GREENSBORO, N.C., March 16, 2020 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by HF Foods Group Inc. (NASDAQ: HFFG), please note that in each of the last Pro Forma Financial Summary - 2019 vs 2018 bullet and last Pro Forma 2019 Results paragraph, the Adjusted EBIDTA figures presented in both instances should have been "$32.9 million [in 2019] compared to $38.7 million in 2018" rather than "$31.2 million [in 2019] compared to $36.8 million in 2018" as originally issued. The corrected release follows:

HF Foods Group Inc. (NASDAQ: HFFG), a leading food distributor to Asian restaurants across the Southeast, Pacific and Mountain West regions of the United States, reported full year and pro forma financial results for the year ended December 31, 2019. The pro forma results reflect the combined results of HF Foods Group and B&R Global Holdings (“B&R”) as if the transaction had occurred on the first day of the period presented. The merger was previously completed and announced in a press release on November 4, 2019.

2019 Financial Summary (which includes two months (November and December 2019) of Consolidated Financial Results from B&R)

  • Net revenue increased 33% to $388.2 million, compared to $291.0 million in 2018.
  • Gross profit was $63.2 million, or 16.3% of total revenue, compared to $49.6 million, or 17.0% of total revenue in 2018.
  • Net income was $5.4 million, or $0.22 per diluted share, compared to $6.3 million, or $0.30 per diluted share in 2018.
  • Adjusted EBITDA increased 19% to $16.9 million, compared to $14.2 million in 2018.
  • As of December 31, 2019, cash and cash equivalents totaled $14.5 million compared to $5.5 million at December 31, 2018.

Pro Forma Financial Summary - 2019 vs 2018

  • On a pro forma basis, net revenue increased slightly to $828.1 million from $818.0 million.
  • On a pro forma basis, gross profit was $133.2 million, or 16.1% of total revenue, compared to $134.6 million, or 16.5% of total revenue in 2018.
  • On a pro forma basis, net income was $5.7 million, or $0.11 per diluted share, compared to $15.8 million, or $0.31 per diluted share.
  • On a pro forma basis, adjusted EBITDA was $32.9 million compared to $38.7 million in 2018.

Management Commentary
“Today marks a milestone for our business as we are reporting the pro forma results from our merger with B&R Global Holdings for the first time,” said Zhou Min Ni, chairman and Co-CEO of HF Foods. “Since inception, both B&R and HF Foods have been dedicated to servicing the growing demand for Chinese cuisine in their respective markets, and with the merger complete, we now believe that HF Foods is the largest food distributor to Asian restaurants in the United States. While it will take some time for us to completely integrate the two businesses, we are optimistic that we will soon be in a position to capitalize on the synergies of the merger. We are confident that HF Foods will benefit from greater economies of scale and enhanced buying and negotiating power, which will be of great value to both our customers and our shareholders.”

Peter Zhang, Co-CEO and CFO added, “In the coming months, we will continue to focus our attention on consolidating our operations to effectively grow the business and improve our bottom-line. Due to the synergies that existed between our respective organizations, we remain confident that this merger will be accretive in the first year and will provide the necessary scale to further grow our platform over the long-run.”

Pro Forma 2019 Results
On a pro forma basis, 2019 revenue increased slightly to $828.1 million compared to $818.0 million in 2018, due to an increase in sales to independent restaurants, which was nearly offset by a decline in sales to the wholesale segment. The decline in wholesale was primarily attributable to higher volatility in seafood prices as a result of slightly increased commodity prices year-over-year.

On a pro forma basis, gross profit was $133.2 million (16.1% of total revenue) compared to $134.6 million (16.5% of total revenue) in 2018. The slight decrease in gross profit margin for the year was primarily due to the impact of tariff increases.

On a pro forma basis, distribution, selling and administrative expenses in 2019 were $118.6 million compared to $115.0 million in 2018. The marginal increase reflected one-off professional expenses related to the recently completed merger transaction, increases in fuel prices, particularly in California, as well as increases in insurance premiums. Distribution, selling and administrative expenses also included a substantial straight-line amortization of $10.9 million on intangibles, such as tradenames and customer relationships associated with the B&R merger transaction based on US Accounting GAAP rules.

As a result, pro forma net income for 2019 was $5.7 million, or $0.11 per diluted share, compared to $15.8 million, or $0.31 per diluted share, in 2018.

Adjusted EBITDA on a pro forma basis in 2019 was $32.9 million compared to $38.7 million in 2018. The lower adjusted EBITDA in 2019 was due to a higher tax provision as well as higher non-recurring professional fees associated with the B&R merger transaction.

About HF Foods Group Inc.
HF Foods Group Inc., headquartered in Greensboro, North Carolina, is a leading marketer and distributor of fresh produce, frozen and dry food, and non-food products to primarily Asian/Chinese restaurants and other foodservice customers throughout the Southeast, Pacific and Mountain West regions of the United States. With 14 distribution centers along the U.S. eastern and western seaboards, HF Foods aims to supply the increasing demand for Asian American restaurant cuisine. With an in-house proprietary ordering and inventory control network, more than 10,000 established customers in 21 states, and strong relations with growers and suppliers of food products in the US and China, HF Foods Group is able to offer fresh, high-quality specialty restaurant foods and supplies at economical prices to its large and growing base of customers. For more information, please visit hffoodsgroup.com.

Forward-Looking Statements
All statements in this news release other than statements of historical facts are forward-looking statements which contain our current expectations about our future results. We have attempted to identify any forward-looking statements by using words such as “anticipates,” “believes,” “could,” “expects,” “intends,” “may,” “should” and other similar expressions. Although we believe that the expectations reflected in all of our forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Such statements are not guarantees of future performance or events and are subject to known and unknown risks and uncertainties that could cause the Company’s actual results, events or financial positions to differ materially from those included within or implied by such forward-looking statements. Such factors include, but are not limited to, unfavorable macroeconomic conditions in the United States, competition in the food service distribution industry, particularly the entry of new competitors into the Chinese/Asian restaurant market niche, increases in fuel costs or commodity prices, disruption of relationships with vendors and increases in product prices, U.S. government tariffs on products imported into the United States, particularly from China, changes in consumer eating and dining out habits, disruption of relationships with or loss of customers, our ability to execute our acquisition strategy, availability of financing to execute our acquisition strategy, control of the Company by our Chief Executive Officer and principal stockholder, failure to retain our senior management and other key personnel, our ability to attract, train and retain employees, changes in and enforcement of immigration laws, failure to comply with various federal, state and local rules and regulations regarding food safety, sanitation, transportation, minimum wage, overtime and other health and safety laws, product recalls, voluntary recalls or withdrawals if any of the products we distribute are alleged to have caused illness, been mislabeled, misbranded or adulterated or to otherwise have violated applicable government regulations, failure to protect our intellectual property rights, any cyber security incident, other technology disruption, or delay in implementing our information technology systems, statements of assumption underlying any of the foregoing, and other factors disclosed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to disclose any revision to these forward-looking statements.

Investor Relations Contact:
Gateway Investor Relations
Cody Slach
Tel 1-949-574-3860
HFFG@gatewayir.com


HF Foods Group Inc.
Consolidated Balance Sheets

  As of 
  December 31  December 31 
  2019  2018 
ASSETS        
CURRENT ASSETS:        
Cash $14,538,286  $5,489,404 
Accounts receivable, net  50,027,134   14,406,476 
Accounts receivable - related parties, net  4,202,870   2,292,151 
Inventories, net  77,531,854   22,175,769 
Advances to suppliers - related parties, net  745,135   1,526,482 
Notes receivable  -   3,803,826 
Notes receivable - related parties, current  -   8,117,686 
Other current assets  4,374,338   1,230,970 
TOTAL CURRENT ASSETS  151,419,617   59,042,764 
Property and equipment, net  37,538,147   22,650,021 
Security deposits-related parties  591,380   - 
Long-term notes receivable - related parties  -   423,263 
Operating lease right-of-use assets  17,155,584   - 
Long-term investments  2,296,276   - 
Intangible assets, net  186,687,950   - 
Goodwill  406,703,348   - 
Deferred tax assets  78,993   117,933 
Other long-term assets  372,499   242,426 
TOTAL ASSETS $802,843,794  $82,476,407 
         
CURRENT LIABILITIES:        
Bank overdraft $14,952,510   - 
Lines of credit  41,268,554   8,194,146 
Accounts payable  39,689,911   17,474,206 
Accounts payable - related parties  4,521,356   3,923,120 
Accrued expenses and other payables  2,683,696   2,376,498 
Current portion of long-term debt, net  2,726,981   1,455,441 
Current portion of obligations under finance leases  280,243   164,894 
Current portion of obligations under operating leases  4,322,503   - 
TOTAL CURRENT LIABILITIES  110,445,754   33,588,305 
Long-term debt, net  18,535,016   13,109,854 
Obligations under finance leases, non-current  1,053,166   120,705 
Obligations under operating leases, non-current  12,833,081   - 
Deferred tax liabilities  52,320,045   1,196,061 
TOTAL LIABILITIES $195,187,062  $48,014,925 
SHAREHOLDERS’ EQUITY:        
Preferred Stock, $0.0001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively  -   - 
Common Stock, $0.0001 par value, 100,000,000 shares authorized, 53,050,211 shares issued, and 52,145,096 shares outstanding as of December 31, 2019, and 30,000,000 shares authorized, 22,167,486 shares issued and outstanding as of December 31, 2018  5,305   2,217 
Treasury Stock, at cost, 905,115 shares as of December 31, 2019, and - 0 - shares at December 31, 2018  (12,038,030)  - 
Additional paid-in capital  599,617,009   22,920,603 
Retained earnings  15,823,661   10,433,984 
Total shareholders’ equity attributable to HF Foods Group, Inc.  603,407,945   33,356,804 
Noncontrolling interest  4,248,787   1,104,678 
TOTAL SHAREHOLDERS’ EQUITY  607,656,732   34,461,482 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  802,843,794  $82,476,407 


HF Foods Group Inc.
Consolidated Statements of Income

  For the years ended December 31 
  2019  2018 
         
Net revenue - third parties $368,809,865  $272,859,695 
Net revenue - related parties  19,352,416   18,147,003 
TOTAL NET REVENUE  388,162,281   291,006,698 
Cost of revenue - third parties  306,370,972   223,694,206 
Cost of revenue - related parties  18,582,786   17,746,943 
TOTAL COST OF REVENUE  324,953,758   241,441,149 
GROSS PROFIT  63,208,523   49,565,549 
         
DISTRIBUTION, SELLING AND ADMINISTRATIVE EXPENSES  54,931,157   41,039,438 
         
INCOME FROM OPERATIONS  8,277,366   8,526,111 
         
Other Income (Expenses)        
Interest income  418,530   493,358 
Interest expense and bank charges  (1,661,454)  (1,372,508)
Rental income – related parties  525,600   525,600 
Other income  532,336   671,389 
Total Other Income (Expenses), net  (184,988)  317,839 
INCOME BEFORE INCOME TAX PROVISION  8,092,378   8,843,950 
         
PROVISION FOR INCOME TAXES  2,197,092   2,490,255 
NET INCOME  5,895,286   6,353,695 
Less: net income attributable to noncontrolling interest  505,609   67,240 
NET INCOME ATTRIBUTABLE TO HF FOODS GROUP INC. $5,389,677  $6,286,455 
         
Earnings per common share – basic and diluted $0.22  $0.30 
Weighted average shares – basic and diluted  27,113,288   20,991,004