The Latest News at HF Foods Group Inc.

HF Foods Reports Record Third Quarter 2021 Financial Results

CITY OF INDUSTRY, Calif., Nov. 10, 2021 (GLOBE NEWSWIRE) — HF Foods Group Inc. (NASDAQ: HFFG), a leading food distributor to Asian restaurants across the Southeast, Pacific and Mountain West regions of the United States (the “Company” or “HF Foods”), reported record financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Financial Summary

  • Net revenue increased 54.0% to $215.5 million compared to $139.9 million in the third quarter of 2020.
  • Gross profit increased 66.6% to $41.9 million, or 19.4% of net revenue, from $25.2 million, or 18.0% of net revenue, in the third quarter of 2020.
  • Net income attributable to the Company increased significantly to $7.9 million, or $0.15 per diluted share, compared to a net loss of $0.6 million, or $(0.01) per diluted share, in the third quarter of 2020.
  • Adjusted EBITDA increased 190.9% to $17.4 million compared to $6.0 million in the third quarter of 2020.

Management Commentary

“The strong momentum of our business in the first half of 2021 strengthened in the third quarter,” said Peter Zhang, CEO of HF Foods. “We had remarkable growth across most financial metrics both on a year-over-year and sequential basis due to improving market conditions, and we are reaping the benefits of the proactive actions we took last year to right-size our business during the pandemic. In fact, our net revenue in the third quarter has already surpassed pre-COVID levels to approximately 105% in the month of September and has continued to remain strong into the fourth quarter, and our adjusted EBITDA for the third quarter is more than double the comparable quarter in 2019.

“We remain optimistic about the long-term prospects of our business despite the setback in 2020. Although we will likely continue to face intermittent government restrictions on our restaurant customers’ operations, we believe that our sales volume will maintain its strong momentum as consumers continue to adapt to living with COVID-19.”

Mr. Zhang concluded, “As the market leader in servicing the Asian/Chinese restaurant sector, we believe we are differentiated from our competitors given our extensive footprint, strong vendor and customer relationships, and value-added service offerings, all of which have allowed and will continue to allow us to better serve our customers in these unprecedented conditions. We believe the fragmented nature of the Asian/Chinese food service industry and the current environment create opportunities for a company like HF Foods, which possesses the necessary industry expertise and deep understanding of our unique customer base to further consolidate our market leadership position.”

Third Quarter 2021 Results

Revenue for the third quarter of 2021 increased 54.0% to $215.5 million compared to $139.9 million in the third quarter of 2020 due to a strong market recovery, particularly since the third quarter last year when the country was still at the height of pandemic-related business restrictions.

Gross profit in the third quarter of 2021 was $41.9 million (19.4% of net revenue), a 66.6% increase from $25.2 million (18.0% of net revenue) in the same year-ago quarter. The increase was due to the increase in revenue and better gross margin.

Distribution, selling and administrative (DSA) expenses in the third quarter of 2021 increased to $31.0 million from $25.1 million in the third quarter of 2020. The increase was primarily attributable to salary, wage and fuel cost increases which were necessary to match the increasing sales demand. However, the increase was well below the 54% revenue growth.

As a result, net income attributable to the company in the third quarter of 2021 improved significantly to $7.9 million, or $0.15 per diluted share, compared to a net loss of $0.6 million, or $(0.01) per diluted share, in the third quarter of 2020.

Adjusted EBITDA for the third quarter of 2021 increased 190.9% to $17.4 million compared to $6.0 million in the third quarter of 2020. The increase was due to the strong revenue growth, higher gross margin and prudent cost management.


As of September 30, 2021, HF Foods had $15.5 million in cash and access to over $77 million in additional funds through its $100 million line of credit, subject to a borrowing base calculation.

About HF Foods Group Inc.

HF Foods Group Inc., headquartered in City of Industry, California, is a leading marketer and distributor of fresh produce, frozen and dry food, and non-food products to primarily Asian/Chinese restaurants and other foodservice customers throughout the Southeast, Pacific and Mountain West regions of the United States. With 13 distribution centers along the U.S. eastern and western seaboards, HF Foods aims to supply the increasing demand for Asian American restaurant cuisine. With an in-house proprietary ordering and inventory control network, more than 10,000 established customers in 21 states, and strong relations with growers and suppliers of food products in the US and China, HF Foods Group is able to offer fresh, high-quality specialty restaurant foods and supplies at economical prices to its large and growing base of customers. For more information, please visit

Non-GAAP Financial Measures

Adjusted EBITDA: The Company believes that adjusted EBITDA is a useful performance measure and can be used to facilitate a comparison of the Company’s operating performance on a consistent basis from period to period and to provide for a more complete understanding of factors and trends affecting the business than GAAP measures alone can provide. Management believes that adjusted EBITDA is less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of other factors that directly affect our operating performance. Management believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial performance with that of other companies in the same industry, many of which present similar non-GAAP financial measures to investors. The Company presents adjusted EBITDA in order to provide supplemental information that the Company considers 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.

The following table sets forth of the calculation of adjusted EBITDA and reconciliation to net income (loss), the closest U.S. GAAP measure:

Three Months Ended September 30, Changes
2021 2020 Amount %
Net income (loss) $ 8,209,112 $ (396,939 ) $ 8,606,051 2,168.1 %
Interest expense 703,845 840,851 (137,006 ) 16.3 %
Income tax provision (benefit) 2,637,444 (80,910 ) 2,718,354 3,359.7 %
Depreciation & Amortization 4,249,496 4,474,892 (225,396 ) 5.0 %
EBITDA 15,799,897 4,837,894 10,962,003 226.6 %
Unrealized change in fair value of interest rate swap contracts (52,314 ) 20,022 (72,336 ) 361.3 %
COVID-19 bad debt reserve (recovery) (750,945 ) 750,945 100.0 %
Non-recurring expenses 1,628,098 1,866,415 (238,317 ) 12.8 %
Adjusted EBITDA $ 17,375,681 $ 5,973,386 $ 11,402,295 190.9 %
Percentage of revenue 8.1 % 4.3 % 3.8 % 88.8 %

Quarterly Report

The Company is filing a notification of late filing of its Quarterly Report on Form 10-Q for the third quarter of 2021. The Quarterly Report will be filed within five days of its due date. The filing is delayed because the Company requires additional time to evaluate the status of its previously disclosed, independent investigation and to consider the related impact on the sufficiency of its disclosures. The Company anticipates that its Quarterly Report will present changes in the characterization of certain items shown in previous periodic filings that will result in both total assets and total liabilities on the Company’s balance sheet being reduced by slightly more than $6 million, but that otherwise no material changes in the Company’s statement of financial position, results of operation or cash flows are anticipated.

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 “anticipates,” “believes,” “could,” “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 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, unfavorable macroeconomic conditions in the United States, competition in the food service distribution industry, particularly the entry of new competitors into the Chinese/Asian restaurant market niche, increases in fuel costs or commodity prices, disruption of relationships with vendors and increases in product prices, U.S. government tariffs on products imported into the United States, particularly from China, changes in consumer eating and dining out habits, disruption of relationships with or loss of customers, our ability to execute our acquisition strategy, availability of financing to execute our acquisition strategy, failure to retain our senior management and other key personnel, our ability to attract, train and retain employees, changes in and enforcement of immigration laws, failure to comply with various federal, state and local rules and regulations regarding food safety, sanitation, transportation, minimum wage, overtime and other health and safety laws, product recalls, voluntary recalls or withdrawals if any of the products we distribute are alleged to have caused illness, been mislabeled, misbranded or adulterated or to otherwise have violated applicable government regulations, failure to protect our intellectual property rights, any cyber security incident, other technology disruption, or delay in implementing our information technology systems, supply chain disruption, statements of assumption underlying any of the foregoing, the continuing impact of the Covid-19 pandemic, and other factors disclosed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 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.

Investor Relations Contact:

[email protected]

HF Foods Group Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

As of
September 30,
December 31,
Cash $ 15,543,177 $    9,580,853
Accounts receivable, net 34,103,832 24,857,322
Accounts receivable – related parties 954,230 1,261,463
Inventories, net 77,239,478 58,535,040
Advances to suppliers – related parties 196,803
Other current assets 2,640,233 4,614,164
TOTAL CURRENT ASSETS 130,480,950 99,045,645
Property and equipment, net 141,740,117 136,869,085
Operating lease right-of-use assets 2,551,286 931,630
Long-term investments 2,443,885 2,377,164
Intangible assets, net 167,629,925 175,797,650
Goodwill 68,511,941 68,511,941
Other long-term assets 1,145,167 694,490
TOTAL ASSETS $ 514,503,271 $ 484,227,605  
Bank overdraft $ 19,422,811 $ 14,839,747
Line of credit 23,020,114 18,279,062
Accounts payable 42,044,350 28,602,570
Accounts payable – related parties 2,499,872 1,572,427
Current portion of long-term debt, net 5,677,453 5,641,259
Current portion of obligations under finance leases 270,160 286,903
Current portion of obligations under operating leases 687,040 308,148
Accrued expenses and other liabilities 3,841,327 6,178,144
Obligations under interest rate swap contracts 341,165 993,516
TOTAL CURRENT LIABILITIES 97,804,292 76,701,776
Long-term debt, net of current portion 83,708,244 88,008,803
Promissory note payable – related party 5,000,000 7,000,000
Obligations under finance leases, non-current 8,448,619 766,885
Obligations under operating leases, non-current 2,010,664 623,482
Deferred tax liabilities 44,199,536 46,325,226
TOTAL LIABILITIES 241,171,355 219,426,172
Preferred Stock, $0.0001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
Common Stock, $0.0001 par value, 100,000,000 shares authorized, 51,913,411 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively 5,191 5,191
Additional paid-in capital 583,928,639 587,579,093
Accumulated deficit (314,179,103 ) (327,150,398 )
Non-controlling interests 3,577,189 4,367,547
TOTAL SHAREHOLDERS’ EQUITY 273,331,916 264,801,433

HF Foods Group Inc. and Subsidiaries
Condensed Consolidated Statements of Operations

For the Three Months Ended
September 30,

For the Nine Months Ended
September 30,

2021 2020 2021 2020
Net revenue – third parties $ 213,178,708 $ 137,631,565 $ 560,630,604 $ 409,446,496
Net revenue – related parties 2,363,341 2,287,377 7,839,509 10,835,878
TOTAL NET REVENUE 215,542,049 139,918,942 568,470,113 420,282,374
Cost of revenue – third parties 171,431,310 112,535,923 453,990,363 335,202,455
Cost of revenue – related parties 2,198,771 2,220,161 8,003,887 10,329,232
TOTAL COST OF REVENUE 173,630,081 114,756,084 461,994,250 345,531,687
GROSS PROFIT 41,911,968 25,162,858 106,475,863 74,750,687
Distribution, selling and administrative expenses 30,972,019 25,050,419 89,003,273 79,549,580
Goodwill impairment loss 338,191,407
TOTAL OPERATING EXPENSES 30,972,019 25,050,419 89,003,273 417,740,987
INCOME (LOSS) FROM OPERATIONS 10,939,949 112,439 17,472,590 (342,990,300 )
Other Income (Expenses)
Interest income 133 396
Interest expense (703,845 ) (840,851 ) (2,155,328 ) (3,116,739 )
Other income 558,138 270,452 1,470,887 940,832
Change in fair value of interest rate swap contracts 52,314 (20,022 ) 1,370,950 (1,284,276 )
Total Other Income (Expenses), net (93,393 ) (590,288 ) 686,509 (3,459,787 )
INCOME (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT) 10,846,556 (477,849 ) 18,159,099 (346,450,087 )
PROVISION (BENEFIT) FOR INCOME TAXES 2,637,444 (80,910 ) 4,621,749 (2,052,426 )
NET INCOME (LOSS) 8,209,112 (396,939 ) 13,537,350 (344,397,661 )
Less: net income attributable to non-controlling interests 357,345 226,865 566,055 168,988
NET INCOME (LOSS) ATTRIBUTABLE TO HF FOODS GROUP INC. $ 7,851,767 $ (623,804 ) $ 12,971,295 $ (344,566,649 )
Earnings (loss) per common share – basic and diluted $ 0.15 $ (0.01 ) $ 0.25 $ (6.61 )
Weighted average shares – basic 51,913,411
Weighted average shares – diluted 51,932,712

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