HF Foods Announces Third Quarter 2022 Financial Results

LAS VEGAS, Nov. 10, 2022 (GLOBE NEWSWIRE) — HF Foods Group Inc. (NASDAQ: HFFG), one of the leading food distributors to Asian restaurants in the United States (“HF Foods”, “HF Group” or the “Company”), released unaudited third quarter financial results for the three months ended September 30, 2022.

The company is unable to file its unaudited financial results on Form 10-Q due to its ongoing review of complex technical and accounting issues related to the independent investigation by the Board’s Special Investigation Committee. administration, regarding a previously disclosed SEC subpoena and investigation. As previously reported, the Company’s Form 10-K for the fiscal year ended December 31, 2021, Form 10-Q for the quarter ended March 31, 2022 and Form 10-Q for the quarter ended June 30, 2022 had been delayed due to an outcome of an ongoing review of accounting issues related to the Company’s business combination with B&R Global Holdings, Inc. on November 4, 2019 (the “B&R Merger”) in response to a letter from SEC comments. After the Company entered into correspondence and discussions with the staff of the SEC (the “SEC Staff”) regarding the accounting issues surrounding the B&R Merger, on September 12, 2022, the staff of the SEC informed the Company by written notice that the staff of the SEC had completed their review of the Company’s prior periodic reports. The Company and its external consultant, under the supervision of the Audit Committee of the Board of Directors of the Company, are working on the filing of the outstanding periodic reports on Forms 10-K and 10-Q, and will file their Form 10-Q for the quarter ended September 30, 2022 as soon as possible after the filing of outstanding periodic reports for such prior periods. Consequently, the Company’s financial results are not yet available. This press release contains certain unaudited financial information relating to the financial results for the third quarter ended September 30, 2022, and this information could potentially change depending on the results of the Company’s ongoing accounting review.

Third Quarter 2022 Financial Summary

  • Net revenue increased 40% to $300.7 million from $215.5 million in 2021.
  • Gross profit was $52.1 million, or 17.3% of total revenue, compared to $41.9 million, or 19.4% of total revenue in 2021.

Management commentary

“HF Foods recorded another strong result in the third quarter of 2022,” said Peter Zhang, CEO of HF Foods. “Revenues were up 40% year-over-year, driven by both acquisitions and growing restaurants fully recovered to pre-pandemic levels. We have largely been able to weather inflationary pressures and are well positioned for continued profitable growth. »

“I am very pleased with the progress made to strengthen our management team, with a number of valuable additions made during the quarter. The team also made significant progress in discussions with the SEC, NASDAQ and our auditors. independents and hope that we can reach an agreement to resolve all outstanding issues. Going forward, we will continue to strengthen our management team and create long-term shareholder value through organic growth and purchases.

Third quarter 2022 results

Net revenue was $300.7 million for the third quarter of 2022, compared to $215.5 million for the third quarter of 2021, an increase of $85.2 million, or 40%. This increase is mainly due to additional revenues generated by recent acquisitions and overall product cost inflation. Recent acquisitions, which moved our product line to higher seafood sales compared to the same period in 2021, contributed $70.7 million and organic growth contributed $14.5 million. remaining dollars.

Gross profit was $52.1 million for the third quarter of 2022, compared to $41.9 million in the third quarter of 2021, an increase of $10.2 million, or 24%. The increase is primarily attributable to net revenue growth and recent acquisitions, which contributed $11.1 million to gross profit for the third quarter of 2022. Overall gross profit margin decreased from $19 .4% for the third quarter of 2021 to 17.3% for the third quarter of 2022. , mainly due to the expected decline in gross profit margin on sales of seafood products from recent acquisitions.

About HF Foods Group Inc.

HF Foods Group Inc., headquartered in Las Vegas, Nevada, is a leading marketer and marketer of fresh, frozen and dry food and non-food items primarily to Asian/Chinese restaurants and other customers restaurants across the United States. With 18 distribution centers strategically located across the country, HF Foods aims to meet the growing demand for Asian American restaurant cuisine. With an exclusive internal ordering and inventory control network, more than 15,000 established customers in 46 states, and strong relationships with food producers and suppliers in the United States, South America, and China, HF Foods Group is able to offer fresh and top quality products. -Quality specialty restaurant food and supplies at economical prices for its large and growing clientele. For more information, visit www.hffoodsgroup.com.

Forward-looking statements

All statements in this press release other than statements of historical facts are forward-looking statements that contain our current expectations regarding our future results. We have attempted to identify any forward-looking statements by using words such as “anticipates”, “believes”, “could”, “continues”, “estimates”, “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 cannot guarantee that these expectations will prove to be correct. These statements are not guarantees of future performance or events and are subject to known and unknown risks and uncertainties that could cause the actual results, events or financial positions of the HF Group to differ materially from those included or understated. referred to in these forward-looking statements. These factors include, but are not limited to, the effects of the COVID-19 pandemic or other pandemics, low margins in the foodservice distribution industry and periods of significant or prolonged inflation, skilled labor shortages, unfavorable macroeconomic conditions in the United States, competition in the foodservice distribution industry, particularly the entry of new competitors into the Chinese/Asian foodservice niche, the increased fuel or raw material costs, disruption of supplier relationships and increased product prices, U.S. government tariffs on products imported into the United States, particularly from China , changes in consumer eating and dining habits, related party transactions and potential conflicts of interest, consolidation of parties related and variable interest entities, disruption of relationships with or loss of customers, our ability to execute our acquisition strategy, the availability of financing to execute our acquisition strategy, the failure to maintain our high management and other key personnel, our ability to attract, train and retain employees, changes to and enforcement of immigration laws, failure to comply with various federal, state and local rules and regulations regarding food safety, sanitation, transportation, minimum wages, overtime and other health and safety laws, product recalls, voluntary recalls or withdrawals if any of the products we distribute are suspected to have caused illness, have been mislabeled, mislabeled or tampered with or have otherwise violated applicable government regulations, weather, disasters and changes adverse weather, adverse geopolitical conditions, failure to protect our intellectual property rights, any cybersecurity incident, other technological disruption or delay in the implementation of our information technology systems, statements of assumptions underlying all of the foregoing and other factors disclosed under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and other SEC filings. 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 assume no obligation to disclose any revisions to these forward-looking statements.

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