HF Foods Group Inc.

Previous wording

To position the business for long-term success, starting in 2024, we initiated a comprehensive, operational transformation plan in an effort to drive growth and cost savings. Our transformation is focused on four key areas, each of which we expect will positively impact future growth or cost savings. The components of our transformation were as follows:

Current wording

To position the business for long-term success, starting in 2024, we initiated a comprehensive, operational transformation plan in an effort to drive growth and cost savings. Our transformation is focused on four key areas, each of which we expect will positively impact future growth or cost savings. The components of our transformation are as follows:

Previous 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.

Current wording

•Centralized Purchasing: Now that we’ve rolled out our centralized purchasing program with seafood and poultry products and have yielded positive results with respect to margin expansion for the product categories, we are now focusing on expanding the program to other categories such as commodities.

Previous wording

•Fleet and Transportation: We have established a national fleet maintenance program. Within this, we have defined new truck specifications, initiated a replacement program for 50% of our current fleet, implemented a national fuel savings program to maximize efficiency, and plan to outsource domestic inbound freight logistics to a third-party partner to adopt a cohesive national approach to our supply chain. This is expected to deliver substantial improvements to our transportation system moving forward.

Current wording

•Fleet and Transportation: We have established a national fleet maintenance program that standardizes truck specifications across the organization. As part of this initiative, nearly 50% of our fleet is enrolled in national third-party fleet maintenance provider programs, ensuring consistent preventive maintenance, improved vehicle reliability, and reduced downtime. We have also launched a fleet replacement program for 50% of our current vehicles, implemented a national fuel savings initiative to maximize operating efficiency, and plan to outsource domestic inbound freight logistics to a third-party provider to create a more cohesive national supply chain. Collectively, these initiatives are expected to deliver significant improvements in the efficiency, reliability, and overall performance of our transportation network.

Previous wording

Net revenue for the three months ended March 31, 2026 increased by $13.6 million, or 4.5%, compared to the same period in 2025. The increase was primarily due to volume growth and pricing improvement in Seafood followed by volume growth for Commodity.

Current wording

Net revenue for the three months ended June 30, 2026 increased by $8.9 million, or 2.8%, compared to the same period in 2025. The increase was primarily due to volume growth and pricing improvement in Seafood followed by volume growth in Commodity, partially offset by price decreases in Meat & Poultry.

Previous wording

Gross profit was $50.5 million for three months ended March 31, 2026 compared to $51.0 million in the same period in 2025, a decrease of $0.4 million, or 0.8%. The decrease was primarily due to increased sales in lower margin products like Seafood and an uptick in landed costs. Gross profit margin for the three months ended March 31, 2026 of 16.2% declined compared to 17.1% in the same period in 2025.

Current wording

Gross profit was $55.0 million for the three months ended June 30, 2026 compared to $55.1 million in the same period in 2025, a decrease of $0.1 million, or 0.2%. The gross profit decreased across most categories due to additional tariffs effective beginning in the third quarter of 2025. The decrease was partially offset by the IEEPA tariff refund received during the quarter. Gross profit margin for the three months ended June 30, 2026 of 17.0% declined compared to 17.5% in the same period in 2025.

Previous wording

Interest expense for the three months ended March 31, 2026 of $2.8 million increased slightly compared to $2.6 million for the three months ended March 31, 2025. Average floating interest rates on our floating-rate debt for the three months ended March 31, 2026 decreased by approximately 0.6% on our line of credit and 0.6% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2025. Our average daily line of credit balance increased by $8.0 million, or 16.4%, to $56.7 million for the three months ended March 31, 2026 from $48.7 million for the three months ended March 31, 2025, and our average daily JPMorgan Chase mortgage-secured term loan balance decreased by $6.7 million, or 6.7%, to $93.7 million for the three months ended March 31, 2026 from $100.4 million for the three months ended March 31, 2025.

Current wording

Interest expense for the three months ended June 30, 2026 of $2.9 million increased slightly compared to $2.8 million for the three months ended June 30, 2025. Average floating interest rates on our floating-rate debt for the three months ended June 30, 2026 decreased by approximately 0.3% on our line of credit and 0.7% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2025. Our average daily line of credit balance increased by $12.1 million, or 22.6%, to $65.7 million for the three months ended June 30, 2026 from $53.6 million for the three months ended June 30, 2025, and our average daily JPMorgan Chase mortgage-secured term loan balance decreased by $8.2 million, or 8.3%, to $91.0 million for the three months ended June 30, 2026 from $99.2 million for the three months ended June 30, 2025.

Previous wording

Income tax benefit was $0.4 million for the three months ended March 31, 2026, compared to an income tax benefit of $0.9 million for the three months ended March 31, 2025, primarily due to an increase in income before income taxes, partially offset by investment tax credits.

Current wording

Income tax expense was $0.2 million for the three months ended June 30, 2026, compared to an income tax expense of $0.5 million for the three months ended June 30, 2025. The decrease in income tax expense was primarily due to investment tax credits recognized during the period, partially offset by higher income before income taxes.

Previous wording

Net income attributable to HF Foods Group, Inc. was $1.2 million for the three months ended March 31, 2026, compared to net loss of $1.6 million for the three months ended March 31, 2025. The improvement was primarily driven by gain on sale of Utah building and positive change in fair value of interest rate swap contracts by $2.0 million compared to 2025.

Current wording

Net income attributable to HF Foods Group, Inc. was $2.6 million for the three months ended June 30, 2026, compared to net income of $1.2 million for the three months ended June 30, 2025. The improvement was primarily driven by recognition of $1.8 million employee retention credit including interest, the IEEPA tariff refund of $1.1 million, and a positive change in fair value of interest rate swap contracts by $1.4 million compared to 2025. These favorable variances were partially offset by $1.3 million decrease in income from operations and $0.7 million year-over-year change in net income attributable to noncontrolling interests.

Previous wording

(2) Includes the gain recognized on the sale of the Utah facility in 2026 and legal and consulting expenses incurred in connection with various corporate projects and other strategic initiatives.

Current wording

(2) Includes legal and consulting expenses incurred in connection with various corporate projects and other strategic initiatives.

Previous wording

As of March 31, 2026, we had cash of approximately $11.1 million, checks issued not presented for payment of $5.0 million and access to approximately $55.2 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 June 30, 2026, we had cash of approximately $18.1 million, checks issued not presented for payment of $5.6 million and access to approximately $39.7 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 March 31, 2026 and 2025:

Current wording

The following table summarizes cash flow data for the six months ended June 30, 2026 and 2025:

Previous 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 $8.3 million primarily due to an increase in non-cash expense add-backs and increases in accounts payable balances, offset by the timing of working capital outlays mainly for inventory purchases and increases in our accounts receivable balances.

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 $3.6 million primarily due to higher income, driven by an increase in other income, and favorable changes in accrued expenses. These favorable impacts were partially offset by lower non-cash expense add-backs, which reduced the adjustments added back to net income in the determination of operating cash flows.

Previous wording

Net cash used in investing activities increased by $7.6 million primarily due to increased capital project spend in the three months ended March 31, 2026, partially offset by proceeds from the sale of the Utah property (see Note 4 - Balance Sheet Components for additional information).

Current wording

Net cash used in investing activities increased by $9.5 million primarily due to increased capital project spending including the purchases of warehouse buildings which were previously leased in the six months ended June 30, 2026, partially offset by proceeds from the sale of the Utah property (see Note 4 - Balance Sheet Components for additional information).

Previous wording

Net cash used in financing activities remained relatively consistent at $1.7 million during the three months ended March 31, 2026 primarily due to the higher overall net proceeds from line of credit activity, offset by overall lower interest rates as compared to the three months ended March 31, 2025.

Current wording

Net cash provided by financing activities of $11.5 million during the six months ended June 30, 2026 as compared to $2.7 million net cash used in financing activities for the six months ended June 30, 2025 was primarily due to the higher overall net proceeds from line of credit activity, offset by overall lower interest rates.

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 2025 Annual Report 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 three months ended March 31, 2026.

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 2025 Annual Report 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, 2026.