Executive Summary

Q4 revenue grew 8.7% to $305.3M, but gross margin compressed to 17.1% (from 18.6% YoY) and GAAP results were dominated by a $46.3M non-cash goodwill impairment, driving a GAAP net loss of $43.9M; Adjusted EBITDA rose 39.4% to $14.5M as non-GAAP add-backs excluded the impairment and prior-year settlement gain .
Management reiterated transformation execution (centralized purchasing, ERP, logistics/facilities) and highlighted expansion into higher-growth channels (wholesale specialty, private-label oil, e-commerce) to offset restaurant traffic softness and tariff/macro headwinds .
Liquidity improved post-quarter via a revolver upsizing to $125M (from $100M), adding Wells Fargo to the bank group; year-end access to incremental borrowing was ~$36.1M on the prior $100M line before the increase, bolstering flexibility for M&A and capex .
Cost discipline remains a key 2025 catalyst: management finalized a plan to cut cash DSA by 3–5% by year-end 2025 and continues to target wholesale as <5% of revenue, acknowledging wholesale’s lower margins but highlighting pricing power and scale benefits .

What Went Well and What Went Wrong

What Went Well
- Adjusted EBITDA rose 39.4% YoY to $14.5M on transformation progress and non-GAAP add-backs; non-GAAP diluted EPS improved to $0.11 from $0.05 YoY, despite mix/margin headwinds .
- Strategic initiatives advanced: centralized purchasing broadened beyond seafood; Kansas City oil packaging is operational (DC access broad) to support private label and margin over time; ERP deployed to 12 of 15 sites, with system-wide completion targeted in 2025 .
- Liquidity and financing: credit facility upsized to $125M (from $100M), enhancing capacity for M&A and facility upgrades; YE24 cash was $14.5M with ~$36.1M incremental availability on the prior revolver .
- Quote: “We are actively expanding into high-growth channels such as specialty grocery and e-commerce to diversify revenue streams and mitigate risks associated with traditional restaurant segments.” — CEO Felix Lin .
What Went Wrong
- Gross margin compressed to 17.1% (from 18.6% YoY) on meat/poultry margin pressure and a higher wholesale mix; gross profit was flat YoY at $52.2M .
- DSA dollars rose YoY (to $48.0M, +$7.0M), mainly from higher professional fees and payroll/severance; DSA rate rose to 15.7% (from 14.6%) as the prior-year included a $10.0M settlement gain reducing professional fees .
- GAAP results swung to a $43.9M loss vs. $2.7M income YoY due to a $46.3M goodwill impairment; consumer softness (lower restaurant foot traffic) and tariff policy uncertainty weighed on demand narratives .

Financial Results

Sequential performance – last three quarters

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($M)	$302.3	$298.4	$305.3
Gross Profit ($M)	$52.5	$50.2	$52.2
Gross Margin %	17.4%	16.8%	17.1%
GAAP Diluted EPS	$0.00	$(0.07)	$(0.83)
Adjusted EBITDA ($M)	$10.6	$8.3	$14.5

YoY comparison – Q4 2024 vs Q4 2023

Metric	Q4 2023	Q4 2024
Revenue ($M)	$280.9	$305.3
Gross Profit ($M)	$52.3	$52.2
Gross Margin %	18.6%	17.1%
GAAP Diluted EPS	$0.05	$(0.83)
Adjusted EBITDA ($M)	$10.4	$14.5
Non-GAAP Diluted EPS	$0.05	$0.11

Q4 2024 vs Estimates (Wall Street consensus – S&P Global)

Metric	Actual (Q4 2024)	Consensus	Surprise
Revenue ($M)	$305.3	N/A	N/A
GAAP Diluted EPS	$(0.83)	N/A	N/A

Estimates were unavailable at time of request due to S&P Global daily request limit being exceeded.

KPIs and operating metrics

KPI	Q2 2024	Q3 2024	Q4 2024
DSA as % of Revenue	16.5%	16.6%	15.7%
Gross Margin %	17.4%	16.8%	17.1%
Adjusted EBITDA ($M)	$10.6	$8.3	$14.5
Cash & Equivalents ($M)	$14.0 (6/30)	$11.4 (9/30)	$14.5 (12/31)
Revolver Availability ($M)	~$29.9 (6/30)	~$27.3 (9/30)	~$36.1 (12/31, on $100M facility)
ERP Sites Live (# of 15)	n/a	n/a	12

Segment breakdown: not disclosed; HF Foods reports consolidated results without segment revenue tables in these materials .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cash DSA reduction target	By YE 2025	Plan to reduce 3–5% (finalizing plan)	Finalized plan to reduce 3–5%	Maintained (status firmed)
ERP rollout completion	2025	Complete by early 2025	On track to complete in 2025	Timeline broadened (early → during 2025)
Charlotte DC renovation	Completion timing	Early 2025	End of Q2 2025	Slight delay
Atlanta facility capacity	Through 2026	Phased, double regional capacity by 2026	Phased through 2026, doubling capacity	Maintained
Wholesale mix of revenue	Ongoing	<5% of revenue; slight uptick	<5% of revenue; slight uptick	Maintained
Revolver capacity	Current	$100M facility at 9/30/24	$125M (Feb-2025)	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
Demand/Macro (foot traffic)	Cautious consumer; weaker restaurant traffic; competitive environment	Lower foot traffic noted; tariff policy/inflation uncertainty	Persistent headwind
Centralized purchasing	Seafood rollout completed; expansion to other categories planned	Expanding beyond seafood; consolidating produce purchasing in 2025	Expanding scope
Cooking oil vertical integration	KC facility to be fully operational by start of 2025; $60M capacity goal	KC facility operational; DC access broad; ramping utilization	Operationalized; ramping
ERP/digital transformation	ERP rollout initiated; target early 2025 completion; e-commerce first phase planned Q1 2025	12/15 sites live; completion in 2025; e-commerce unveil with East Coast DC launches; pilots encouraging	Progressing; timeline broadened
Facilities/network	Charlotte early 2025; Atlanta phased through 2026; Las Vegas DC plan; SLC consolidation	Charlotte by end Q2 2025; Atlanta phased through 2026; SLC on track; route optimization/fleet upgrades	On track with timing updates
Liquidity/Financing	n/a	Revolver upsized to $125M with Wells Fargo added	Improved flexibility
M&A appetite	Exploring for geographic expansion and synergies	Expect to be active in 2025; strategy unchanged	Increasing intent

Management Commentary

“We are actively expanding into high-growth channels such as specialty grocery and e-commerce to diversify revenue streams and mitigate risks associated with traditional restaurant segments.” — Felix Lin, CEO .
“Our centralized purchasing program continues to make meaningful progress… our cooking oil initiative… Kansas City facility is now operational… This vertical integration… helps us to enhance our operational efficiency and improve our margin profile over the long term.” — Felix Lin .
“Our digital transformation initiatives continue to advance with 12 of our 15 sites now operating on our modern ERP platform… preparing to unveil our new e-commerce platform… we believe it represents a significant growth opportunity.” — Felix Lin .
“We finalized our comprehensive plan to reduce cash DSA expenses by 3% to 5% by the end of 2025, while preserving our core growth initiatives.” — Cindy Yao, CFO .
“Our net income was adversely impacted by $46.3 million goodwill impairment charge. This is a function of an accounting requirement and not a reflection of our business performance and overall transformation plan.” — Felix Lin .

Q&A Highlights

The company used a pre-recorded format; no live Q&A was included. Management directed investors to the posted webcast for further details .
Clarifications delivered in prepared remarks addressed: wholesale mix (<5% of revenue), transformation cost controls (3–5% DSA cut by YE25), ERP/e-commerce timing, and the non-cash nature of the goodwill impairment .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 revenue and EPS was not retrievable at the time of analysis due to an S&P Global daily request limit being exceeded; as a result, we cannot assess beats/misses versus consensus for this quarter. We will update when access is restored.

Key Takeaways for Investors

Core demand softened in traditional restaurant channels, but HF is leaning into wholesale specialty, private label oil, and e-commerce to diversify growth and support margins amid tariff/inflation uncertainty .
Non-GAAP profitability improved despite margin compression, as Adjusted EBITDA rose to $14.5M and non-GAAP EPS to $0.11, highlighting benefits from transformation levers and the exclusion of non-recurring items (impairment, prior settlement) .
Near-term catalysts: ERP completion and e-commerce rollout in 2025; Charlotte renovation by end-Q2 2025; Atlanta doubling regional capacity through 2026; logistics optimization and fleet upgrades supporting cost per route .
Cost program execution is pivotal: 3–5% cash DSA reduction by YE25 underpins 2025–26 margin trajectory; monitor professional fees normalization and headcount actions versus service levels .
Liquidity now stronger (revolver $125M), improving capacity to pursue M&A and fund capex; YE24 cash was $14.5M with ~$36.1M of incremental revolver availability pre-upsizing .
Risk watchlist: wholesale mix carries structurally lower gross margins; meat/poultry price/margin volatility; macro/traffic and tariff policy changes; execution risk on ERP/e-commerce timelines .
Accounting overlay: the $46.3M goodwill impairment is non-cash but masks operational progress in GAAP EPS; investors should triangulate with Adjusted EBITDA and non-GAAP EPS while scrutinizing add-back quality over time .

HF Foods Group Inc. (HFFG)·Q4 2024 Earnings Summary