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HF Foods Reports Third Quarter 2024 Financial Results

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HF Foods Group (NASDAQ: HFFG) reported its unaudited financial results for Q3 2024. Net revenue increased by 6.0% to $298.4 million from $281.5 million in the prior year. However, gross profit decreased by 1.5% to $50.2 million, and the gross profit margin fell to 16.8% from 18.1%. The company reported a net loss of $3.8 million compared to a net income of $2.0 million in the prior year, primarily due to a $5.3 million non-cash expense related to interest rate swap contracts. Adjusted EBITDA decreased by 17.7% to $8.3 million. For the nine months ended September 30, 2024, net revenue increased by 3.3% to $896.4 million. Gross profit increased slightly by 0.8% to $153.0 million, but the gross profit margin decreased to 17.1% from 17.5%. The net loss improved to $4.2 million from $5.4 million in the prior year. Cash used in operating activities was $3.3 million, down from $20.6 million provided in the prior year. The company has a cash balance of $11.4 million and access to $27.3 million through its line of credit.

HF Foods Group (NASDAQ: HFFG) ha riportato i suoi risultati finanziari non revisionati per il terzo trimestre del 2024. Il fatturato netto è aumentato del 6,0% a 298,4 milioni di dollari rispetto ai 281,5 milioni di dollari dell'anno precedente. Tuttavia, l'utile lordo è diminuito dell'1,5% a 50,2 milioni di dollari, e il margine di profitto lordo è sceso al 16,8% rispetto al 18,1%. L'azienda ha riportato una perdita netta di 3,8 milioni di dollari rispetto a un utile netto di 2,0 milioni di dollari nell'anno precedente, principalmente a causa di una spesa non monetaria di 5,3 milioni di dollari legata a contratti di swap sui tassi d'interesse. EBITDA rettificato è diminuito del 17,7% a 8,3 milioni di dollari. Nei nove mesi fino al 30 settembre 2024, il fatturato netto è aumentato del 3,3% a 896,4 milioni di dollari. L'utile lordo è aumentato leggermente dello 0,8% a 153,0 milioni di dollari, ma il margine di profitto lordo è diminuito al 17,1% rispetto al 17,5%. La perdita netta è migliorata a 4,2 milioni di dollari rispetto ai 5,4 milioni di dollari dell'anno precedente. Il denaro utilizzato nelle attività operative è stato di 3,3 milioni di dollari, in calo rispetto ai 20,6 milioni di dollari forniti nell'anno precedente. L'azienda ha un saldo di cassa di 11,4 milioni di dollari e accesso a 27,3 milioni di dollari attraverso la sua linea di credito.

HF Foods Group (NASDAQ: HFFG) reportó sus resultados financieros no auditados para el tercer trimestre de 2024. Los ingresos netos aumentaron un 6,0% a 298,4 millones de dólares desde 281,5 millones de dólares del año anterior. Sin embargo, la utilidad bruta disminuyó un 1,5% a 50,2 millones de dólares, y el margen de utilidad bruta cayó al 16,8% desde el 18,1%. La compañía reportó una pérdida neta de 3,8 millones de dólares en comparación con una ganancia neta de 2,0 millones de dólares del año anterior, principalmente debido a un gasto no monetario de 5,3 millones de dólares relacionado con contratos de intercambio de tasas de interés. El EBITDA ajustado disminuyó un 17,7% a 8,3 millones de dólares. Para los nueve meses finalizados el 30 de septiembre de 2024, los ingresos netos aumentaron un 3,3% a 896,4 millones de dólares. La utilidad bruta aumentó ligeramente un 0,8% a 153,0 millones de dólares, pero el margen de utilidad bruta disminuyó al 17,1% desde el 17,5%. La pérdida neta mejoró a 4,2 millones de dólares desde 5,4 millones de dólares en el año anterior. El efectivo utilizado en actividades operativas fue de 3,3 millones de dólares, en comparación con los 20,6 millones de dólares proporcionados en el año anterior. La compañía tiene un saldo de efectivo de 11,4 millones de dólares y acceso a 27,3 millones de dólares a través de su línea de crédito.

HF Foods Group (NASDAQ: HFFG)는 2024년 3분기 검토되지 않은 재무 결과를 발표했습니다. 순매출은 작년 2억 8,150만 달러에서 2억 9,840만 달러로 6.0% 증가했습니다. 그러나 총 이익은 1.5% 감소하여 5,020만 달러가 되었고, 총 이익률은 18.1%에서 16.8%로 하락했습니다. 회사는 작년 200만 달러의 순이익에서 380만 달러의 순손실을 기록하였으며, 이는 주로 이자율 스왑 계약과 관련된 530만 달러의 비현금 비용 때문입니다. 조정된 EBITDA는 17.7% 감소하여 830만 달러가 되었습니다. 2024년 9월 30일로 종료된 9개월 동안, 순매출은 3.3% 증가하여 8억 9,640만 달러에 달했습니다. 총 이익은 0.8% 증가하여 1억 5,300만 달러가 되었지만, 총 이익률은 17.5%에서 17.1%로 감소했습니다. 순손실은 작년 540만 달러에서 420만 달러로 개선되었습니다. 운영 활동에 사용된 현금은 330만 달러로, 작년 2,060만 달러보다 감소했습니다. 회사는 1,140만 달러의 현금 잔고를 보유하고 있으며, 신용 한도를 통해 2,730만 달러에 접근할 수 있습니다.

HF Foods Group (NASDAQ: HFFG) a publié ses résultats financiers non audités pour le troisième trimestre de 2024. Les revenus nets ont augmenté de 6,0 % pour atteindre 298,4 millions de dollars, contre 281,5 millions de dollars l'année précédente. Cependant, le bénéfice brut a diminué de 1,5 % pour s'élever à 50,2 millions de dollars, et la marge bénéficiaire brute est passée de 18,1 % à 16,8 %. La société a déclaré une perte nette de 3,8 millions de dollars par rapport à un bénéfice net de 2,0 millions de dollars l'année précédente, principalement en raison d'une dépense non monétaire de 5,3 millions de dollars liée à des contrats d'échange de taux d'intérêt. Le EBITDA ajusté a diminué de 17,7 % pour atteindre 8,3 millions de dollars. Pour les neuf mois se terminant le 30 septembre 2024, les revenus nets ont augmenté de 3,3 % pour atteindre 896,4 millions de dollars. Le bénéfice brut a légèrement augmenté de 0,8 % pour atteindre 153,0 millions de dollars, mais la marge bénéficiaire brute a diminué à 17,1 % contre 17,5 %. La perte nette s'est améliorée à 4,2 millions de dollars contre 5,4 millions de dollars l'année précédente. Les liquidités utilisées dans les activités d'exploitation se sont élevées à 3,3 millions de dollars, contre 20,6 millions de dollars fournis l'année précédente. L'entreprise dispose d'un solde de trésorerie de 11,4 millions de dollars et d'un accès à 27,3 millions de dollars via sa ligne de crédit.

HF Foods Group (NASDAQ: HFFG) hat seine ungeprüften Finanzdaten für das 3. Quartal 2024 veröffentlicht. Der Nettoumsatz stieg um 6,0% auf 298,4 Millionen Dollar, gegenüber 281,5 Millionen Dollar im Vorjahr. Der Bruttogewinn sank jedoch um 1,5% auf 50,2 Millionen Dollar, und die Bruttogewinnmarge fiel auf 16,8% von 18,1%. Das Unternehmen berichtete von einem Nettoverlust von 3,8 Millionen Dollar im Vergleich zu einem Nettogewinn von 2,0 Millionen Dollar im Vorjahr, was hauptsächlich auf eine nicht monetäre Ausgabe von 5,3 Millionen Dollar in Zusammenhang mit Zinsswaps zurückzuführen ist. Das bereinigte EBITDA fiel um 17,7% auf 8,3 Millionen Dollar. Für die neun Monate bis zum 30. September 2024 stieg der Nettoumsatz um 3,3% auf 896,4 Millionen Dollar. Der Bruttogewinn stieg leicht um 0,8% auf 153,0 Millionen Dollar, aber die Bruttogewinnmarge sank auf 17,1% von 17,5%. Der Nettoverlust verbesserte sich auf 4,2 Millionen Dollar von 5,4 Millionen Dollar im Vorjahr. Der im operativen Geschäft verwendete Cashflow betrug 3,3 Millionen Dollar, verglichen mit 20,6 Millionen Dollar im Vorjahr. Das Unternehmen hat einen Kassenbestand von 11,4 Millionen Dollar und Zugang zu 27,3 Millionen Dollar über seine Kreditlinie.

Positive
  • Net revenue increased by 6.0% in Q3 2024.
  • Net revenue for the nine months ended September 30, 2024, increased by 3.3%.
  • Gross profit for the nine months increased by 0.8%.
  • Net loss for the nine months improved to $4.2 million from $5.4 million.
  • Adjusted EBITDA for the nine months increased by 13.9%.
Negative
  • Gross profit decreased by 1.5% in Q3 2024.
  • Gross profit margin decreased to 16.8% in Q3 2024.
  • Net loss of $3.8 million in Q3 2024 compared to net income of $2.0 million in the prior year.
  • Adjusted EBITDA decreased by 17.7% in Q3 2024.
  • Cash used in operating activities was $3.3 million, down from $20.6 million provided in the prior year.

Increase in Net Revenue as Company Continues to Execute Operational Transformation Plan

Pre-Recorded Earnings Call Webcast Available on Investor Relations Website

LAS VEGAS, Nov. 12, 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, reported its unaudited financial results for the third quarter and nine months ended September 30, 2024.

Third Quarter 2024 Financial Results

  • Net revenue increased 6.0% to $298.4 million compared to $281.5 million in the prior year.
  • Gross profit decreased 1.5% to $50.2 million compared to $50.9 million in the prior year. Gross profit margin decreased to 16.8% from 18.1% in the prior year.
  • Net loss of $3.8 million compared to net income of $2.0 million in the prior year.
  • Adjusted EBITDA decreased 17.7% to $8.3 million compared to $10.1 million in the prior year.

Nine Months 2024 Financial Results

  • Net revenue increased 3.3% to $896.4 million compared to $867.6 million in the prior year.
  • Gross profit increased 0.8% to $153.0 million compared to $151.8 million in the prior year. Gross profit margin decreased to 17.1% from 17.5% in the prior year.
  • Net loss improved to $4.2 million compared to $5.4 million in the prior year.
  • Adjusted EBITDA increased 13.9% to $27.6 million compared to $24.2 million in the prior year.

Management Commentary

“We are making meaningful progress on our comprehensive transformation plan, which positions HF Foods to capture the significant growth opportunities in the Asian foodservice market,” said Felix Lin, Interim Chief Executive Officer, President, and Chief Operating Officer. “Our strategic investments in facility upgrades and supply chain enhancements are addressing capacity constraints while building the foundation for sustained growth. 2025 will be a year focused on strengthening our operational infrastructure and digital capabilities, and we remain committed to driving margin improvement through targeted efficiency initiatives. The strong loyalty of our customers, combined with favorable demographic trends driving increased demand for Asian cuisine, reinforces our confidence in our market position. With our exceptional leadership team and best-in-class network of general managers, suppliers, and customers, we remain confident that we are well-positioned to create long-term value for our stakeholders.”

Third Quarter 2024 Results

Net revenue was $298.4 million for the third quarter of 2024 compared to $281.5 million in the prior year period, an increase of $16.9 million, or 6.0%. The increase was primarily attributable to product cost inflation, volume increases and improved pricing in certain categories, such as chicken and seafood. The increase was partially offset by deflation in commodities, such as cooking oils, and the $2.7 million loss in revenue resulting from the exit of the Company’s chicken processing businesses in 2023.

Gross profit was $50.2 million compared to $50.9 million in the prior year period, a decrease of $0.8 million, or 1.5%. The decrease was primarily attributable to a decrease in margins on meat and poultry and also caused by an increase in our wholesale mix during the quarter. Gross profit margin decreased to 16.8% from 18.1% in the prior year period.

Distribution, selling and administrative expenses increased by $0.8 million to $49.7 million, primarily due to increases of $1.0 million each in both auto expenses and insurance costs, partially offset by a decrease of $1.6 million in professional fees. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.6% from 17.4% in the prior year period primarily due to increased net revenue and lower professional fees, partially offset by increased rental and insurance costs.

Net loss of $3.8 million was realized in the third quarter compared to net income of $2.0 million in the prior year period. The decrease in income was primarily driven by a non-cash expense related to the change in fair value of interest rate swap contracts of $5.3 million and increases of $1.0 million each in both auto expenses and insurance costs partially offset by the income tax benefit of $1.2 million.

Adjusted EBITDA decreased $1.8 million to $8.3 million compared to $10.1 million in the prior year, which was primarily due to the decrease in income from operations of $1.6 million.        

Nine Months 2024 Results

Net revenue was $896.4 million for the nine months ended September 30, 2024 compared to $867.6 million in the prior year, an increase of $28.8 million, or 3.3%. The increase was primarily attributable to product cost inflation and improved pricing in certain categories, partially offset by the $13.3 million loss in revenue resulting from the exit of the Company’s chicken processing businesses in 2023.

Gross profit was $153.0 million compared to $151.8 million in the prior year period, an increase of $1.3 million, or 0.8%. The increase was primarily attributable to increased net revenue, partially offset by increased costs. Gross profit margin for the nine months ended September 30, 2024 decreased to 17.1% compared to 17.5% in the same period in 2023.

Distribution, selling and administrative expenses decreased by $4.0 million to $150.0 million, primarily due to a decrease in professional fees of $10.0 million, partially offset by an increase of $3.6 million in payroll and related labor costs and an increase of $2.0 million in insurance costs. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.7% for the nine months ended September 30, 2024 from 17.8% in the same period in 2023, primarily due to lower professional fees and increased net revenue, partially offset by increased payroll and related labor costs and insurance costs.

Net loss of $4.2 million was realized compared to a net loss of $5.4 million in the prior year. The improvement was primarily driven by the increase in our income from operations of $5.3 million and the $5.2 million reversal of the lease guarantee liability. The improvement was partially offset by the SEC settlement of $3.9 million, the increase in income tax expense of $2.2 million and the loss of $3.1 million resulting from the change in fair value of interest rate swap contracts.

Adjusted EBITDA increased $3.4 million to $27.6 million compared to $24.2 million in the prior year, which was primarily due to the increase in income from operations.

Cash Flow and Liquidity

Cash used in operating activities was $3.3 million for the nine months ended September 30, 2024, compared to cash provided by operating activities of $20.6 million in the prior year. The decrease in cash flow from operating activities was primarily due to the timing of working capital outlays and the $3.9 million SEC settlement payment. As of September 30, 2024, 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, subject to a borrowing base calculation.

Earnings Call and Webcast

A pre-recorded call and webcast with HF Foods’ management team discussing the 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, South America, 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

hffoodsgroup@icrinc.com

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, 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, 2023 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 results includes certain non-GAAP financial measures, including EBITDA, adjusted EBITDA and non-GAAP net income (loss) attributable to HF Foods Group Inc., 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 and non-GAAP net income (loss) attributable to HF Foods Group Inc. may not be the same as similarly titled measures used by other companies in the industry. EBITDA, adjusted EBITDA and non-GAAP net income (loss) attributable to HF Foods Group Inc. 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. is a useful measure of operating performance because it excludes 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. 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. 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 current Quarterly Report on Form 10Q, 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)

 September 30, 2024 December 31, 2023
ASSETS   
CURRENT ASSETS:   
Cash$11,445  $15,232 
Accounts receivable, net 51,954   47,832 
Inventories 119,508   105,618 
Other current assets 10,012   10,145 
TOTAL CURRENT ASSETS 192,919   178,827 
Property and equipment, net 146,073   133,136 
Operating lease right-of-use assets 14,981   12,714 
Long-term investments 2,374   2,388 
Customer relationships, net 139,257   147,181 
Trademarks, trade names and other intangibles, net 26,339   30,625 
Goodwill 85,118   85,118 
Other long-term assets 5,689   6,531 
TOTAL ASSETS$612,750  $596,520 
LIABILITIES AND SHAREHOLDERS' EQUITY   
CURRENT LIABILITIES:   
Checks issued not presented for payment$12,018  $4,494 
Line of credit 66,911   58,564 
Accounts payable 51,640   52,014 
Current portion of long-term debt, net 5,410   5,450 
Current portion of obligations under finance leases 3,301   1,749 
Current portion of obligations under operating leases 4,147   3,706 
Accrued expenses and other liabilities 19,684   17,287 
TOTAL CURRENT LIABILITIES 163,111   143,264 
Long-term debt, net of current portion 104,658   108,711 
Obligations under finance leases, non-current 17,726   11,229 
Obligations under operating leases, non-current 11,180   9,414 
Deferred tax liabilities 27,853   29,028 
Other long-term liabilities 2,612   6,891 
TOTAL LIABILITIES 327,140   308,537 
Commitments and contingencies   
SHAREHOLDERS’ EQUITY:   
Preferred stock     
Common stock 5   5 
Treasury stock (7,750)  (7,750)
Additional paid-in capital 604,110   603,094 
Accumulated deficit (313,305)  (308,688)
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO HF FOODS GROUP INC. 283,060   286,661 
Noncontrolling interests 2,550   1,322 
TOTAL SHAREHOLDERS’ EQUITY 285,610   287,983 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$612,750  $596,520 


HF FOODS GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
   2024   2023   2024   2023 
Net revenue $298,389  $281,453  $896,385  $867,620 
Cost of revenue  248,226   230,528   743,346   715,857 
Gross profit  50,163   50,925   153,039   151,763 
         
Distribution, selling and administrative expenses  49,652   48,841   149,988   154,013 
Income (loss) from operations  511   2,084   3,051   (2,250)
         
Other expenses (income):        
Interest expense  2,644   2,715   8,597   8,430 
Other expense (income), net  (332)  (490)  3,040   (845)
Change in fair value of interest rate swap contracts  3,290   (1,984)  959   (2,094)
Lease guarantee income     (95)  (5,548)  (305)
Total Other expenses (income), net  5,602   146   7,048   5,186 
(Loss) income before income taxes  (5,091)  1,938   (3,997)  (7,436)
         
Income tax (benefit) expense  (1,254)  (36)  164   (2,053)
Net (loss) income  (3,837)  1,974   (4,161)  (5,383)
Less: net income (loss) attributable to noncontrolling interests  103   90   456   (484)
Net (loss) income attributable to HF Foods Group Inc. $(3,940) $1,884  $(4,617) $(4,899)
         
(Loss) earnings per common share - basic $(0.07) $0.03  $(0.09) $(0.09)
(Loss) earnings per common share - diluted $(0.07) $0.03  $(0.09) $(0.09)
         
Weighted average shares - basic  52,726,683   54,142,396   52,490,321   54,005,010 
Weighted average shares - diluted  52,726,683   54,513,314   52,490,321   54,005,010 


HF FOODS GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 Nine Months Ended
September 30,
  2024   2023 
Cash flows from operating activities:   
Net loss$(4,161) $(5,383)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:   
Depreciation and amortization expense 19,932   19,551 
Asset impairment charges    1,200 
Provision for credit losses (40)  56 
Deferred tax benefit (1,175)  (2,467)
Change in fair value of interest rate swap contracts 959   (2,094)
Stock-based compensation 1,961   2,605 
Non-cash lease expense 2,955   2,668 
Lease guarantee income (5,548)  (305)
Other non-cash expense 522   168 
Changes in operating assets and liabilities:   
Accounts receivable (4,105)  997 
Accounts receivable - related parties 23   (115)
Inventories (13,890)  4,349 
Prepaid expenses and other current assets 133   (14,074)
Other long-term assets 734   (2,878)
Accounts payable (658)  22,618 
Accounts payable - related parties (323)  (1,039)
Operating lease liabilities (3,015)  (2,511)
Accrued expenses and other liabilities 2,397   (2,722)
Net cash (used in) provided by operating activities (3,299)  20,624 
Cash flows from investing activities:   
Purchase of property and equipment (9,435)  (3,495)
Proceeds from sale of property and equipment 12   900 
Net cash used in investing activities (9,423)  (2,595)
Cash flows from financing activities:   
Payments for tax withholding related to vested stock awards (173)   
Checks issued not presented for payment 7,524   (15,058)
Proceeds from line of credit 1,120,318   891,510 
Repayment of line of credit (1,112,012)  (896,959)
Repayment of long-term debt (4,125)  (4,653)
Repayment of obligations under finance leases (2,597)  (1,974)
Cash distribution to shareholders    (884)
Net cash provided by (used in) financing activities 8,935   (28,018)
Net decrease in cash (3,787)  (9,989)
Cash at beginning of the period 15,232   24,289 
Cash at end of the period$11,445  $14,300 


HF FOODS GROUP INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(In thousands)
(Unaudited)

  Three Months Ended
September 30,
  
   2024   2023  Change
Net income (loss) $(3,837) $1,974  $(5,811)
Interest expense  2,644   2,715   (71)
Income tax expense  (1,254)  (36)  (1,218)
Depreciation and amortization  6,666   6,422   244 
EBITDA  4,219   11,075   (6,856)
Lease guarantee income     (95)  95 
Change in fair value of interest rate swaps  3,290   (1,984)  5,274 
Stock-based compensation expense  701   757   (56)
Business transformation costs(1)  77   198   (121)
Other non-routine expense(2)  18   146   (128)
Adjusted EBITDA $8,305  $10,097  $(1,792)


  Nine Months Ended
September 30,
  
   2024   2023  Change
Net loss $(4,161) $(5,383) $1,222 
Interest expense  8,597   8,430   167 
Income tax expense (benefit)  164   (2,053)  2,217 
Depreciation and amortization  19,932   19,551   381 
EBITDA  24,532   20,545   3,987 
Lease guarantee income  (5,548)  (305)  (5,243)
Change in fair value of interest rate swaps  959   (2,094)  3,053 
Stock-based compensation expense  1,961   2,605   (644)
SEC settlement  3,900      3,900 
Asset impairment charges     1,200   (1,200)
Business transformation costs(1)  1,180   402   778 
Other non-routine expense(2)  584   1,850   (1,266)
Adjusted EBITDA $27,568  $24,203  $3,365 

________________

(1) Represents non-recurring expenses 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.


HF FOODS GROUP INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO HF FOODS GROUP INC.
TO NON-GAAP NET INCOME ATTRIBUTABLE TO HF FOODS GROUP INC.
(In thousands)
(Unaudited)

  Three Months Ended
September 30,
  
   2024   2023  Change
Net (loss) income attributable to HF Foods Group Inc. $        (3,940) $        1,884  $        (5,824)
Amortization of intangibles          4,070           4,071           (1)
Lease guarantee income          —           (95)          95 
Change in fair value of interest rate swaps          3,290           (1,984)          5,274 
Stock-based compensation expense          701           757           (56)
Business transformation costs (1)          77           198           (121)
Other non-routine expense (2)          18           146           (128)
Aggregate adjustment for income taxes (3)          (2,006)          137           (2,143)
Non-GAAP net income attributable to HF Foods Group Inc. $        2,210  $        5,114  $        (2,904)


  Nine Months Ended
September 30,
  
   2024   2023  Change
Net loss attributable to HF Foods Group Inc. $(4,617) $(4,899) $282 
Amortization of intangibles  12,210   12,213   (3)
Lease guarantee income  (5,548)  (305)  (5,243)
Change in fair value of interest rate swaps  959   (2,094)  3,053 
Stock-based compensation expense  1,961   2,605   (644)
SEC settlement  3,900      3,900 
Asset impairment charges     1,200   (1,200)
Business transformation costs(1)  1,180   402   778 
Other non-routine expense(2)  584   1,850   (1,266)
Aggregate adjustment for income taxes(3)  (2,791)  (4,704)  1,913 
Non-GAAP net income attributable to HF Foods Group Inc. $7,838  $6,268  $1,570 

________________

(1) Represents non-recurring expenses 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 the income tax adjustments related to the business transformation costs and other non-routine expenses described in footnotes (1) and (2) above.


FAQ

How did HF Foods' net revenue perform in Q3 2024?

HF Foods' net revenue increased by 6.0% to $298.4 million in Q3 2024 compared to $281.5 million in the prior year.

What was HF Foods' gross profit in Q3 2024?

HF Foods' gross profit in Q3 2024 was $50.2 million, a decrease of 1.5% compared to the prior year.

What was HF Foods' net loss in Q3 2024?

HF Foods reported a net loss of $3.8 million in Q3 2024 compared to a net income of $2.0 million in the prior year.

How did HF Foods' adjusted EBITDA perform in Q3 2024?

HF Foods' adjusted EBITDA decreased by 17.7% to $8.3 million in Q3 2024 compared to $10.1 million in the prior year.

What is HF Foods' cash balance as of September 30, 2024?

As of September 30, 2024, HF Foods had a cash balance of $11.4 million.

HF Foods Group Inc.

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Food Distribution
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