Highest Net Revenue Ever Recorded During First Quarter of $295.7 Million Pre-Recorded Earnings Call Webcast Available on Investor Relations Website LAS VEGAS, May 08, 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 unaudited financial results for the first quarter ended March 31, 2024. First Quarter 2024 Financial Results Net revenue increased 0.6% to $295.7 million compared to $293.9 million in the prior year. Gross profit increased 0.5% to $50.4 million compared to $50.2 million in the prior year. Gross profit margin was flat at 17.1%. Net loss improved to $0.6 million compared to $5.8 million in the prior year. Adjusted EBITDA increased 51.4% to $8.7 million compared to $5.7 million in the prior year. Management Commentary "We are pleased to report record first quarter revenue, showing progress in our core operations as we achieved growth despite exiting our chicken processing businesses in 2023," said Peter Zhang, Chief Executive Officer of HF Foods. "We continue to make progress on all key areas of our operational transformation plan, including centralized purchasing which will allow us to maximize synergies from our acquisitions, fleet and transportation improvements to enhance efficiency and reduce fuel costs, digital transformation which will improve our operations and strengthen our ability to adapt quickly to market dynamics, and facility upgrades to allow our distribution centers to serve as full broadline facilities that supply the products that are strongest in demand in a given area. We are a trusted partner for thousands of restaurants across the United States, empowering them to serve customers high quality products at affordable prices. I remain confident that our operational transformation plan will drive sales and efficiencies and help us deliver on our growth targets." First Quarter 2024 Results Net revenue was $295.7 million for the first quarter of 2024 compared to $293.9 million in the prior year period, an increase of $1.8 million, or 0.6%. This increase was primarily attributable to product cost inflation and improved pricing in certain categories, partially offset by the $2.7 million loss in revenue resulting from the exit of our chicken processing businesses. Gross profit was $50.4 million for the first quarter of 2024 compared to $50.2 million in the prior year period, an increase of $0.2 million, or 0.5%. Gross profit margin was flat at 17.1% compared to the prior year period. Distribution, selling and administrative expenses decreased by $2.4 million to $50.5 million, primarily due to a decrease of $2.8 million in professional fees, partially offset by higher payroll and related labor costs. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 17.1% from 18.0% in the prior year period primarily attributable to lower professional fees and increased net revenue, partially offset by increased headcount. Net loss improved to $0.6 million for the first quarter of 2024 compared to $5.8 million in the prior year period. The improvement was primarily attributable to the decreased distribution, selling and administrative expenses and the impact from changes in the fair value of interest rate swap contracts. Adjusted EBITDA increased 51.4% to $8.7 million for the first quarter of 2024 compared to $5.7 million in the prior year. The increase was primarily attributable to the decreased distribution, selling and administrative expenses. Cash Flow and Liquidity Cash flow from operating activities decreased to $7.1 million for in the first quarter of 2024, compared to $12.6 million in the prior year. The decrease in cash flow from operating activities was primarily due to the timing of working capital outlays. As of March 31, 2024, the Company had a cash balance of $18.2 million and access to approximately $40.9 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 China. 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: HFFG Investor Relations 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 "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, 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)     March 31, 2024   December 31, 2023 ASSETS       CURRENT ASSETS:       Cash $ 18,215     $ 15,232   Accounts receivable, net   50,000       47,832   Inventories   107,908       105,618   Other current assets   9,363       10,145   TOTAL CURRENT ASSETS   185,486       178,827   Property and equipment, net   137,989       133,136   Operating lease right-of-use assets   11,815       12,714   Long-term investments   2,389       2,388   Customer relationships, net   144,540       147,181   Trademarks, trade names and other intangibles, net   29,196       30,625   Goodwill   85,118       85,118   Other long-term assets   6,532       6,531   TOTAL ASSETS $ 603,065     $ 596,520   LIABILITIES AND SHAREHOLDERS' EQUITY       CURRENT LIABILITIES:       Checks issued not presented for payment $ 8,663     $ 4,494   Line of credit   55,192       58,564   Accounts payable   57,834       52,014   Current portion of long-term debt, net   5,427       5,450   Current portion of obligations under finance leases   2,299       1,749   Current portion of obligations under operating leases   3,766       3,706   Accrued expenses and other liabilities   17,454       17,287   TOTAL CURRENT LIABILITIES   150,635       143,264   Long-term debt, net of current portion   107,331       108,711   Obligations under finance leases, non-current   14,689       11,229   Obligations under operating leases, non-current   8,493       9,414   Deferred tax liabilities   28,557       29,028   Other long-term liabilities   5,198       6,891   TOTAL LIABILITIES   314,903       308,537   Commitments and contingencies       SHAREHOLDERS' EQUITY:       Preferred stock   —       —   Common stock   5       5   Treasury stock   (7,750 )     (7,750 ) Additional paid-in capital