Yahoo Finance HF Foods Group Inc. (NASDAQ:HFFG) Q4 2023 Earnings Call Transcript
HF Foods Group Inc. (NASDAQ:HFFG) Q4 2023 Earnings Call Transcript March 14, 2024
HF Foods Group Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Anna Heller : Hello, everyone. Welcome to HF Foods Group’s Fourth Quarter and Full Year 2023 Earnings Conference Call. Joining me on today’s call are Peter Zhang, HF Foods’ Chief Executive Officer, and Felix Lin, the Company’s President, Chief Operating Officer and interim Chief Financial Officer. In a moment, we'll hear their prepared remarks. By now, everyone should have access to the earnings release for the period ended December 31, 2023 that went out Thursday, March 14 at approximately 8:00 AM Eastern time. The press release is accessible on the Company’s website at investors.hffoodsgroup.com. Before we begin, let me remind everyone that today's discussion contains forward-looking statements based on the environment as the company currently sees it, and as such, does include risks and uncertainties.
If you refer to HF Foods’ earnings release, as well as the Company’s most recent SEC filings, you will see a discussion of factors that could cause the Company’s actual results to differ materially as a result of these forward-looking statements. Please remember the Company undertakes no obligation to update or revise these forward-looking statements in the future. In these remarks, the Company will make a number of references to non-GAAP financial measures. We believe that these measures provide investors with 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 measures. Now, I will turn the call over to Peter.
Peter Zhang : Hello, everyone. I am excited to be speaking to you today. I will start with a quick introduction. Felix will talk to you about our financial results as well as some of the exciting progress we have made with our transformational plan. For those of you who are new to our story, HF Foods is a leading Asian foodservice distributor for Asian restaurants in the United States. We partner with domestic and international suppliers to offer a wide range of high-quality Asian ingredients for our customers, and our widespread distribution network covers 95% of the United States. I would also like to note that Felix Lin has taken on the role of President of HF Foods, in addition to being our Chief Operating Officer and Interim CFO. Now over to you, Felix.
Felix Lin: Thanks, Peter. I am excited to be speaking with you after our fourth quarter of 2023 in which our gross profit, gross margin, net income, and Adjusted EBITDA all increased compared to the prior year period. We have already begun to see signs of success from our operational transformation plan that we laid out during our third quarter earnings call in November, and I will speak about our progress on these key financial metrics. I’ll start with our results for our fourth quarter ended December 31st, 2023, versus the same period in 2022: Net revenue for the fourth quarter decreased 3.8% to $280.9 million, from $291.9 million in the prior year quarter. The decrease in net revenue was primarily attributable to deflationary pressure in key commodities as well as the exit of our chicken processing businesses.
Gross profit increased by 3.1% to $52.3 million for the quarter, compared to $50.7 million in the prior year quarter and gross profit margins increased 120 basis points to 18.6%. The increase was attributable to improvement in the Seafood category due to successful execution of a centralized purchasing plan. Distribution, selling, and administrative expenses decreased approximately 24.3% to $41.0 million for the fourth quarter of 2023 from $54.1 million for the fourth quarter of 2022. The reduced expenses were due primarily to lower professional fees and were partially offset by higher payroll and related labor costs. During the fourth quarter of 2023, we received net settlement amounts totaling $10.0 million which reduced our professional fees.
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