HF Foods Group Inc.

Previous wording

•Centralized Purchasing: We began the roll out of our centralized purchasing program with seafood and poultry products and have yielded positive results with respect to margin expansion for the product category. We are now focusing on expanding the program to other categories.

Current wording

•Centralized Purchasing: We continue the roll out of our centralized purchasing program with seafood and poultry products and have yielded positive results with respect to margin expansion for the product category. We are now focusing on expanding the program to other categories.

Previous wording

•Facility Upgrades: We are reorganizing and upgrading some of our facilities and distribution centers to efficiently streamline costs, and to capitalize on cross-selling opportunities with both new and existing customers.

Current wording

•Facility Upgrades: We continue reorganizing and upgrading some of our facilities and distribution centers to efficiently streamline costs, and to capitalize on cross-selling opportunities with both new and existing customers.

Previous wording

Net revenue for the three months ended June 30, 2025 increased by $12.5 million, or 4.1%, compared to the same period in 2024. The increase was primarily attributable to volume increases and improved pricing in Meat & Poultry and Seafood, offset by a slight decrease in volume within other categories.

Current wording

Net revenue for thethree months ended September 30, 2025 increased by $8.6 million, or 2.9%, compared to the same period in 2024. The increase was primarily attributable to volume increases and improved pricing in Meat & Poultry and Seafood, offset by a slight decrease in volume within other categories.

Previous wording

Gross profit was $55.1 million forthree months ended June 30, 2025 compared to $52.5 million in the same period in 2024, an increase of $2.7 million, or 5.1%. The increase was primarily attributable to an increase in volume and improved pricing in Meat & Poultry and Seafood during the quarter. Gross profit margin for thethree months ended June 30, 2025 of 17.5% remained consistent compared to 17.4% in the same period in 2024.

Current wording

Gross profit was $50.4 million for three months ended September 30, 2025 compared to $50.2 million in the same period in 2024, an increase of $0.2 million, or 0.5%. The increase was primarily attributable to an increase in volume and improved pricing during the quarter. Gross profit margin for the three months ended September 30, 2025 of 16.4% remained relatively consistent compared to 16.8% in the same period in 2024 due to an increased proportion of sales from lower margin products, particularly Seafood.

Previous wording

Distribution, selling and administrative expenses increased by $1.2 million, or 2.4%, to $51.0 million, for the three months ended June 30, 2025. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.2% for the three months ended June 30, 2025 from 16.5% in the same period in 2024, primarily due to increased net revenue and lower professional fees, partially offset by increased payroll, rental and other expenses.

Current wording

Distribution, selling and administrative expenses decreased by $0.4 million, or 0.7%, to $49.3 million, for the three months ended September 30, 2025. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.1% for the three months ended September 30, 2025 from 16.6% in the same period in 2024, primarily due to increased net revenue and lower personnel, professional and insurance costs, partially offset by increased rental, occupancy and other expenses.

Previous wording

Interest expense for the three months ended June 30, 2025 of $2.8 million decreased slightly compared to $3.1 million for the three months ended June 30, 2024. Average floating interest rates on our floating-rate debt for the three months ended June 30, 2025 decreased by approximately 1.0% on our line of credit and 1.0% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2024. Our average daily line of credit balance increased by $2.8 million, or 4.9%, to $53.6 million for the three months ended June 30, 2025 from $56.4 million for the three months ended June 30, 2024, and our average daily JPMorgan Chase mortgage-secured term loan balance decreased by $5 million, or 4.9%, to $99.2 million for the three months ended June 30, 2025 from $104.2 million for the three months ended June 30, 2024.

Current wording

Interest expense for the three months ended September 30, 2025 of $2.9 million increased slightly compared to $2.6 million for the three months ended September 30, 2024. Average floating interest rates on our floating-rate debt for the three months ended September 30, 2025 decreased by approximately 1.0% on our line of credit and 1.0% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2024. Our average daily line of credit balance decreased by $0.2 million, or 0.3%, to $61.5 million for the three months ended September 30, 2025 from $61.7 million for the three months ended September 30, 2024, and our average daily JPMorgan Chase mortgage-secured term loan balance decreased by $5.1 million, or 5.0%, to $97.9 million for the three months ended September 30, 2025 from $103.0 million for the three months ended September 30, 2024.

Previous wording

Net income attributable to HF Foods Group, Inc. was $1.2 million for the three months ended June 30, 2025, compared to net income of $17.0 thousand for the three months ended June 30, 2024. The improvement was primarily driven by an increase in income from operations of $1.5 million compared to the prior year period; however, the prior year’s results included a one time gain from lease guarantee income offset by an SEC settlement, which did not recur in the current year, thereby partially offsetting the year-over-year improvement.

Current wording

Net loss attributable to HF Foods Group, Inc. was $1.1 million for the three months ended September 30, 2025, compared to net loss of $3.9 million for the three months ended September 30, 2024. The improvement was primarily driven by an increase in income from operations of $0.6 million compared to the prior year period and a decrease in change in fair value of interest rate swap contracts by $3.2 million compared to 2024.

Previous wording

The following table sets forth a summary of our consolidated results of operations for the six months ended June 30, 2025 and 2024. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

Current wording

The following table sets forth a summary of our consolidated results of operations for the nine months ended September 30, 2025 and 2024. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

Previous wording

Net revenue for the six months ended June 30, 2025 increased by $15.3 million, or 2.6%, compared to the same period in 2024. This increase was primarily attributable to volume growth and improved pricing in Commodity, Meat & Poultry and Seafood, partially offset by decrease in volume within other categories.

Current wording

Net revenue for thenine months ended September 30, 2025 increased by $23.9 million, or 2.7%, compared to the same period in 2024. This increase was primarily attributable to volume growth and improved pricing in Commodity, Meat & Poultry and Seafood, partially offset by decrease in volume within other categories.

Previous wording

Gross profit was $106.1 million for the six months ended June 30, 2025 compared to $102.9 million in the same period in 2024, an increase of $3.2 million, or 3.1%. The gross profit increase was primarily attributable to increased net revenue partially offset by increased costs. Gross profit margin for the six months ended June 30, 2025 slightly increased to 17.3% compared to 17.2% in the same period in 2024.

Current wording

Gross profit was $156.5 million for the nine months ended September 30, 2025 compared to $153.0 million in the same period in 2024, an increase of $3.5 million, or 2.3%. The gross profit increase was primarily attributable to increased net revenue partially offset by increased costs. Gross profit margin for the nine months ended September 30, 2025 slightly decreased to 17.0% compared to 17.1% in the same period in 2024.

Previous wording

Distribution, selling and administrative expenses of $100.8 million for the six months ended June 30, 2025 slightly increased compared to prior year expenses of $100.3 million primarily due to an increase in payroll and related labor costs, partially offset by a decrease in professional fees. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.4% for the six months ended June 30, 2025 from 16.8% in the same period in 2024, primarily due to lower professional fees and increased net revenue, partially offset by increased payroll and related labor costs and insurance costs.

Current wording

Distribution, selling and administrative expenses of $150.1 million for the nine months ended September 30, 2025 slightly increased compared to prior year expenses of $150.0 million primarily due to an increase in rental, occupancy and delivery expense, partially offset by a decrease in professional and insurance fees and travel and entertainment costs. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.3% for the nine months ended September 30, 2025 from 16.7% in the same period in 2024, primarily due to increased revenue and lower professional fees, partially offset by increased rental, occupancy and delivery costs.

Previous wording

Interest expense for the six months ended June 30, 2025 decreased by $0.5 million or 8.9%, compared to the six months ended June 30, 2024, primarily due to a decrease in our average daily JPMorgan Chase mortgage-secured term loan balance of $5.1 million, partially offset by an increase in our average daily line of credit balance of $0.6 million combined with a slightly lower interest-rate environment. Average floating interest rates on our floating-rate debt for the six months ended June 30, 2025 decreased by approximately 1.0% on the line of credit and 1.0% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2024. Our average daily line of credit balance increased by $0.6 million, or 1.2%, to $51.2 million for the six months ended June 30, 2025 from $50.6 million for the six months ended June 30, 2024, and our average daily JPMorgan Chase mortgage-secured term loan balance decreased by $5.1 million, or 4.9%, to $99.8 million for the six months ended June 30, 2025 from $104.9 million for the six months ended June 30, 2024.

Current wording

Interest expense for the nine months ended September 30, 2025 decreased by $0.2 million or 2.7%, compared to the nine months ended September 30, 2024, primarily due to a decrease in our average daily JPMorgan Chase mortgage-secured term loan balance of $5.1 million, partially offset by an increase in our average daily line of credit balance of $0.3 million combined with a slightly lower interest-rate environment. Average floating interest rates on our floating-rate debt for the nine months ended September 30, 2025 decreased by approximately 1.0% on the line of credit and 1.0% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2024. Our average daily line of credit balance increased by $0.3 million, or 0.6%, to $54.6 million for the nine months ended September 30, 2025 from $54.3 million for the nine months ended September 30, 2024, and our average daily JPMorgan Chase mortgage-secured term loan balance decreased by $5.1 million, or 4.9%, to $99.1 million for the nine months ended September 30, 2025 from $104.2 million for the nine months ended September 30, 2024.

Previous wording

Income tax benefit was $411 thousand for the six months ended June 30, 2025, compared to and income tax expense of $1.4 million for the six months ended June 30, 2024. The change was primarily driven by an increase in loss before income taxes in the current period, as well as discrete items related to the SEC settlement and stock-based compensation shortfalls that impacted the tax provision for the period ended June 30, 2024.

Current wording

Income tax benefit was $1.2 million for the nine months ended September 30, 2025, compared to the income tax expense of $0.2 million for the nine months ended September 30, 2024. The change was primarily driven by the SEC settlement that impacted the tax provision for the period ended September 30, 2024.

Previous wording

Net loss attributable to HF Foods Group Inc. was $0.4 million for the six months ended June 30, 2025, compared to net loss of $0.7 million for the six months ended June 30, 2024. The improvement of $0.2 million was primarily driven by an increase in income from operations of $2.7 million compared to the prior year period; however, the prior year’s results included a one time gain from lease guarantee income offset by an SEC settlement, which did not recur in the current year, thereby partially offsetting the year-over-year improvement.

Current wording

Net loss attributable to HF Foods Group Inc. was $1.5 million for the nine months ended September 30, 2025, compared to net loss of $4.6 million for the nine months ended September 30, 2024. The improvement of $3.1 million was primarily driven by an increase in income from operations of $3.3 million compared to the prior year period; however, the prior year’s results included a one time gain from lease guarantee income offset by an SEC settlement within other expense, which did not recur in the current year, thereby partially offsetting the year-over-year improvement.

Previous wording

As of June 30, 2025, we had cash of approximately $15.7 million, checks issued not presented for payment of $7.0 million and access to approximately $57.8 million in additional funds through our $125.0 million line of credit, subject to a borrowing base calculation. We have funded working capital and other capital requirements primarily by cash flow from operations and bank loans. Cash is required to pay purchase costs for inventory, salaries, fuel and trucking expenses, selling expenses, rental expenses, income taxes, other operating expenses and to service debts.

Current wording

As of September 30, 2025, we had cash of approximately $12.3 million, checks issued not presented for payment of $2.1 million and access to approximately $49.8 million in additional funds through our $125.0 million line of credit, subject to a borrowing base calculation. We have funded working capital and other capital requirements primarily by cash flow from operations and bank loans. Cash is required to pay purchase costs for inventory, salaries, fuel and trucking expenses, selling expenses, rental expenses, income taxes, other operating expenses and to service debts.

Previous wording

The following table summarizes cash flow data for the three months ended June 30, 2025 and 2024:

Current wording

The following table summarizes cash flow data for the nine months ended September 30, 2025 and 2024:

Previous wording

Net cash provided by operating activities consists primarily of net income adjusted for non-cash items, including depreciation and amortization, changes in deferred income taxes and others, and includes the effect of working capital changes. Net cash provided by operating activities increased by $8.5 million primarily due to an increase in non-cash expense add-backs, offset by the timing of working capital outlays mainly for inventory purchases to counter potential tariff increases.

Current wording

Net cash provided by operating activities consists primarily of net income (loss) adjusted for non-cash items, including depreciation and amortization, changes in deferred income taxes and others, and includes the effect of working capital changes. Net cash provided by operating activities increased by $0.3 million primarily due to an increase in non-cash expense add-backs, offset by the timing of working capital outlays mainly for inventory purchases to counter potential tariff increases.

Previous wording

Net cash used in investing activities increased by $0.3 million primarily due to increased capital project spend in the six months ended June 30, 2025.

Current wording

Net cash used in investing activities increased by $0.4 million primarily due to increased capital project spend in the nine months ended September 30, 2025.

Previous wording

Net cash used in financing activities decreased by $5.8 million to $2.7 million during the six months ended June 30, 2025 primarily due to the lower overall net proceeds from line of credit activity for the six months ended June 30, 2025 as compared the six months ended June 30, 2024.

Current wording

Net cash used in financing activities increased by $1.8 million to $3.2 million during the nine months ended September 30, 2025 primarily due to the higher overall net proceeds from line of credit activity for the nine months ended September 30, 2025 as compared the nine months ended September 30, 2024.

Previous wording

We have prepared the financial information in this Quarterly Report in accordance with GAAP. Preparing our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during these reporting periods. We base our estimates and judgments on historical experience and other factors we believe are reasonable under the circumstances. These assumptions form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2024 Annual Report on Form 10-K includes a summary of the critical accounting policies and estimates we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies and estimates that have had a material impact on our reported amounts of assets, liabilities, revenue, or expenses during the six months ended June 30, 2025.

Current wording

We have prepared the financial information in this Quarterly Report in accordance with GAAP. Preparing our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during these reporting periods. We base our estimates and judgments on historical experience and other factors we believe are reasonable under the circumstances. These assumptions form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the 2024 Annual Report on Form 10-K includes a summary of the critical accounting policies and estimates we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies and estimates that have had a material impact on our reported amounts of assets, liabilities, revenue, or expenses during the nine months ended September 30, 2025.

Previous wording

As a result of continued declines in the level of stock price, the Company performed a quantitative goodwill impairment assessment as of December 31, 2024. The results of the testing as of December 31, 2024, concluded that the estimated fair value of the reporting unit fell short of carrying value, and therefore impairment existed as of that date. A goodwill impairment charge of $46.3 million was recorded during the fourth quarter of the year ended December 31, 2024.

Current wording

The Company’s annual goodwill impairment assessment is performed as of December 31. As a result of continued declines in the level of stock price, the Company performed a quantitative goodwill impairment assessment as of December 31, 2024. The results of the testing as of December 31, 2024, concluded that the estimated fair value of the reporting unit fell short of carrying value, and therefore impairment existed as of that date. A goodwill impairment charge of $46.3 million was recorded during the fourth quarter of the year ended December 31, 2024.

Previous wording

For the December 31, 2024 impairment test, we used a combination of discounted cash flow (“DCF”) model and market approaches, such as public company comparable analysis and comparable acquisitions analysis to determine fair value of the reporting unit. The income approach and market approaches were weighted equally to estimate fair value. The income approach requires detailed forecasts of cash flows, including significant assumptions such as revenue growth rates, gross profit margins, distribution, selling and administrative expenses, among other assumptions, and an estimate of weighted-average cost of capital which we believe approximate the assumptions from a market participant’s perspective. The market approaches are primarily impacted by an enterprise value multiple of EBITDA. These estimates incorporate many uncertain factors which could be impacted by changes in market conditions, interest rates, growth rate, tax rates, costs, customer behavior, regulatory environment and other macroeconomic changes. In addition, we considered the reasonableness of the fair value of the reporting unit by assessing the implied enterprise value control premium based on our market capitalization and also considered the lack of liquidity in the Company’s common stock. The Company’s common stock is fairly thinly traded, with a higher level of internal stockholders than its peers, and no major analyst coverage. As a result, the implied value from the traded stock price is based on limited investment public interest. Our market capitalization is calculated using the number of common shares outstanding and common stock publicly traded price. We determined that the implied control premium was reasonable which corroborates our fair value estimates. We categorize the fair value determination as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs.

Current wording

For the December 31, 2024 impairment test, we used a combination of discounted cash flow (“DCF”) model and market approaches, such as public company comparable analysis and comparable acquisitions analysis to determine fair value of the reporting unit. The income approach and market approaches were weighted equally to estimate fair value. The income approach requires detailed forecasts of cash flows, including significant assumptions such as revenue growth rates, gross profit margins, distribution, selling and administrative expenses, among other assumptions, and an estimate of weighted-average cost of capital which we believe approximate the assumptions from a market participant’s perspective. The market approaches are primarily impacted by an enterprise value multiple of EBITDA. These estimates incorporate many uncertain factors which could be impacted by changes in market conditions, interest rates, growth rate, tax rates, costs, customer behavior, regulatory environment and other macroeconomic changes. In addition, we considered the reasonableness of the fair value of the reporting unit by assessing the implied enterprise value control premium based on our market capitalization and also considered the lack of liquidity in the Company’s common stock. The Company’s common stock is fairly thinly traded, with a higher level of internal stockholders than its peers, and limited equity analyst coverage. As a result, the implied value from the traded stock price is based on limited investment public interest. Our market capitalization is calculated using the number of common shares outstanding and common stock publicly traded price. We determined that the implied control premium was reasonable which corroborates our fair value estimates. We categorize the fair value determination as Level 3 in the fair value hierarchy due to its use of internal projections and unobservable measurement inputs.

Previous wording

The Company determined that there were no events or circumstances during the six months ended June 30, 2025 that would more likely than not reduce the fair value of the reporting unit below its carrying value.

Current wording

As of September 30, 2025, the Company determined that there were no events or circumstances that would more likely than not reduce the fair value of the reporting unit below its carrying value. Management considered the decrease in the Company’s share price around September 30, 2025 and concluded this was primarily attributable to market reactions and higher-than normal trade volumes caused by potential dilution related to the Company’s announcement of a $100 million At the Market (“ATM”) equity offering on September 25, 2025. We believe that due to the Company’s normally low trading volume, this creates higher volatility and fluctuations in stock price, and such a decline is not considered a sustained decline as of September 30, 2025.