HFFG

• General Financial Performance
  • Achieved a record quarterly net revenue of $323.8 million, up 2.8% year-over-year, marking the sixth consecutive quarter of year-over-year net revenue growth
  • Gross profit was flat year-over-year at $55 million, with a gross margin of 17% (down from 17.5% YoY due to incremental 2025 tariffs, partially offset by IEPA tariff refunds received in the quarter)
  • Adjusted EBITDA was $13.6 million, down 2% YoY, with an adjusted EBITDA margin of 4.2% (down from 4.4% YoY)
  • Trailing 12-month net revenue reached approximately $1.25 billion, all driven by organic volume growth and improved pricing
• Strategic Milestone: Sea Ray Foods Acquisition
  • Entered a definitive agreement to acquire Sea Ray Foods, a leading Canadian importer and distributor of ethnic and specialty frozen seafood, for an aggregate base purchase price of ~$35 million USD (5x Sea Ray's 2025 baseline adjusted EBITDA)
  • This is HF Foods' first acquisition outside the United States, creating a growth platform in Canada and expanding the company's total addressable market beyond the $50 billion U.S. Asian specialty food market
  • Sea Ray has grown annual revenue at ~15% since 2019, with mid-teens adjusted EBITDA margins and gross margins above 20%, making the deal accretive to consolidated margins and EPS from closing
  • The transaction includes a mix of cash and HF Foods stock, is expected to close by the end of Q3 2026, and Sea Ray's existing management team will continue day-to-day operations
  • The acquisition adds six proprietary seafood brands, expands HF Foods' channel mix to include retail and wholesale, and enables cross-selling opportunities leveraging HF Foods' U.S. distribution infrastructure to accelerate Sea Ray's existing U.S. expansion
• Long-Term Transformation and Capital Deployment
  • Continued progress on the company's long-term transformation plan, including upgrades to sales operations, digital infrastructure, and facilities; the transformation program is now largely complete, shifting focus from implementation to optimization
  • Completed a post-quarter-end refinancing and upsizing of the company's credit facility, increasing revolving commitments to $140 million, extending term loan maturities to 2036, and creating additional balance sheet liquidity to support growth and M&A
  • Capital expenditures for the first half of 2026 totaled $20.3 million, driven by the $12.4 million purchase of the previously leased Chicago distribution center, $2.8 million in solar investments (eligible for a 40% investment tax credit that lowers net cost), $2.1 million in capacity expansion, and $1.4 million in fleet upgrades
  • M&A remains a core growth pillar; HF Foods is the largest scaled player in the U.S. Asian specialty food distribution space and sees itself as the strategic acquirer of choice, remaining disciplined but actively evaluating additional tuck-in opportunities in 2026 and beyond

• Management reaffirms the long-term target for consolidated adjusted EBITDA margin of 4.5% to 5%+ over the next three to five years, and the Sea Ray acquisition moves the company closer to this target
• Additional freezer capacity expansion in the Southeast and capacity improvements in the Midwest are expected to be completed by late 2026 or early 2027, with meaningful volume growth from these expansions expected after that time
• Management expects continued volume growth and conquest market share gains in 2026, with margin normalization expected to occur in 2027 and beyond, after the completion of current expansion and acquisition initiatives
• The Sea Ray acquisition is expected to contribute higher-margin revenue to HF Foods beginning in Q4 2026

Seafood: Generated the largest revenue contribution, accounting for ~36% of total net revenue. Seafood delivered positive volume growth and improved pricing that drove the overall 2.8% year-over-year net revenue increase. Commodity: Posted positive volume growth that contributed to the overall net revenue increase. Meat and Poultry: Experienced price decreases that partially offset the revenue gains from seafood and commodity, resulting in a net overall revenue increase.

• Near-term industry headwinds include ongoing tariff pressure, softer overall restaurant foot traffic, and rising fuel costs that have increased transportation expenses (fuel costs were $1.4 million higher year-over-year in Q2 2026)
• The Sea Ray Foods acquisition remains subject to customary closing conditions and required regulatory approval, so there is uncertainty around the final timing and completion of the transaction
• Current expansion initiatives in new markets require temporary margin concessions to gain market share, which puts near-term pressure on consolidated margins

Q: What additional seafood category and channel opportunities does the Sea Ray acquisition create beyond expanding into Canada? / A: Historically, HF Foods' U.S. business has focused primarily on independent restaurants. Sea Ray has a healthy mix of retail and wholesale channels serving Asian specialty grocery stores in Canada, which opens new, high-margin channel expansion opportunities for HF Foods that did not exist at scale previously. / Q: How will the gross margin profile evolve going forward, as the company offsets current headwinds and integrates Sea Ray? / A: HF Foods' 2026 focus is on gaining new market share, particularly in the Southeast with a higher mix of seafood volume, and temporary margin concessions are expected as part of this conquest strategy. Sea Ray has a gross margin above 20%, well above HF Foods' current consolidated margin, and will begin boosting the overall gross margin profile when it contributes revenue starting in Q4 2026. Volume growth is expected to offset near-term margin pressure. / Q: What is the current pace of cross-selling and capacity expansion in the Southeast and Midwest, and when will these new markets start contributing meaningfully to operating income? / A: Meaningful seafood volume growth has already been achieved in the Southeast, but full additional freezer capacity will not be ready until late 2026 or 2027. Minor capacity improvements in the Midwest are also not expected to deliver meaningful expansion until late 2026 or 2027. / Q: What drove the better-than-expected EBITDA performance in Q2, amid the company's aggressive share-gain pricing? / A: HF Foods has shifted to an offensive growth strategy, running new promotional campaigns with vendor partners on the West Coast and making a heavy push on seafood volume in the Southeast. Meaningful Q2 seafood volume gains drove gross profit dollar improvements that offset pricing pressure from rising fuel costs and conquest share-gain concessions. The company will remain in conquest mode through the end of 2026, with margin normalization expected in 2027.