Hf Foods Group Q1 2026 Earnings Report

Hf Foods Group EPS Results

• Actual EPS: $0.06
• Consensus EPS: $0.06
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

Hf Foods Group Revenue Results

• Actual Revenue: $312.00 million
• Expected Revenue: $307.36 million
• Beat/Miss: Beat by +$4.64 million
• YoY Revenue Growth: N/A

Hf Foods Group Announcement Details

• Quarter: Q1 2026
• Date: 5/11/2026
• Time: After Market Closes
• Conference Call Date: Monday, May 11, 2026
• Conference Call Time: 4:30PM ET

Hf Foods Group (NASDAQ:HFFG), Inc., together with its subsidiaries, manufactures, imports and distributes a variety of ethnic and specialty food products primarily for retail and foodservice customers in the United States. The company focuses on value‐added fresh and frozen offerings that cater to growing consumer interest in Hispanic and other global cuisines. Its vertically integrated operations include in‐house manufacturing, procurement of specialty ingredients, and third‐party distribution partnerships.

The company’s product portfolio spans a broad range of categories, including fresh and frozen tamales, enchiladas, empanadas, tortillas and quesadillas, as well as shelf‐stable salsas, sauces, dips, spreads and snack items. HF Foods Group supports multiple private‐label programs for national and regional retailers, alongside proprietary brands designed to appeal to both mainstream and ethnic consumers seeking authentic flavors and convenient meal solutions.

HF Foods Group operates manufacturing and distribution facilities in the southeastern United States, with its primary production center located in Alabama. From these bases, the company serves grocery chains, convenience stores and foodservice distributors across the continental U.S., Puerto Rico and select Caribbean markets. Its integrated supply‐chain model enables responsive order fulfillment and tailored product development in line with shifting consumer trends.

Hf Foods Group Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Net revenue rose 4.5% to $312 million year‑over‑year and Adjusted EBITDA increased 3.8% to $10.1 million, with net income improving to $1.2 million versus a prior‑year loss.
• Negative Sentiment: Gross profit and margin contracted (gross profit down to $50.5M and margin to 16.2% from 17.1%) driven by a higher mix of lower‑margin seafood and elevated landed and fuel costs, with management expecting short‑term pressure into Q2/Q3.
• Positive Sentiment: The company completed its ERP implementation and consolidated sales call centers, already realizing lower SG&A and positioning for purchasing efficiencies, route optimization, SKU rationalization, and a planned customer portal to improve service and margins.
• Positive Sentiment: Capital investments include buying the Chicago facility, pending Charlotte permitting (expected late Q2/early Q3) and an Atlanta freezer expansion that will nearly double cold storage, aimed at enabling cross‑selling and unlocking several hundred million dollars of organic growth opportunity.
• Positive Sentiment: M&A remains a core pillar — inbound interest has increased as smaller competitors are squeezed, and HF Foods plans disciplined tuck‑in acquisitions to expand footprint, capture synergies, and leverage its leading position in the U.S. Asian specialty market.

Presentation

[Operator]

Greetings and welcome to HF Foods Group first quarter 2026 earnings call. It is now my pleasure to introduce your host. To turn the call over to Mr. Jon DeDomenico. Thank you. Over to you, Mr. Jon DeDomenico. You may begin.

[Jon DeDomenico, VP of Investor Relations at ICR]

Hello, everyone. Welcome to HF Foods Group's first quarter 2026 earnings conference call. Joining me on today's call are Felix Lin, the company's president and chief executive officer, and Paul McGarry, the company's chief financial officer. Before we begin, let me remind everyone that today's discussion contains forward-looking statements based on management's current beliefs and expectations about future events, which are subject to several known and unknown risks and uncertainties. If you refer to HF Foods earnings release, as well as the company's most recent SEC filings, you will see a discussion of factors that could cause the company's actual results to differ materially from those expressed or implied by these forward-looking statements. The company undertakes no obligation to update or revise these forward-looking statements in the future.

[Jon DeDomenico, VP of Investor Relations at ICR]

In these remarks, the company will make several references to non-GAAP financial measures, including Adjusted EBITDA and non-GAAP diluted earnings per share. We believe that these measures provide investors with a useful perspective on the underlying growth trends of the business and have included in the earnings release a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures. Now, I will turn the call over to Felix.

[Felix Lin, President and CEO at HF Foods Group]

Hello, everyone. Welcome to HF Foods first quarter 2026 earnings call. I'll provide a business update. Paul will speak to our first quarter financial results. We'll open the line for Q&A. As we mentioned on our last call, 2025 brought headwinds for the broader food service industry in terms of tariff pressure and lower foot traffic. We saw many of these pressures continue, particularly with the added pressure from rising fuel prices. Against this backdrop, we drove meaningful continuous momentum for our business. Net revenue increased 4.5% year-over-year to $312 million due to higher volume. Gross profit decreased slightly to $50.5 million, driven by higher mix of Seafood during the quarter. Also, notably, Adjusted EBITDA increased 3.8% year-over-year to $10.1 million.

[Felix Lin, President and CEO at HF Foods Group]

We made meaningful progress on our long-term transformation plan with respect to sales operations, digital infrastructure, and facilities upgrades. We consolidated two sales call center operations into one unified team as of late December 2025. This consolidation provides us better control over the overall sales process and improved customer service while maintaining the distinct connection we have with our customers through our understanding of their business, language, and product needs. Importantly, this unified approach enables us to maintain consistent pricing strategies across our network, while the efficiency gains are already evident with lower SG&A spend on sales commissions as the new team continues to adapt. With the ERP implementation completed, we're now actively working on driving operational efficiencies through system and data optimization.

[Felix Lin, President and CEO at HF Foods Group]

The new system positions us to achieve higher level of purchasing efficiency by consolidating buying across our distribution centers and enables operational improvements through enhanced route optimization capabilities. We recategorized a significant number of SKUs as part of system implementation. The next phase of our digital transformation focuses on improving overall customer experience. We're actively developing a customized customer portal that will enable transactional visibility and improve efficiency. On facilities, we successfully completed the acquisition of our previously leased facility in Chicago and are actively expanding cooler and ambient capacity. This move is part of our broader cross-selling strategy, driving organic growth. The Charlotte facility is largely ready and still pending final permits from local government. We expect Charlotte to be fully operational in late second quarter or early third quarter of 2026, which will shorten our Seafood distribution routes in the Southeast.

[Felix Lin, President and CEO at HF Foods Group]

We're also kicking off phase II of Atlanta's freezer expansion plan, which will nearly double our cold storage capacity in the Atlanta market from 10,000 to 20,000 square feet, where we've historically been limited by cold storage capacity. This will likely be operational ready by the end of 2026. We see all three facilities upgrades as a cornerstone of our cross-selling strategy in the Southeast and Midwest in the future. Between the Southeast and Midwest, there's $several hundred million worth of organic growth opportunity as we continue to invest and expand capacity. These exciting infrastructure investments reflect our ongoing commitment to optimizing our distribution network and creating a stronger foundation for sustainable growth.

[Felix Lin, President and CEO at HF Foods Group]

Based on current trends, we do expect some short-term pressure due to increased cost of goods sold and outbound distribution costs related to rising fuel costs, which we're taking action to mitigate this impact. We remain extremely confident in our long-term growth strategy and are committed to our capital investment plans as we continue our growth momentum in 2026 and beyond. M&A remains a core pillar of our growth strategy. HF Foods is the only scaled food service provider in the Asian specialty market in the U.S. We believe we are the strategic acquirer of choice within our space. We're focused on expanding our geographic footprint in high potential markets, capturing operational synergies, broadening our customer base, and enhancing our product and service capabilities.

[Felix Lin, President and CEO at HF Foods Group]

We remain disciplined but optimistic about M&A opportunities in 2026 and beyond. We're actively evaluating opportunities from potential sellers who understand our unique position. We believe our proven ability to successfully navigate the tariff landscape positions us uniquely to identify and execute attractive tuck-in acquisitions that will benefit from our operational expertise and scale. I want to emphasize the significant runway ahead of us. We operate in a $50 billion addressable market and at just over $1 billion in net revenue. We are the largest player in the Asian specialty space. No one, whether larger or smaller competitors, is better positioned than HF Foods to capture this opportunity in the coming years. Now over to Paul, our CFO, to walk you through more details of the financial performance for the quarter.

[Paul McGarry, CFO at HF Foods Group]

Thanks, Felix. I will now review our results for the quarter ended March 31, 2026 versus the same period in 2025. Net revenue for the quarter increased 4.5% to $312 million from $298.4 million in the prior year quarter. The increase was primarily due to volume growth and improved pricing in seafood, followed by volume growth in commodity, partially offset by volume decreases within other categories. Gross profit slightly decreased by 0.8% to $50.5 million for the quarter compared to $51 million in the prior year quarter. The decrease was primarily due to increased sales in lower margin products like seafood and an uptick in landed costs. Gross profit margin decreased to 16.2% for the quarter compared to 17.1% in the prior year quarter.

[Paul McGarry, CFO at HF Foods Group]

Distribution, selling, and administrative, or DS&A expenses decreased by $0.3 million to $49.5 million for the quarter, primarily due to decreases in professional fees and bad debt expense, partially offset by an increase in auto and truck expenses and depreciation. DS&A expenses decreased as a percentage of net revenue to 15.9% for the quarter compared to 16.7% in the prior year quarter. Adjusted EBITDA increased 3.8% to $10.1 million for the quarter compared to $9.8 million in the prior year quarter. Total interest expense increased slightly to $2.8 million for the quarter compared to $2.6 million in the prior year quarter. Net income attributable to HF Foods was $1.2 million for the quarter compared to a net loss of $1.6 million in the prior year quarter.

[Paul McGarry, CFO at HF Foods Group]

The quarter-over-quarter improvement was primarily due to strong revenue growth along with controlled cost oversight and a gain on sale of an asset. Adjusted net income attributable to HF Foods decreased $0.1 million to $3.4 million compared to $3.5 million in the prior year quarter. Earnings per share improved to $0.02 compared to a loss per share of $0.03 in the prior year quarter. Adjusted earnings per share decreased to $0.06 compared to $0.07 in the prior year quarter. Stepping back from the details, the quarter reinforces the business is progressing in a challenging cost environment. Our focus is now on execution, converting the transformation work we've completed into measurable operational gains, including purchasing discipline, route and warehouse efficiency, and tighter cost control as fuel and other input costs remain elevated.

[Paul McGarry, CFO at HF Foods Group]

As the systems foundation is now in place, we're moving from implementation to optimization while continuing to support organic growth through cross-selling and network capacity investments. We'll stay disciplined on capital deployment and remain selective on strategic tuck-in opportunities that strengthen the platform. With that, I'll now turn it back over to Felix.

[Felix Lin, President and CEO at HF Foods Group]

Thanks, Paul. As we look ahead to the remainder of 2026 and beyond, I want to emphasize our commitment to executing the comprehensive transformation initiatives that are reshaping HF Foods. 2025 was a year of strategic investment for HF, and the investments we're making in our facilities, digital infrastructure, and operations will establish a strong foundation for our next phase of growth. While short-term uncertainties persist, we remain focused on our long-term strategic objectives. Our investments in digital transformation and infrastructure are strategically designed to drive organic growth through cross-selling opportunities while positioning us to complement this expansion with targeted M&A initiatives. Our key competitive advantages stem from the growing demand for authentic Asian cuisine and our unmatched position as a leading nationwide Asian specialty distributor. We're methodically building the infrastructure, systems, and capabilities needed to fully capitalize on these strategic advantages.

[Felix Lin, President and CEO at HF Foods Group]

As we move forward, we'll continue to identify and implement additional efficiency measures while maintaining our commitment to service excellence and sustainable growth. Thank you for your continued support as we execute our strategic transformation. We look forward to sharing our progress with you on our next call. I'll now hand over to the operator for live Q&A.

[Operator]

The first question comes from the line of Aaron Grey with Alliance Global Partners. Please go ahead.

[Aaron Grey, Analyst at Alliance Global Partners]

Hi, good evening, and thank you very much for the questions. My first question from me. I just want to think about the gross margin and talk a bit more on it. Obviously, you guys have some headwinds right now given the macro backdrop and rising fuel prices. How do we think about the near to medium impact of that as we also think about potential offsets in terms of your own efficiency gains, particularly with the implementation of your ERP program? Thank you.

[Felix Lin, President and CEO at HF Foods Group]

Hey, Aaron. Yeah. I think in the short term, the elevated costs, as Paul had mentioned, is probably continue to persist here for a little bit. If we look at our business specifically, we talk about in the past, we operate very much in a spot market where we buy and sell everything from a spot standpoint versus contract. At least on a year-over-year comparisons, you know, as we get into second quarter, you know, we benefited last year from lower cost inventory as the tariffs were implemented.

[Felix Lin, President and CEO at HF Foods Group]

Going forward, we saw some of that higher cost coming through in the second half of 2025 that had continued on to Q1 of 2026, which again, we think that it's gonna be here for a little while, you know, in Q2 and maybe even Q3 of 2026 here. Internally, again, we're doing a lot of things trying to mitigate from an overall cost structure standpoint. A lot of the programs that we have implemented in place. One of the things we mentioned is the transaction to convert a lease to of a facility to something that we own today, which has cut down on our occupancy expense. Professionals fee has gone lower. Also the sales operation.

[Felix Lin, President and CEO at HF Foods Group]

You know, these are the things that we're actively working on trying to improve operational efficiency to make sure that overall, there's still gonna be this bottom line improvement that we're seeing year-over-year.

[Aaron Grey, Analyst at Alliance Global Partners]

Appreciate the color there, Felix. Second question from me. As we think about some of the headwinds with fuel prices obviously have an impact on you guys. You know, often we'll see these types of headwinds have an even bigger impact for smaller operators. Wondering if that's the case that you're seeing here and what impact that might have, maybe positively, on potential M&A targets who are more inclined to wanna partner with a larger operator with you. Just any impact on the broader competitive environment and if that's helping you in terms of potential M&A targets. Thank you.

[Felix Lin, President and CEO at HF Foods Group]

Yeah. We're definitely seeing, you know, the amount of inbound M&A calls tick up over the last several months or so. You know, as we talk about a lot of smaller players, you know, they're really being squeezed, whether it's from the elevated inventory costs or now from an operating cost standpoint with the added fuel costs. Over time, we do see that as an advantage. Similar to what we saw back in, you know, the pandemic days, where the operating environment becomes a lot tougher for the smaller players, and you have these family-owned businesses that generally, because of the pressure, are looking for an exit. That is a positive for us, and we're actively evaluating an increased level of activities and opportunities behind the scenes, for sure.

[Aaron Grey, Analyst at Alliance Global Partners]

Okay, thanks. Appreciate the detail. I'll go and jump back in the queue.

[Operator]

Thank you. Next question comes from the line of Daniel Scott Harriman with Sidoti & Company, LLC. Please go ahead.

[Daniel Scott Harriman, Analyst at Sidoti & Company]

Hey, Felix. Hey, Paul. Thanks so much for taking my questions, and congrats on the great quarter. Guys, I just kinda wanted to follow up on that prior question about gross margin and give you an opportunity to talk a little bit about Charlotte and what your expectations are longer term for gross margins and also DS&A, just as Charlotte comes online and some of your distribution routes shorten, maybe even within Seafood. I know the mix there was a cause of the gross margin contraction in the quarter.

[Daniel Scott Harriman, Analyst at Sidoti & Company]

Now that you've got Atlanta up and running and kinda like a cornerstone of your cross-selling strategy in the Southeast, I'm curious if you have any proof points you could share with us in terms of new accounts or expanded wallet share or even more SKUs to really help us understand what the long-term impact could be of that facility.

[Felix Lin, President and CEO at HF Foods Group]

Both the Charlotte facility and the Atlanta expansion facility, toward the end of last year, from a strategic investment standpoint, have very much been a center point of our cross-selling strategy. I talked about this previously in that in the Southeast, historically, we have not done a whole lot of frozen Seafood business. Given our scale, I think today, frozen Seafood as a product category is the largest of our mix at just over $400 million of top-line revenue on an annual basis. With shortened routes, with improved distribution efficiency, we do see that as significant leverage where we have over the smaller competitors, where we can be a lot more efficient, and that's gonna enable us to have better pricing power over those guys as well.

[Felix Lin, President and CEO at HF Foods Group]

Now we're just a few months into the year. With Atlanta specifically, we have opened up, you know, couple dedicated Seafood routes servicing our existing customers. With Charlotte, again, you know, the construction and the renovation of that facility have largely been complete. We've been just waiting on the permitting from the local government for months now. You know, the latest on that is we're expecting again toward the end of Q2 or beginning of Q3 for the permit to be finally approved and get that up and running. That should benefit us in the second half of the year.

[Daniel Scott Harriman, Analyst at Sidoti & Company]

Okay, great. That's really helpful, Felix. Thanks so much.

[Operator]

Thank you. Next question comes from the line of Bill Kirk with ROTH Capital Partners. Please go ahead.

[Bill Kirk, Analyst at ROTH Capital Partners]

Hey, good evening, everybody. Felix, on that higher fuel price conversation that, you know, you were doing earlier, have you seen any changes in foot traffic as a result? meaning maybe people leaving restaurants in favor of grocery or maybe, you know, switching into buffet style customers within restaurants. Are you seeing any foot traffic, you know, changes in kind of behavior because of higher fuel prices?

[Felix Lin, President and CEO at HF Foods Group]

Not in a material way. I think the foot traffic that we're seeing in Q1 of 2026 has been pretty consistent with what we've been seeing in the second half of 2025. Largely, the lower foot traffic is still limited to some of the larger buffet restaurants that we service throughout the country. Again, you know, with elevated fuel price, there are a number of things that we're doing. You know, every single market is different. Where in markets where we have a significant market share, for example, our Salt Lake business, where we have 80%, 90% of the market share, and it's a lot more rural routes that we're running, we're able to pass along a fairly good bit of the fuel increase.

[Felix Lin, President and CEO at HF Foods Group]

In other locations where there's high competitive pressure, again, over foot traffic play a role in that, and it's very limited opportunity where we can pass along the cost.

[Bill Kirk, Analyst at ROTH Capital Partners]

Okay. Is it fair to say then that, you know, for your customers, April foot traffic would be similar to 1Q?

[Felix Lin, President and CEO at HF Foods Group]

Yeah. I think April there's a lot of noise, right? You know April at least on the year-over-year comparison, you know, I talked about earlier with the tariff impact. Again, we were sitting on a lot of low-cost inventory last April, so we had a significant margin uptick because we were able to sell through that at a higher price. I think there's a lot of noise from a perspective of, you know, both increased fuel price this April and inventory costs at an elevated level. I think it's still a little bit too early for us to tell specifically through the entire month of April and for the rest of Q2, how much of the impact is gonna be due to tariff and how much of it is due to the elevated cost from a fuel perspective.

[Bill Kirk, Analyst at ROTH Capital Partners]

Got it. Thank you. My second question is on the refining of the sales force. Where are we in terms of that process? When we're on, you know, fully on the other side of that refinement, you know, how does the new sales force, you know, help HF and drive better, you know, customer acquisition or, you know, account penetration? You know, what's on the other side of the sales force refinement?

[Felix Lin, President and CEO at HF Foods Group]

Yeah. I think from a business stabilization standpoint, that has been largely complete, going through the Q1 of 2026. I think the rest of the year is really about, you know, additional training around new product SKUs that we're trying to introduce to the market. Specifically, as we talk about cross-selling of the Seafood product in the southeast. This is where, again, at the end of the day, we have over 20,000 SKUs, right? Specifically, for the southeast, there haven't been a significant amount of frozen Seafood sales in the past. That's a bit of a learning curve for the new sales force. I do expect them getting there in the second half of the year, and a lot of this volume offset is gonna come from pushing out Seafood here.

[Bill Kirk, Analyst at ROTH Capital Partners]

Excellent. Thank you. I'll pass it along.

[Operator]

Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Felix Lin for closing comments.

[Felix Lin, President and CEO at HF Foods Group]

First of all, thank you guys for, again, the continued support and paying attention to HF Foods. We are fully committed to what our long-term strategic plan is here, and we're executing on that plan quarter after quarter. I look forward to updating you guys on the progress here in the coming quarters ahead. Thank you.

[Operator]

Thank you. This concludes our today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Analysts

• Aaron Grey, Analyst at Alliance Global Partners
• Bill Kirk, Analyst at ROTH Capital Partners
• Daniel Scott Harriman, Analyst at Sidoti & Company
• Felix Lin, President and CEO at HF Foods Group
• Jon DeDomenico, VP of Investor Relations at ICR
• Paul McGarry, CFO at HF Foods Group