HF Foods Group Inc. Q1 FY2024 earnings call

• Welcomed Cindy Yao as Chief Financial Officer.
• Achieved highest ever recorded net revenue during the first quarter alongside year-over-year improvements in gross profit, net loss and adjusted EBITDA. Demonstrated strength in core business despite exiting chicken processing businesses in 2023.
• Operational transformation plan is underway: - Centralized purchasing initiative focused on formalizing national category purchases and bringing in new vendors. - Seafood margin expansion plan expanded to select beef and poultry products. - Launched national fuel savings program in March 2024. - Initiated first phase of fleet replacement program with orders for roughly 25% of existing fleet, new trucks expected in service by end of 2024. - Well underway with implementation of modern ERP solution, expected to complete by end of 2024. - Completed network and facility optimization study, moved into Phase 1 of facility upgrade initiatives with 2 new state-of-the-art facilities in Southeast region.

For the first quarter ended March 31, 2024, net revenue increased 0.6% to $295.7 million from $293.9 million in the prior year quarter. The increase was primarily driven by product cost inflation and improved pricing in certain categories, partially offset by the $2.7 million loss in revenue from exiting chicken processing businesses. Gross profit increased by 0.5% to $50.4 million, with gross profit margins approximately flat at 17.1%. The increase in gross profit was due to improvement in the seafood category from successful execution of a centralized purchasing plan. Distribution, selling and administrative expenses decreased approximately 4.6% to $50.5 million, with the percentage of net revenue for these expenses decreasing to 17.1% from 18% in the prior year period. Operating income was a loss of $0.1 million compared to a loss of $2.8 million in the prior year quarter. Net loss improved to $0.6 million from $5.8 million in the prior year quarter. Adjusted EBITDA increased approximately 51.4% to $8.7 million from $5.7 million in the prior year quarter, primarily due to lower distribution, selling and administrative expenses.

• Continue to execute comprehensive operational transformation plan to achieve growth targets. - Actively exploring M&A opportunities for geographic expansion of business, focused on targets that will realize meaningful synergies.

• Discussion of forward-looking statements which include risks and uncertainties, and actual results could differ materially from forward-looking statements.