HF Foods To Acquire Seafood Supplier Sealand Food, Inc.

Rhea-AI Summary

HF Foods Group Inc. (NASDAQ: HFFG) announced an agreement to acquire substantially all assets of Sealand Food, Inc., a prominent frozen seafood supplier, for an anticipated 2022 revenue of $90 million. This acquisition strategically expands HF Foods' distribution network to 46 states, allowing it to serve approximately 15,000 restaurants and aiming for over $1 billion in projected revenue. HF Group's leadership emphasized growth through acquisition as a key strategy for enhancing shareholder value.

Positive

• Acquisition of Sealand Food enhances HF Foods' distribution to 46 states, covering over 90% of the contiguous U.S.
• Projected revenue surpassing $1 billion in 2022, bolstering market position.
• Expansion into new states increases potential customer base to approximately 15,000 restaurants.

Negative

• Integration challenges could arise from merging operations and cultures between HF Foods and Sealand.
• Potential financial strain from acquisition costs and maintaining current operational efficiencies.

LAS VEGAS, April 25, 2022 (GLOBE NEWSWIRE) -- HF Foods Group Inc. (NASDAQ: HFFG), a leading food distributor to Asian restaurants across the United States (“HF Foods”, “HF Group” or the “Company”), announced today that it has entered into an agreement (the “Agreement”) to acquire substantially all of the assets of Sealand Food, Inc. (“Sealand”).

With 25 years of operating history, Richmond, Virginia-based Sealand is one of the largest frozen seafood suppliers servicing the Asian/Chinese restaurant market along the Eastern Seaboard of the U.S, with 2022 run-rate revenues expected to approach $90 million. Sealand services a market that includes seventeen states along the East Coast, from Massachusetts to Florida, as well as Pennsylvania, West Virginia, Ohio, Kentucky, and Tennessee.

“I am extremely pleased with the signing of the Agreement to acquire Sealand’s operations and am looking forward to the closing of the transaction,” said HF Group Chairman Russell T. Libby. “Sealand’s leadership position in the frozen seafood industry, coupled with their extensive distribution network along the East Coast, particularly in states where HF Foods currently does not have a presence, perfectly complements the strengths of our existing network and supports our strategic goal of growth by acquisition.”

Peter Zhang, CEO of HF Foods, added: “The acquisition of Sealand takes our extensive distribution network to 46 states covering well over 90% of the contiguous United States and propels us to over a billion dollars in projected 2022 revenue. Upon completion of the acquisition of Sealand, the Company will serve approximately 15,000 restaurants. We will continue to solidify our market leadership position to deliver long-term shareholder value through organic growth and acquisitions such as this. On behalf of the Company, I sincerely welcome Tammy Lu and the rest of the Sealand employees to our HF Group family.”

Connie Wang, President of Sealand, said: “With HF Group’s nationwide distribution footprint and market leadership position, we expect our customers will benefit from an organization with greater scale and our suppliers will enjoy the ability to reach further into HF Group’s network. We are excited to have found a partner that shares our commitment to customer service and look forward to partnering with the HF Group team to drive additional value.”

About HF Foods Group Inc.

HF Foods Group Inc., headquartered in Las Vegas, Nevada, is a leading marketer and distributor of fresh produce, frozen and dry food, and non-food products to primarily Asian/Chinese restaurants and other foodservice customers throughout the United States. With 16 distribution centers strategically located throughout the nation, HF Foods aims to supply the increasing demand for Asian American restaurant cuisine. With an in-house proprietary ordering and inventory control network, more than 12,500 established customers in over 40 states, and strong relations with growers and suppliers of food products in the U.S., South America and China, HF Foods is able to offer fresh, high-quality specialty restaurant foods and supplies at economical prices to its large and growing base of customers. For more information, please visit www.hffoodsgroup.com.

Forward-Looking Statements

All statements in this news release other than statements of historical facts are forward-looking statements which contain our current expectations about our future results. We have attempted to identify any forward-looking statements by using words such as “anticipates,” “believes,” “could,” “expects,” “intends,” “may,” “should” 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, unfavorable macroeconomic conditions in the United States, competition in the food service distribution industry, particularly the entry of new competitors into the Chinese/Asian restaurant market niche, increases in fuel costs or commodity prices, disruption of relationships with vendors and increases in product prices, U.S. government tariffs on products imported into the United States, particularly from China, changes in consumer eating and dining out habits, disruption of relationships with or loss of customers, our ability to execute our acquisition strategy, availability of financing to execute our acquisition strategy, failure to retain our senior management and other key personnel, our ability to attract, train and retain employees, changes in and enforcement of immigration laws, failure to comply with various federal, state and local rules and regulations regarding food safety, sanitation, transportation, minimum wage, overtime and other health and safety laws, product recalls, voluntary recalls or withdrawals if any of the products we distribute are alleged to have caused illness, been mislabeled, misbranded or adulterated or to otherwise have violated applicable government regulations, failure to protect our intellectual property rights, any cyber security incident, other technology disruption, or delay in implementing our information technology systems, statements of assumption underlying any of the foregoing, and other factors disclosed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 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.

Investor Relations Contact:

Gateway Group, Inc.
Cody Slach
Tel 1-949-574-3860
HFFG@gatewayir.com

FAQ

What is the significance of HF Foods' acquisition of Sealand Food, Inc.?

The acquisition significantly expands HF Foods' distribution reach, allowing it to serve a larger customer base and enhance revenue streams.

How much revenue is Sealand Food expected to generate for HF Foods in 2022?

Sealand Food is expected to contribute approximately $90 million in revenue for HF Foods in 2022.

How many states will HF Foods cover after acquiring Sealand?

After the acquisition, HF Foods will cover 46 states across the United States.

What is HF Foods' projected revenue after the Sealand acquisition?

HF Foods projects revenues exceeding $1 billion following the acquisition of Sealand Food.