HF Foods 2025 Q2: Key Contradictions in M&A Strategy, Earnings Growth, and Market Performance

M&A strategy and organic growth prioritization, earnings growth expectations for 2025, Asian specialty market performance, and adjusted EBITDA growth are the key contradictions discussed in HF Foods Group Inc.'s latest 2025Q2 earnings call.



Record Financial Performance:
- HF Foods Group reported the highest net revenue of $314.9 million and gross profit of $55.1 million ever recorded, with 4.1% and 5.1% year-over-year increases, respectively.
- This growth was driven by strategic initiatives like price increases, inventory management, and changes in the tariff landscape.

Adjusted EBITDA Growth:
- Adjusted EBITDA increased 31.1% year-over-year to $13.8 million.
- The significant improvement in adjusted EBITDA was attributed to disciplined execution against strategic initiatives and proactive measures to navigate macroeconomic challenges.

Digital Transformation and ERP Implementation:
- HF Foods successfully deployed a new, modern ERP application across its entire network, aiming to enhance efficiency, visibility, and control across operations.
- The ERP implementation, completed on May 1, is expected to unlock the potential of centralized purchasing capabilities over time.

Macroeconomic Challenges and Consumer Behavior:
- The company experienced lower exit velocity and foot traffic towards the end of Q2 and into Q3 due to economic uncertainties and immigration policy changes.
- This was particularly evident in markets with a heavy agricultural presence, impacting buffet-type restaurants that rely on frozen seafood products.

Strategic Investments and M&A Opportunities:
- HF Foods plans to invest in capacity expansions and infrastructure enhancements to create organic growth opportunities.
- The company remains optimistic about M&A opportunities, focusing on tuck-in acquisitions to expand its geographic footprint and enhance product capabilities.