HF Foods plans major capacity expansion and sales force restructuring through 2026

Earnings Call Insights: HF Foods Group Inc. (HFFG) Q3 2025

MANAGEMENT VIEW

* CEO Xi Lin stated that net revenue increased 2.9% year-over-year to $307 million and gross profit grew 0.5% to $50.4 million, with adjusted EBITDA up 41.5% year-over-year to $11.7 million. Lin emphasized, "Our results reflect our continued discipline execution against our strategic initiatives and showcase the resilience of our business model. Despite ongoing macro challenges, including tariff pressures and shifts in consumer spending behaviors, our transformation initiatives are paving the way for continued growth and improvement throughout the business."
* Lin highlighted successful digital transformation milestones: "We've reached a major milestone on May 1 with the successful deployment of a new modern ERP application across our entire network. All of our locations are now offering on a single unified ERP platform... unlocking the full potential of our centralized purchasing capabilities over time."
* Strategic investments were noted, including the acquisition of a Chicago warehouse and ongoing renovations in Charlotte and Atlanta. Lin reported, "The cold storage capacity expansion in Atlanta is expected to double our capacity in the region and enable us to significantly increase frozen seafood sales to our existing customer base along the Eastern Seaboard."
* On M&A, Lin reiterated, "HF Foods is the only scaled food service provider in the Asian specialty market in the United States. And we believe we are the strategic acquirer of choice within our space."
* Lin announced a management change: "I'd like to welcome Paul McGarry, who is joining us on the first earnings call as interim CFO of HF Foods."
* Interim CFO Paul McGarry stated, "Net revenue for the third quarter increased 2.9% to $307 million from $298.4 million in the prior year quarter... Gross profit increased by 0.5% to $50.4 million... Adjusted EBITDA increased 41.5% to $11.7 million for the third quarter 2025 compared to $8.3 million in the prior year quarter."

OUTLOOK

* Lin shared, "Based on our current trends, we expect Q4 results to be similar to what we achieved in Q3. We remain extremely confident in our long-term growth strategy and are committed to our capital investment in growing our capacity as we continue building momentum for the rest of the year and into 2026."
* The CEO described the next phase: "With our operations unified on a single system, we now plan to restructure our sales operation which will reduce costs over time and further strengthen our competitive positioning. We expect the initiatives to kick off in the second half of Q4 2025 and run through the first part of Q1 2026."

FINANCIAL RESULTS

* McGarry detailed that net revenue increased 2.9% to $307 million, gross profit rose to $50.4 million, and adjusted EBITDA reached $11.7 million. Gross profit margin was 16.4%. Distribution, selling and administrative expenses decreased by $0.4 million to $49.3 million, and as a percentage of net revenue, dropped to 16.1%. Income from operations was $1.1 million. Total interest expense was $2.9 million. Net loss was ($0.9 million), improved from a loss of ($3.8 million) in the prior year quarter. Adjusted net income was $4.3 million. Loss per share was ($0.02), and adjusted earnings per share was $0.08.
* McGarry summarized: "Our third quarter results demonstrate the effectiveness of our strategic transformation initiatives and operational discipline in driving meaningful progress across our business."

Q&A

* William Kirk, ROTH Capital Partners: Asked about capacity increases in 2026 and M&A impact. Lin responded, "For Atlanta, we talk about cold storage, it's effectively going to double our capacity in the Atlanta market. So we're moving from a 100,000 square feet warehouse to roughly about 190,000 square feet warehouse in that market."
* Kirk queried sales force restructuring and cost savings. Lin noted, "This is really more of an efficiency play. So over time, we'll have better control over pricing strategy, promotion with our broader program here in the future... I do expect going through the end of 2025 and certainly, midpoint through the Q1 2026 everything should get normalized here for us."
* Kirk followed up on monthly cadence in Q3 and potential government shutdown impacts. Lin explained, "Beginning of Q3, we saw it continue to be a little bit softer, but it rebounded nicely towards the end of Q3... the shutdown have impacted volume and foot traffic in that selected market. But overall, going through the entirety of 2025, I think the team has done a really good job."
* Daniel Harriman, Sidoti & Company: Asked about maintenance CapEx and organic growth ramp-up. Lin answered, "Our typical maintenance CapEx budget probably fluctuate between $10 million to $15 million a year... In '26, I think CapEx might be a little bit higher just given the fact that we announced the strategic acquisition of our Chicago warehouse."
* Harriman: Asked about timing of organic growth. Lin said, "I do believe that '26 is going to be the first year there will be some incremental volume gains, specifically with respect to frozen seafood in the Atlanta and Southeast market."

SENTIMENT ANALYSIS

* Analyst sentiment was neutral, with questions focusing on capacity, cost savings, and investment timelines. Direct praise was offered: "Congratulations on the continued progress."
* Management maintained a confident tone throughout, emphasizing resilience and long-term strategy. Lin stated, "We remain extremely confident in our long-term outlook."
* Compared to the previous quarter, management’s confidence remained steady, with a continued focus on transformation and discipline. Analyst tone shifted from broader macro concerns to more execution-specific queries this quarter.

QUARTER-OVER-QUARTER COMPARISON

* Q3 saw a moderation in net revenue and gross profit compared to Q2, which had record highs. Adjusted EBITDA, however, showed significant year-over-year improvement. Guidance language remained similar, with management reiterating ongoing investment and operational discipline.
* The strategic focus shifted slightly from digital transformation implementation (ERP rollout in Q2) to operational efficiencies and sales force restructuring in Q3.
* Analysts in Q3 focused more on operational execution and near-term impacts (government shutdown, restructuring), differing from the broader growth and market share concerns of Q2.
* Management’s confidence and long-term outlook stayed consistent, while analysts' questions became more targeted toward execution and tangible outcomes.

RISKS AND CONCERNS

* CEO Lin acknowledged ongoing macro challenges, "including tariff pressures and shifts in consumer spending behaviors."
* Lin addressed lower foot traffic in line with industry trends, with select markets offsetting the decline.
* The risk of government shutdowns was specifically cited as impacting volume and foot traffic in certain markets, such as Richmond, Virginia.
* Management cited strategic inventory management, alternative sourcing, and proactive pricing as mitigation measures.

FINAL TAKEAWAY

HF Foods Group reported solid third quarter results with continued progress in strategic transformation initiatives and operational discipline. Management remains focused on expanding capacity, restructuring sales operations, and investing in infrastructure to drive long-term organic growth and M&A opportunities. Despite macroeconomic challenges and selective market headwinds, the company expresses strong confidence in its growth trajectory heading into 2026, supported by ongoing investments and efficiency improvements.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/hffg/earnings/transcripts]

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* HF Foods Group Inc. (HFFG) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4841523-hf-foods-group-inc-hffg-q3-2025-earnings-call-transcript]
* HF Foods: Weathering Tariffs And Slowing Asian Restaurant Traffic [https://seekingalpha.com/article/4814557-hf-foods-weathering-tariffs-slowing-asian-restaurant-traffic]
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* Seeking Alpha’s Quant Rating on HF Foods Group [https://seekingalpha.com/symbol/HFFG/ratings/quant-ratings]
* Historical earnings data for HF Foods Group [https://seekingalpha.com/symbol/HFFG/earnings]