Q1 2025 HF Foods Group Inc Earnings Call - Pre Recorded
With me today on today's call are Felix Wayne, the company's President and Chief Executive Officer, and Cindy out the company's Chief Financial Officer by now everyone should have access to the earnings release for the period ending March 31, 2025 that went out on Monday May 12 at approximately 405 P M Eastern time.
The press release is accessible on the company's website at investors thought H F Foods group Dotcom.
Speaker Change: 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 H F foods earnings release as well as the company's most recent SEC filings you will see.
Speaker Change: For 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.
Speaker Change: The company undertakes no obligation to update or revise these forward looking statements in the future.
Speaker Change: In these remarks, the company will make several references to non-GAAP financial measures, including adjusted EBITDA. We believe that these measures provide investors with the 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.
Speaker Change: Measures.
Felix: Now I will turn the call over to Felix.
Felix: Hello, everyone and welcome to HFF Foods first quarter earnings call.
Felix: Business update and Cindy will speak about our first quarter, a 2025 financial results.
Felix: Following a strong finish of 'twenty 'twenty four I am pleased to report that we have to carry our momentum into the first quarter 'twenty 'twenty five.
Felix: Net revenue increased 0.9% year over year, despite one fewer day of operations in the first quarter 2025.
Felix: Adjusted EBITDA increased 12, 3% year over year to $9 8 million.
Felix: It is also worth noting like many others in the foodservice space, we saw a relatively slow February driven mainly by macro uncertainty.
Felix: Which was then offset by a very strong March so far we have seen this momentum carry through into April which gives us confidence in our 2025 performance.
Felix: Our results in the first quarter reflects continued discipline.
Felix: Execution against our strategic initiatives, even amid a dynamic and uncertain macro environment characterized by new terrorist persistent inflationary pressures and shifting consumer spending behaviors.
Felix: Delivering positive net revenue growth and significant adjusted EBITDA growth under these conditions demonstrates the resilience of our business model and strength of our operational focus.
Felix: The industry continues to face macro headwinds.
Particularly the uncertainty as a result of new tariff policy and related supply chain disruption in response to the evolving tariff landscape.
Felix: We have been actively diversifying our supplier base and exploring alternative sourcing strategies to ensure continuity and cost effectiveness in our supply chain.
Felix: We are encouraged by our performance in the first quarter and a solid foundation with Bill.
Felix: We remain extremely optimistic in our long term plan and we aim to continue the momentum we've built for the rest of the year.
Felix: Our digital transformation initiatives reached a major milestone on mace versus when we successfully completed the implementation of a new ERP application across our entire network.
Felix: All of our locations are now operating on a single modern ERP platform.
Felix: This unified system will help us to achieve breakthrough levels of efficiency visibility and control across our operations unlocking the full potential of our centralized purchasing capabilities and enabling more data driven decision, making throughout the organization.
Felix: In parallel with the ERP rollout, we launch our new E Commerce platform at our Utah, North Carolina, Florida, Dc's. This new platform, which is designed specifically for foodservice customers and distributors will enable restaurant employees and owners to directly purchase Hff's foods.
Felix: <unk> authentic high quality specialty products using the same delivery infrastructure already serving their restaurants.
Felix: This model Leverages <unk> established global network of suppliers and robust distribution infrastructure to offer a cost efficient value at a channel and a seamless digital experience.
Felix: Together these initiatives represent a strategically for.
Felix: We're confident they will serve as powerful catalyst for margin expansion improved service levels for our customers and long term operational excellence.
Our strategic facility enhancement initiatives continued to advance across multiple regions. We're on track to complete renovations at our Charlotte distribution center by the end of Q2 2025, we continue to make steady progress on our Atlanta State of the art facility project, which we expect will create meaningful organic.
Felix: <unk> opportunities from a cross selling perspective.
Felix: These infrastructure investments reflect our ongoing commitment to optimize our distribution network and creating a stronger foundation for sustainable growth.
<unk> foods is the only scale foodservice provider in Asia specialty market in the United States and we believe we are in a strategic acquirer of choice within our space.
M&A remains a core pillar of our growth strategy.
Felix: 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: We remain disciplined but optimistic about M&A opportunities in 2025 and beyond.
Sandy: Now over to you Sandy.
Sandy: Thanks Felix.
Speaker Change: I'll now review our results for the first quarter ending March 31st 2025 versus the same period in 2024.
Speaker Change: Net revenue for the first quarter increased <unk>, 9% to $98 4 million from $295 7 million in the prior year quarter.
Speaker Change: The increase was primarily attributable to volume increases and the improved pricing in our commodity meat poultry and seafood categories.
Speaker Change: Gross profit increased by one 1% to 51 million for the quarter compared to $50 4 million in the same period in 2020 for the.
Speaker Change: The increase was primarily attributable to an increase in margins in commodities and a seafood during the quarter gross profit margin of 17, 1% remained consistent with the same period in 2024.
Speaker Change: Distribution, selling and administrative expenses decreased by <unk> 7 million to $49 7 million for the first quarter.
Speaker Change: Primarily due to the company's efforts in reducing professional fees.
Speaker Change: As mentioned last quarter, we have identified strategic cost optimization opportunities across T spending categories.
Speaker Change: I realize there's some DSA costs the benefit during Q1.
Speaker Change: We also finalized our comprehensive plan to reduce cash DSA expenses by 3% to 5% by the end of 2025, while preserving our core growth initiatives.
Speaker Change: Operating income for the first quarter of 2025 was $1 2 million.
Speaker Change: Compared to operating loss of zero point $1 million in the prior year quarter the increase in income.
Speaker Change: Driven by the increase in the net revenue and a decrease in distribution selling and administrative expenses.
Speaker Change: Okay.
Speaker Change: Total interest expense decreased slightly to $2 7 million for the first quarter of 2025 compared to $2 8 million in the prior year quarter.
Speaker Change: Net loss of one 5 million increase compared to net loss of 0.6 million for the prior year quarter. The.
Speaker Change: The increase was primarily driven by an unfavorable change of approximately $3 2 million in the fair market value of interest rate swaps.
Speaker Change: Adjusted EBITDA increased to $9 8 million for the first quarter of 2025 compared to $8 7 million in the prior year quarter.
Speaker Change: Reflecting a 12% increase.
Speaker Change: This was mainly due to the decrease in BSA expenses, along with an increase in gross profit.
Felix: Thank you and back over to you Felix.
Felix: As we look ahead to 2025 and beyond I want to emphasize our commitment to executing the comprehensive transformation initiatives that are reshaping HSV.
Felix: 2025 is a good strategic investment for Hs and the investments, we're making in our facilities digital infrastructure and operations will establish a strong foundation for our next phase of growth.
Felix: While short term uncertainties persist we remain focus on our long term strategic objectives.
Felix: Our investments in digital transformation and infrastructure, our strategically designed to drive organic growth through cross selling opportunities while positioning us to complement this expansion with targeted M&A initiatives are.
Felix: Our key competitive advantages stem from the growing demand for it.
Felix: <unk> cuisine, and our unmatched position as a leading nationwide Asian specialty distributor.
Felix: We are methodically building the infrastructure systems and capabilities needed to fully capitalize on these strategic advantages as we move forward.
Felix: We'll continue to identify and implement additional efficiency measures, while maintaining our commitment to service excellence and sustainable growth. Thank.
Felix: 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.