Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net revenue increased by 8.7% for the fourth quarter and 4.6% for the full year 2024, indicating strong sales growth.
- Adjusted EBITDA saw a significant increase of 39.4% for the fourth quarter and 21.6% for the full year 2024, reflecting improved operational efficiency.
- HF Foods Group Inc (HFFG, Financial) has diversified its supply chain network globally, enhancing its ability to manage potential disruptions.
- The company is expanding its business portfolio to include wholesale and retail sales, targeting specialty businesses and consumers directly.
- HF Foods Group Inc (HFFG) is actively piloting a new e-commerce platform, which is expected to drive future growth and enhance customer accessibility.
Negative Points
- Gross profit margin decreased to 17.1% from 18.6% in the fourth quarter, primarily due to a write-off of aged trade accounts payable and decreased margins on meat and poultry.
- Distribution, selling, and administrative expenses increased, driven by higher professional fees, payroll severance expenses, and insurance costs.
- The company reported an operating loss of $42.2 million for the fourth quarter, largely due to a $46.3 million goodwill impairment charge.
- Net loss for the fourth quarter was $43.9 million, a significant decrease compared to net income of $2.7 million in the prior year quarter.
- The company faces uncertainties in the market due to new tariff policies and potential higher inflation, impacting consumer spending decisions.
Q & A Highlights
Q: Can you elaborate on the impact of the new tariff policies and inflation on your business?
A: Xi Lin, President and Interim CFO, explained that the new tariff policies and potential higher inflation are creating uncertainties in the market, affecting consumer spending decisions. This has led to lower foot traffic for restaurant customers as consumers become more budget-conscious. To mitigate these challenges, HF Foods is expanding its business portfolio to increase wholesale and retail sales, reaching specialty businesses and consumers directly.
Q: What are the key strategic initiatives HF Foods is implementing to drive growth?
A: Xi Lin highlighted several strategic initiatives, including expanding the centralized purchasing program, operationalizing the new oil packaging operation in Kansas City, and piloting a new e-commerce platform. These initiatives aim to enhance operational efficiency, improve margins, and drive sustainable growth by leveraging HF Foods' scale and distribution infrastructure.
Q: How is HF Foods addressing supply chain disruptions?
A: Xi Lin stated that HF Foods has diversified its supply chain network to become a global sourcing network, sourcing goods domestically and from Asia, South America, and the Middle East. This diversification positions the company to better handle potential supply chain disruptions and capitalize on opportunities in the broader wholesale channel.
Q: Can you provide more details on the financial performance for Q4 2024?
A: Cindy Yao, CFO, reported that net revenue for Q4 2024 increased by 8.7% to $305.3 million, driven by volume growth, product cost inflation, and improved pricing. However, gross profit was flat, and the gross profit margin decreased due to a write-off of aged trade accounts payable and decreased margins on meat and poultry. The operating loss was $42.2 million, primarily due to a $46.3 million goodwill impairment charge.
Q: What are the expectations for the wholesale and retail sales mix moving forward?
A: Cindy Yao mentioned that while wholesale sales generally have lower gross margins than retail sales, the company expects wholesale sales to remain less than 5% of total revenue. The slight uptick in wholesale mix is expected to benefit the retail business in the long term as retail volume increases.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
