATTRIBUTABLE TO HF FOODS GROUP INC. | ||||||||||||
| (In thousands, except per share amounts) | ||||||||||||
| (Unaudited) | ||||||||||||
| The following tables present our non-GAAP net income and non-GAAP EPS for the three months March 31, 2025 and 2024 respectively, as well as reconciliations of each measure to their nearest GAAP equivalents: | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2025 | 2024 | Change | ||||||||||
| Net loss attributable to HF Foods Group Inc. | $ | (1,645 | ) | $ | (694 | ) | $ | (951 | ) | |||
| Amortization of intangibles | 3,870 | 4,070 | (200 | ) | ||||||||
| Lease guarantee income | — | (115 | ) | 115 | ||||||||
| Change in fair value of interest rate swaps | 1,184 | (1,970 | ) | 3,154 | ||||||||
| Stock-based compensation expense | 374 | 738 | (364 | ) | ||||||||
| Business transformation costs (1) | 237 | 973 | (736 | ) | ||||||||
| Other non-routine expense (2) | 100 | 306 | (206 | ) | ||||||||
| Executive transition and organizational redesign (3) | 973 | — | 973 | |||||||||
| Aggregate adjustment for income taxes (4) | (1,617 | ) | (980 | ) | (637 | ) | ||||||
| Non-GAAP net income attributable to HF Foods Group Inc. | $ | 3,476 | $ | 2,328 | $ | 1,148 | ||||||
| GAAP diluted loss per common share attributable to HF Foods | $ | (0.03 | ) | $ | (0.01 | ) | (0.02 | ) | ||||
| EPS difference (5) | 0.10 | 0.05 | 0.05 | |||||||||
| Non-GAAP diluted earnings per common share attributable to HF Foods (5) | $ | 0.07 | $ | 0.04 | 0.03 | |||||||
| Non-GAAP diluted weighted average number of shares (in thousands) (5) | 52,992 | 52,746 | ||||||||||
| ________________ | ||||||||||||
| (1) Represents costs associated with the launch of strategic projects including supply chain management improvements and technology infrastructure initiatives. | ||||||||||||
| (2) Includes contested proxy and related legal and consulting costs and facility closure costs. | ||||||||||||
| (3) Includes severance and related expenses for the Company's transition of executive officers and organizational redesign. | ||||||||||||
| (4) Represents the adjustments to the tax provision values to a normalized annual effective tax rate on adjusted pretax earnings, excluding permanent items, using 24.0% for the first quarters of 2025 and 2024. | ||||||||||||
| (5) EPS difference and diluted non-GAAP earnings per share are calculated by dividing our non-GAAP net income attributable to HF Foods by our non-GAAP diluted weighted average number of shares. | ||||||||||||
