Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________________________

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________ to _______________________.

Commission File Number: 001-38180

__________________________________________________________________________

HF FOODS GROUP INC.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)			81-2717873 (I.R.S. Employer Identification No.)

6325 South Rainbow Boulevard, Suite 420, Las Vegas, NV 89118
(Address of principal executive offices) (Zip Code)

(888) 905-0988

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value	HFFG	Nasdaq Capital Market
Preferred Share Purchase Rights	N/A	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 5, 2024, the registrant had 52,730,183 shares of common stock outstanding.

HF Foods Group Inc. and Subsidiaries

Form 10-Q for the Quarter Ended June 30, 2024

Table of Contents


Description		Page

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	2
	Condensed Consolidated Statements of Cash Flows (Unaudited)	3
	Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4.	Controls and Procedures	28

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	31

SIGNATURE PAGE		33

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

HF Foods Group Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)


	June 30, 2024		December 31, 2023
ASSETS
CURRENT ASSETS:
Cash	$	13,968	$	15,232
Accounts receivable, net of allowances of $2,077 and $2,119	50,867		47,524
Accounts receivable - related parties	548		308
Inventories	119,232		105,618
Prepaid expenses and other current assets	8,996		10,145
TOTAL CURRENT ASSETS	193,611		178,827
Property and equipment, net	143,538		133,136
Operating lease right-of-use assets	16,006		12,714
Long-term investments	2,390		2,388
Customer relationships, net	141,898		147,181
Trademarks, trade names and other intangibles, net	27,768		30,625
Goodwill	85,118		85,118

Other long-term assets	6,538		6,531
TOTAL ASSETS	$	616,867	$	596,520
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Checks issued not presented for payment	$	6,452	$	4,494
Line of credit	66,350		58,564
Accounts payable	62,497		51,617
Accounts payable - related parties	651		397
Current portion of long-term debt, net	5,414		5,450
Current portion of obligations under finance leases	3,025		1,749
Current portion of obligations under operating leases	4,116		3,706
Accrued expenses and other liabilities	15,554		17,287
TOTAL CURRENT LIABILITIES	164,059		143,264
Long-term debt, net of current portion	106,000		108,711

Obligations under finance leases, non-current	17,434		11,229
Obligations under operating leases, non-current	12,219		9,414
Deferred tax liabilities	28,204		29,028
Other long-term liabilities	160		6,891
TOTAL LIABILITIES	328,076		308,537
COMMITMENTS AND CONTINGENCIES (Note 13)
SHAREHOLDERS’ EQUITY:
Series A Participating Preferred Stock, par value $0.001; 100,000 shares authorized, no shares issued and outstanding	—		—
Preferred Stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding	—		—
Common Stock, $0.0001 par value; 100,000,000 shares authorized; 54,668,169 and 54,153,391 shares issued and 52,670,746 and 52,155,968 shares outstanding as of June 30, 2024 and December 31, 2023, respectively	5		5
Treasury stock, at cost; 1,997,423 shares as of June 30, 2024 and December 31, 2023	(7,750)		(7,750)
Additional paid-in capital	603,454		603,094
Accumulated deficit	(309,365)		(308,688)
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO HF FOODS GROUP INC.	286,344		286,661
Noncontrolling interests	2,447		1,322
TOTAL SHAREHOLDERS’ EQUITY	288,791		287,983
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	616,867	$	596,520

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HF Foods Group Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net revenue - third parties	$	301,331	$	290,364	$	596,167	$	581,926
Net revenue - related parties	1,011		1,948		1,829		4,241
TOTAL NET REVENUE	302,342		292,312		597,996		586,167

Cost of revenue - third parties	248,957		239,724		493,441		481,181
Cost of revenue - related parties	920		1,922		1,679		4,148
TOTAL COST OF REVENUE	249,877		241,646		495,120		485,329

GROSS PROFIT	52,465		50,666		102,876		100,838

Distribution, selling and administrative expenses	49,840		52,243		100,336		105,172

INCOME (LOSS) FROM OPERATIONS	2,625		(1,577)		2,540		(4,334)



Interest expense	3,119		2,847		5,953		5,715
Other expense (income), net	3,466		(127)		3,372		(355)
Change in fair value of interest rate swap contracts	(361)		(2,856)		(2,331)		(110)
Lease guarantee income	(5,433)		(90)		(5,548)		(210)


INCOME (LOSS) BEFORE INCOME TAXES	1,834		(1,351)		1,094		(9,374)

Income tax expense (benefit)	1,599		209		1,418		(2,017)
NET INCOME (LOSS) AND COMPREHENSIVE LOSS	235		(1,560)		(324)		(7,357)

Less: net income (loss) attributable to noncontrolling interests	218		(710)		353		(574)
NET INCOME (LOSS) AND COMPREHENSIVE LOSS ATTRIBUTABLE TO HF FOODS GROUP INC.	$	17	$	(850)	$	(677)	$	(6,783)

EARNINGS (LOSS) PER COMMON SHARE - BASIC	$	0.00	$	(0.02)	$	(0.01)	$	(0.13)
EARNINGS (LOSS) PER COMMON SHARE - DILUTED	$	0.00	$	(0.02)	$	(0.01)	$	(0.13)
WEIGHTED AVERAGE SHARES - BASIC	52,585,715		54,046,328		52,370,842		53,935,178
WEIGHTED AVERAGE SHARES - DILUTED	52,661,119		54,046,328		52,370,842		53,935,178

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HF Foods Group Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(324)	$	(7,357)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization expense	13,266		13,129

Asset impairment charges	—		1,200

Provision for credit losses	(40)		56
Deferred tax benefit	(824)		(1,324)

Change in fair value of interest rate swap contracts	(2,331)		(110)
Stock-based compensation	1,260		1,848

Non-cash lease expense	1,930		1,916
Lease guarantee income	(5,548)		(210)
Other non-cash expense	485		389
Changes in operating assets and liabilities:
Accounts receivable	(3,303)		(1,456)
Accounts receivable - related parties	(240)		(394)
Inventories	(13,614)		9,225


Prepaid expenses and other current assets	1,149		(3,545)

Other long-term assets	723		(1,519)
Accounts payable	10,880		(667)
Accounts payable - related parties	254		(659)
Operating lease liabilities	(2,007)		(1,765)
Accrued expenses and other liabilities	(1,733)		(25)
Net cash (used in) provided by operating activities	(17)		8,732
Cash flows from investing activities:

Purchase of property and equipment	(6,331)		(1,522)











Net cash used in investing activities	(6,331)		(1,522)
Cash flows from financing activities:
Payments for tax withholding related to vested stock awards	(128)		—
Checks issued not presented for payment	1,958		(1,072)
Proceeds from line of credit	735,717		594,916
Repayment of line of credit	(727,958)		(605,826)

Repayment of long-term debt	(2,768)		(3,172)

Repayment of obligations under finance leases	(1,737)		(1,399)



Net cash provided by (used in) financing activities	5,084		(16,553)
Net decrease in cash	(1,264)		(9,343)
Cash at beginning of the period	15,232		24,289
Cash at end of the period	$	13,968	$	14,946




Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	5,222	$	88
Property acquired in exchange for finance leases	9,218		1,059

Dissolution of noncontrolling interests	772		—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HF Foods Group Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Shareholders' Equity

(In thousands, except share data)

(Unaudited)


	Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Deficit		Total Shareholders’ Equity Attributable to HF Foods Group Inc.		Noncontrolling Interests		Total Shareholders’ Equity
	Shares	Amount		Shares	Amount











































Balance at January 1, 2023	53,813,777	$	5	—	$	—	$	598,322	$	(306,514)	$	291,813	$	4,436	$	296,249
Net (loss) income	—	—		—	—		—		(5,933)		(5,933)		136		(5,797)
Issuance of common stock pursuant to equity compensation plan	37,847	—		—	—		—		—		—		—		—
Shares withheld for tax withholdings on vested awards	(7,132)	—		—	—		(34)		—		(34)		—		(34)


Stock-based compensation	—	—		—	—		1,096		—		1,096		—		1,096
Balance at March 31, 2023	53,844,492	$	5	—	$	—	$	599,384	$	(312,447)	$	286,942	$	4,572	$	291,514
Net loss	—	—		—	—				(850)		(850)		(710)		(1,560)

Issuance of common stock pursuant to equity compensation plan	269,113	—		—	—		—		—		—		—		—
Shares withheld for tax withholdings on vested awards	(27,441)	—		—	—		(106)		—		(106)		—		(106)
Stock-based compensation	—	—		—	—		752		—		752		—		752
Balance at June 30, 2023	54,086,164	$	5	—	$	—	$	600,030	$	(313,297)	$	286,738	$	3,862	$	290,600






Balance at January 1, 2024	54,153,391	$	5	1,997,423	$	(7,750)	$	603,094	$	(308,688)	$	286,661	$	1,322	$	287,983
Net (loss) income	—	—		—	—		—		(694)		(694)		135		(559)




Stock-based compensation	—	—		—	—		738		—		738		—		738
Balance at March 31, 2024	54,153,391	$	5	1,997,423	$	(7,750)	$	603,832	$	(309,382)	$	286,705	$	1,457	$	288,162
Net income	—	—		—	—		—		17		17		218		235
Issuance of common stock pursuant to equity compensation plan	555,181	—		—	—		—		—		—		—		—
Shares withheld for tax withholdings on vested awards	(40,403)	—		—	—		(128)		—		(128)		—		(128)
Dissolution of noncontrolling interests							(772)				(772)		772		—
Stock-based compensation	—	—		—	—		522		—		522		—		522
Balance at June 30, 2024	54,668,169	$	5	1,997,423	$	(7,750)	$	603,454	$	(309,365)	$	286,344	$	2,447	$	288,791

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

HF Foods Group Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 - Organization and Description of Business

Organization and General

HF Foods Group Inc. and subsidiaries (collectively “HF Foods” or the “Company”) is an Asian foodservice distributor that markets and distributes fresh produce, seafood, frozen and dry food, and non-food products to primarily Asian restaurants and other foodservice customers throughout the United States. The Company's business consists of one operating segment, which is also its one reportable segment: HF Foods, which operates solely in the United States. The Company's customer base consists primarily of Asian restaurants, and it provides sales and service support to customers who mainly converse in Mandarin or Chinese dialects.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. All adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 26, 2024 (the “2023 Annual Report”). There have been no material changes to the Company’s significant accounting policies as compared to the significant accounting policies described in the 2023 Annual Report.

All significant intercompany balances and transactions have been eliminated in consolidation. For consolidated entities where we own or are exposed to less than 100% of the economics, the Company records net income (loss) attributable to noncontrolling interest in its condensed consolidated statements of operations and comprehensive loss equal to the percentage of the economic or ownership interest retained in such entity by the respective noncontrolling party.

Variable Interest Entities

GAAP provides guidance on the identification of a variable interest entity (“VIE”) and financial reporting for an entity over which control is achieved through means other than voting interests. The Company evaluates each of its interests in an entity to determine whether or not the investee is a VIE and, if so, whether the Company is the primary beneficiary of such VIE. In determining whether the Company is the primary beneficiary, the Company considers if the Company (1) has power to direct the activities that most significantly affect the economic performance of the VIE, and (2) has the obligation to absorb losses or the right to receive the economic benefits of the VIE that could be potentially significant to the VIE. If deemed the primary beneficiary, the Company consolidates the VIE.

The Company previously disclosed one VIE, AnHeart, Inc. (“AnHeart”), for which the Company was not the primary beneficiary and therefore did not consolidate. During the three months ended June 30, 2024, the Company assumed the lease for which AnHeart was a lessee and the Company was a guarantor, and as such, it no longer recognizes AnHeart as a VIE as of June 30, 2024. See Note 13 - Commitments and Contingencies for additional information on AnHeart.

Noncontrolling Interests

GAAP requires that noncontrolling interests in subsidiaries and affiliates be reported in the equity section of the Company’s condensed consolidated balance sheets. In addition, the amounts attributable to the net income (loss) of those noncontrolling interests are reported separately in the condensed consolidated statements of operations and comprehensive loss.

As of June 30, 2024 and December 31, 2023, noncontrolling interest equity consisted of the following:


($ in thousands)	Ownership of noncontrolling interest at June 30, 2024	June 30, 2024		December 31, 2023
HF Foods Industrial, LLC ("HFFI")(a)	—%	$	—	$	(759)
Min Food, Inc.	39.75%	2,078		1,715
Monterey Food Service, LLC	35.00%	369		366
Total		$	2,447	$	1,322

_______________

(a)During the quarter ended June 30, 2024, upon dissolution of HFFI, the Company assumed HFFI’s remaining assets and liabilities. In accordance with ASC Topic 810 (“ASC 810”), Consolidation, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary shall be accounted for as equity transactions. No gain or loss was recognized. As a result of this transaction, noncontrolling interest of $0.8 million was reclassified to additional paid-in capital on the condensed consolidated balance sheets.

Uses of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during each reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, inventory reserves, impairment of long-lived assets, impairment of goodwill, and the purchase price allocation and fair value of assets and liabilities acquired with respect to business combinations.

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires enhanced disclosures about segment expenses on an annual and interim basis. This standard is effective for the Company’s consolidated financial statements for the year ending December 31, 2024 and for interim periods beginning in 2025. The impact of the adoption of this ASU is not expected to have a material effect on the Company’s financial position, or operations, however, the Company is currently evaluating the impact of this standard on its disclosures to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (“Topic 740”): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public entities to disclose specific categories in its annual effective tax rate reconciliation and disaggregated information about significant reconciling items by jurisdiction and by nature. ASU 2023-09 also requires entities to disclose their income tax payments (net of refunds) to international, federal, and state and local jurisdictions. This guidance is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on the consolidated financial statements and disclosures.

Note 3 - Revenue

The following table presents the Company's net revenue disaggregated by principal product categories:


	Three Months Ended June 30,								Six Months Ended June 30,
($ in thousands)	2024				2023				2024				2023
Seafood	$	99,530	33	%	$	91,382	31	%	$	193,925	32	%	$	184,272	32	%
Asian Specialty	77,493		26	%	76,337		26	%	157,702		26	%	154,161		26	%
Meat and Poultry	63,792		20	%	56,012		19	%	121,542		20	%	108,061		18	%
Produce	32,171		11	%	31,636		11	%	64,254		11	%	63,847		11	%
Packaging and Other	15,645		5	%	18,037		6	%	32,019		6	%	37,433		6	%
Commodity	13,711		5	%	18,908		7	%	28,554		5	%	38,393		7	%
Total	$	302,342	100	%	$	292,312	100	%	$	597,996	100	%	$	586,167	100	%

Note 4 - Balance Sheet Components

Accounts receivable, net consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Accounts receivable	$	52,944	$	49,643
Less: allowance for expected credit losses	(2,077)		(2,119)
Accounts receivable, net	$	50,867	$	47,524

Movement of allowance for expected credit losses was as follows:


	Six Months Ended June 30,
(In thousands)	2024		2023
Beginning balance	$	2,119	$	1,442

(Decrease) increase in provision for expected credit losses	(40)		56
Bad debt write-offs	(2)		(24)
Ending balance	$	2,077	$	1,474

Prepaid expenses and other current assets consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Prepaid expenses	$	2,093	$	4,591
Advances to suppliers	6,112		3,340
Other current assets	791		2,214
Prepaid expenses and other current assets	$	8,996	$	10,145

Property and equipment, net consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Automobiles(1)	$	47,312	$	37,256
Buildings	63,045		63,045
Building improvements	22,278		22,014
Furniture and fixtures	419		474
Land	49,929		49,929
Machinery and equipment	11,970		11,532
Construction in progress	5,172		1,391
Subtotal	200,125		185,641
Less: accumulated depreciation	(56,587)		(52,505)
Property and equipment, net	$	143,538	$	133,136

_________________

(1) The cost and accumulated depreciation of property and equipment related to finance leases was $31.0 million and $12.3 million at June 30, 2024 and $22.2 million and $10.3 million at December 31, 2023, which primarily relates to Automobiles. During the six months ended June 30, 2024, the Company entered into finance leases for automobiles which mature in 4 to 6 years and have a weighted average discount rate of 6.6%. The total future minimum lease payments under finance leases as of June 30, 2024 is $30.1 million. As of June 30, 2024, the Company had additional leases that had not yet commenced which totaled $16.9 million in future minimum lease payments.

Depreciation expense was $2.5 million and $2.4 million for the three months ended June 30, 2024 and 2023, respectively. Depreciation expense was $5.1 million and $5.0 million for the six months ended June 30, 2024 and 2023, respectively. During the three months ended June 30, 2023, the Company impaired machinery and recognized impairment expense of $1.2 million in distribution, selling and administrative expense in the condensed consolidated statements of operations and comprehensive income.

Long-term investments consisted of the following:


(In thousands)	Ownership as of June 30, 2024	June 30, 2024		December 31, 2023
Asahi Food, Inc. ("Asahi")	49%	$	590	$	588
Pt. Tamron Akuatik Produk Industri ("Tamron")	12%	1,800		1,800
Total long-term investments		$	2,390	$	2,388

The investment in Tamron is accounted for using the measurement alternative under Accounting Standards Codification (“ASC”) Topic 321 Investments—Equity Securities, which is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments, if any. The investment in Asahi is accounted for under the equity method due to the fact that the Company has significant influence but does not exercise control over this investee. The Company determined there was no impairment as of June 30, 2024 for these investments.

Accrued expenses and other liabilities consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Accrued compensation	$	5,617	$	7,941
Accrued professional fees	663		1,353

Accrued interest and fees	1,056		1,276
Self-insurance liability	2,439		1,723
Other	5,779		4,994
Total accrued expenses and other liabilities	$	15,554	$	17,287

Note 5 - Fair Value Measurements

The following table presents the Company's hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the dates indicated:


	June 30, 2024								December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(In thousands)
Assets:
Interest rate swaps	$	—	$	1,142	$	—	$	1,142	$	—	$	412	$	—	$	412

Liabilities:
Interest rate swaps	$	—	$	—	$	—	$	—	$	—	$	(1,601)	$	—	$	(1,601)

The Company follows the provisions of ASC Topic 820 Fair Value Measurement which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

•Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

•Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

•Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions about what assumptions market participants would use in pricing the asset or liability based on the best available information.

Any transfers of assets or liabilities between Level 1, Level 2, and Level 3 of the fair value hierarchy will be recognized at the end of the reporting period in which the transfer occurs. There were no transfers between fair value levels in any of the periods presented herein.

The carrying amounts reported in the condensed consolidated balance sheets for cash, accounts receivable, other current assets, accounts payable, checks issued not presented for payment and accrued expenses and other liabilities approximate their fair value based on the short-term maturity of these instruments.

See Note 7 - Derivative Financial Instruments for additional information regarding the Company’s interest rate swaps.

Carrying Value and Estimated Fair Value of Outstanding Debt - The following table presents the carrying value and estimated fair value of the Company’s outstanding debt as described in Note 8 - Debt, including the current portion, as of the dates indicated:


	Fair Value Measurements
(In thousands)	Level 1		Level 2		Level 3		Carrying Value
June 30, 2024
Fixed rate debt:

Bank of America	$	—	$	—	$	126	$	141


Other finance institutions	—		—		4		4
Variable rate debt:
JPMorgan Chase	$	—	$	103,549	$	—	$	103,549
Bank of America	—		2,123		—		2,123
East West Bank	—		5,597		—		5,597

December 31, 2023
Fixed rate debt:

Bank of America	$	—	$	—	$	151	$	169


Other finance institutions	—		—		43		45
Variable rate debt:
JPMorgan Chase	$	—	$	106,079	$	—	$	106,079
Bank of America	—		2,193		—		2,193
East West Bank	—		5,675		—		5,675

The carrying value of the variable rate debt approximates its fair value because of the variability of interest rates associated with these instruments. For the Company's fixed rate debt, the fair values were estimated using discounted cash flow analyses, based on the current incremental borrowing rates for similar types of borrowing arrangements.

See Note 8 - Debt for additional information regarding the Company's debt.

Nonrecurring Fair Values

The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. No adjustments to fair value from the write-down of asset values due to impairment were made during the three and six months ended June 30, 2024 and 2023.

There were no assets carried at nonrecurring fair value at June 30, 2024 and December 31, 2023.

Note 6 - Goodwill and Acquired Intangible Assets

Goodwill

The Company performed a quantitative goodwill impairment assessment as of December 31, 2023, as a result of the Company’s results of operations compared to previous forecasts, combined with the level of the Company’s stock price. The fair value was determined using an average of the income approach, comparable public company analysis, and comparable acquisitions analysis. The fair value of the reporting unit exceeded the carrying value, and therefore the Company concluded no impairment was required to be recorded during the year ended December 31, 2023.

The annual goodwill impairment test in 2023 resulted in an estimated fair value that exceeded carrying value by approximately 10% at December 31, 2023. The most critical assumptions in determining fair value using the income approach were projections of future cash flows such as forecasted revenue growth rates, gross profit margins, and the discount rate. The market approaches were primarily impacted by an enterprise value multiple of EBITDA. A significant change in these assumptions or a sustained decline in the Company’s stock price could result in an interim impairment test and/or potential goodwill impairment in the future.

The Company determined that there were no events or circumstances during the six months ended June 30, 2024 that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Goodwill was $85.1 million as of June 30, 2024 and December 31, 2023.

Acquired Intangible Assets

The components of the intangible assets are as follows:


	June 30, 2024						December 31, 2023
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Non-competition agreement	$	3,892	$	(3,076)	$	816	$	3,892	$	(2,429)	$	1,463
Trademarks and trade names	44,207		(17,255)		26,952		44,207		(15,045)		29,162
Customer relationships	185,266		(43,368)		141,898		185,266		(38,085)		147,181
Total	$	233,365	$	(63,699)	$	169,666	$	233,365	$	(55,559)	$	177,806

Amortization expense for acquired intangible assets was $4.1 million for the three months ended June 30, 2024 and 2023. Amortization expense for acquired intangible assets was $8.1 million for the six months ended June 30, 2024 and 2023.

Note 7 - Derivative Financial Instruments

Derivative Instruments

The Company utilizes interest rate swaps ("IRS") for the sole purpose of mitigating interest rate fluctuation risk associated with floating rate debt instruments (as defined in Note 8 - Debt). The Company does not use any other derivative financial instruments for trading or speculative purposes.

On August 20, 2019, HF Foods entered into two IRS contracts with East West Bank (the "EWB IRS") for initial notional amounts of $1.1 million and $2.6 million, respectively. On April 20, 2023, the Company amended the corresponding mortgage term loans, which pegged the two mortgage term loans to 1-month Term SOFR (Secured Overnight Financing Rate) + 2.29% per annum for the remaining duration of the term loans. The amended EWB IRS contracts fixed the two term loans at 4.23% per annum until maturity in September 2029.

On December 19, 2019, HF Foods entered into an IRS contract with Bank of America (the "BOA IRS") for an initial notional amount of $2.7 million in conjunction with a newly contracted mortgage term loan of corresponding amount. On December 19, 2021, the Company entered into the Second Amendment to Loan Agreement, which pegged the mortgage term loan to Term SOFR + 2.5%. The BOA IRS was modified accordingly to fix the SOFR based loan to approximately 4.50%. The term loan and corresponding BOA IRS contract mature in December 2029.

On March 15, 2023, the Company entered into an amortizing IRS contract with JPMorgan Chase for an initial notional amount of $120.0 million, effective from March 1, 2023 and expiring in March 2028, as a means to partially hedge its existing floating rate loans exposure. Pursuant to the agreement, the Company will pay the swap counterparty a fixed rate of 4.11% in exchange for floating payments based on Term SOFR.

The Company evaluated the aforementioned IRS contracts currently in place and did not designate those as cash flow hedges. Hence, the fair value changes of these IRS contracts are accounted for and recognized as a change in fair value of interest rate swap contracts in the condensed consolidated statements of operations and comprehensive income (loss).

As of June 30, 2024, the Company determined that the fair values of the IRS contracts were $1.1 million in an asset position. As of December 31, 2023, the fair values of the IRS contracts were $0.4 million in an asset position and $1.6 million in a liability position. The Company includes these in other long-term assets and other long-term liabilities, respectively, on the consolidated balance sheets. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in its assessment of fair value. The inputs used to determine the fair value of the IRS are classified as Level 2 on the fair value hierarchy.

Note 8 - Debt

Long-term debt at June 30, 2024 and December 31, 2023 is summarized as follows:


($ in thousands)
Bank Name	Maturity	Interest Rate at June 30, 2024	June 30, 2024		December 31, 2023
Bank of America (a)	October 2026 - December 2029	4.34% - 7.93%	$	2,264	$	2,362
East West Bank (b)	August 2027 - September 2029	7.62% - 9.00%	5,597		5,675

JPMorgan Chase (c)	January 2030	7.30%	103,786		106,337
Other finance institutions (d)	July 2024	N/A	4		45
Total debt, principal amount			111,651		114,419
Less: debt issuance costs			(237)		(258)
Total debt, carrying value			111,414		114,161
Less: current portion			(5,414)		(5,450)
Long-term debt			$	106,000	$	108,711

_______________

(a)Loan balance consists of real estate term loan and equipment term loan, collateralized by one real property and specific equipment. The real estate term loan is pegged to TERM SOFR + 2.5%.

(b)Real estate term loans with East West Bank are collateralized by three real properties. Balloon payments of $1.9 million and $3.0 million are due at maturity in 2027 and 2029, respectively.

(c)Real estate term loan with a principal balance of $103.8 million as of June 30, 2024 and $106.3 million as of December 31, 2023 is secured by assets held by the Company and has a maturity date of January 2030.

(d)Secured by vehicles.

The terms of the various loan agreements related to long-term bank borrowings require the Company to comply with certain financial covenants, including, but not limited to, a fixed charge coverage ratio and effective tangible net worth. As of June 30, 2024, the Company was in compliance with its covenants.

Credit Facility

The outstanding principal balance on the line of credit as of June 30, 2024 was $66.4 million and outstanding letters of credit amounted to $3.8 million leaving access to approximately $29.9 million in additional funds through our $100.0 million line of credit, subject to a borrowing base calculation.

On March 31, 2022, the Company amended the $100.0 million asset-secured revolving credit facility agreement, extending for five years, with a maturity date of November 4, 2027. On February 6, 2024, the Company amended the agreement to (i) remove a cap on permitted indebtedness in respect of capital lease obligations, subject to certain enumerated conditions; (ii) create a reserve on the borrowing base, which will be reduced on a dollar-for-dollar basis once the Company has made expenditures in excess of such amount relating to the development and construction of certain real property, and which amounts shall be excluded from certain financial covenants under the JPM Credit Agreement and; (iii) remove certain sublease income from various financial covenants.

Note 9 - Earnings (Loss) Per Share

The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260 (“ASC 260”), Earnings per Share. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS, but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, warrants and restricted stock) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were 37,084 and 967,779 potential common shares related to performance-based restricted stock units and restricted stock units that were excluded from the calculation of diluted EPS for the three months ended June 30, 2024 and 2023, respectively, because their effect could have been anti-dilutive. There were 1,354,908 and 620,402 potential common shares related to performance-based restricted stock units and restricted stock units that were excluded from the calculation of diluted EPS for the six months ended June 30, 2024 and 2023, respectively, because their effect could have been anti-dilutive.

The following table sets forth the computation of basic and diluted EPS:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands, except share and per share data)	2024		2023		2024		2023
Numerator:
Net income (loss) attributable to HF Foods Group Inc.	$	17	$	(850)	$	(677)	$	(6,783)
Denominator:
Weighted-average common shares outstanding	52,585,715		54,046,328		52,370,842		53,935,178
Effect of dilutive securities	75,404		—		—		—
Weighted-average dilutive shares outstanding	52,661,119		54,046,328		52,370,842		53,935,178
Earnings (loss) per common share:
Basic	$	0.00	$	(0.02)	$	(0.01)	$	(0.13)
Diluted	$	0.00	$	(0.02)	$	(0.01)	$	(0.13)

Note 10 - Income Taxes

The determination of the Company’s overall effective income tax rate requires the use of estimates. The effective income tax rate reflects the income earned and taxed in U.S. federal and various state jurisdictions based on enacted tax law, permanent differences between book and tax items, tax credits and the Company’s change in relative income in each jurisdiction. Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and the Company’s effective income tax rate in the future. As of June 30, 2024, the Company had no subsidiaries outside the U.S., as such, no foreign income tax was recorded.

For the three and six months ended June 30, 2024, the Company's effective income tax rate of 87.2% and 129.6%, respectively, differed from the federal statutory tax rate primarily as a result of discrete tax items, permanent differences and state income taxes. The Company’s tax provision for the three and six months ended June 30, 2024 includes a discrete tax expense of $1.0 million related to the Company’s SEC settlement and $0.1 million tax expense related to stock-based compensation shortfalls. Absent the discrete items, the estimated annual effective income tax rate from continuing operations for the three and six months ended June 30, 2024 was 25.5% and 25.1%, respectively. For the three and six months ended June 30, 2023, the Company's effective income tax rate of (15.5)% and 21.5%, respectively, differed from the federal statutory tax rate primarily as a result of permanent differences and state income taxes.

During the three months ended June 30, 2024, the Company dissolved one of its subsidiaries, HFFI. The Company is in the process of determining the tax impact of the dissolution. However, the Company does not expect the dissolution of HFFI to have a significant impact on the income tax provision as HFFI’s deferred tax assets were subject to a full valuation allowance.

Note 11 - Related Party Transactions

The Company makes regular purchases from and sales to various related parties. Related party affiliations were attributed to transactions conducted between the Company and those business entities partially or wholly owned by the Company, the Company's officers and/or shareholders who owned no less than 10% shareholdings of the Company.

Mr. Xiao Mou Zhang (“Mr. Zhang”), the Chief Executive Officer of the Company, and certain of his immediate family members (collectively greater than 10% shareholders) have ownership interests in various related parties involved in (i) the distribution of food and related products to restaurants and other retailers and (ii) the supply of fresh food, frozen food, and packaging supplies to distributors. Mr. Zhang does not have any involvement in negotiations with any of the above-mentioned related parties.

The Company believes that Mr. Zhou Min Ni (“Mr. Ni”), the Company’s former Co-Chief Executive Officer, together with various trusts for the benefit of Mr. Ni's four children, are collectively beneficial owners of more than 10% of the outstanding shares of the Company’s common stock, and he and certain of his immediate family members have ownership interests in related parties involved in (i) the distribution of food and related products to restaurants and other retailers and (ii) the supply of fresh food, frozen food, and packaging supplies to distributors.

The related party transactions as of June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and 2023 are identified as follows:

Related Party Sales, Purchases, and Lease Agreements

Purchases

Below is a summary of purchases of goods and services from related parties recorded for the three and six months ended June 30, 2024 and 2023:


			Three Months Ended June 30,				Six Months Ended June 30,
	(In thousands)	Nature	2024		2023		2024		2023
(a)	Asahi Food, Inc.	Trade	$	29	$	17	$	56	$	39
(b)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	Trade	1,763		2,729		2,913		4,813


(c)	Enson Seafood GA, Inc. (formerly “GA-GW Seafood, Inc.”)	Trade	—		—		—		37





(c)	Ocean Pacific Seafood Group, Inc.	Trade	60		74		140		242




(c)	Rainfield Ranches, LP	Trade	38		6		95		36
	Total		$	1,890	$	2,826	$	3,204	$	5,167

_______________

(a)The Company, through its subsidiary Mountain Food, LLC, owns an equity interest in this entity.

(b)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

(c)Mr. Zhou Min Ni owns an equity interest in this entity.

Sales

Below is a summary of sales to related parties recorded for the three and six months ended June 30, 2024 and 2023:


		Three Months Ended June 30,				Six Months Ended June 30,
	(In thousands)	2024		2023		2024		2023
(a)	ABC Food Trading, LLC	$	431	$	722	$	834	$	1,315
(b)	Asahi Food, Inc.	148		191		287		386
(a)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	335		93		588		526
(c)	Eagle Food Service, LLC	—		922		—		1,942




(d)	First Choice Seafood, Inc.	6		8		13		16
(d)	Fortune One Foods, Inc.	91		4		107		23

(e)	N&F Logistics, Inc.	—		—		—		6
(f)	Union Food LLC	—		8		—		27

	Total	$	1,011	$	1,948	$	1,829	$	4,241

_______________

(a)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

(b)The Company, through its subsidiary Mountain Food, LLC, owns an equity interest in this entity.

(c)Tina Ni, one of Mr. Zhou Min Ni’s family members, owns an equity interest in this entity indirectly through its parent company.

(d)Mr. Zhou Min Ni owns an equity interest in this entity indirectly through its parent company.

(e)Mr. Zhou Min Ni owns an equity interest in this entity.

(f)Tina Ni, one of Mr. Zhou Min Ni’s family members, owns an equity interest in this entity.

Lease Agreements

The Company leases various facilities to related parties.

In 2020, the Company renewed a warehouse lease from Yoan Chang Trading Inc. under an operating lease agreement which expired on December 31, 2020. In February 2021, the Company executed a new five-year operating lease agreement with Yoan Chang Trading Inc., effective January 1, 2021 and expiring on December 31, 2025. Rent expense, which is included in distribution, selling and administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss), was $0.1 million and $0.1 million for the three months ended June 30, 2024 and 2023, respectively and $0.1 million and $0.2 million for the six months ended June 30, 2024 and 2023, respectively.

Beginning 2014, the Company leased a warehouse to Asahi Food, Inc. under a commercial lease agreement which was rescinded March 1, 2020. A new commercial lease agreement for a period of one year was entered into, expiring February 28, 2021, with a total of four renewal periods with each term being one year. Rental income was $36 thousand and $36 thousand for the three months ended June 30, 2024 and 2023, respectively and $72 thousand and $72 thousand for the six months ended June 30, 2024 and 2023, respectively. Rental income is included in other income in the condensed consolidated statements of operations and comprehensive income (loss).

Related Party Balances

Accounts Receivable - Related Parties, Net

Below is a summary of accounts receivable with related parties recorded as of June 30, 2024 and December 31, 2023, respectively:


	(In thousands)	June 30, 2024		December 31, 2023
(a)	ABC Food Trading, LLC	$	194	$	94
(b)	Asahi Food, Inc.	80		69
(a)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	168		84

(c)	Enson Seafood GA, Inc. (formerly known as GA-GW Seafood, Inc.)	59		59
(d)	Fortune One Foods, Inc.	47		—
(e)	Union Food LLC	—		2




	Total	$	548	$	308

_______________

(a)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

(b)The Company, through its subsidiary Mountain Food, LLC, owns an equity interest in this entity.

(c)Mr. Zhou Min Ni owns an equity interest in this entity.

(d)Mr. Zhou Min Ni owns an equity interest in this entity indirectly through its parent company.

(e)Tina Ni, one of Mr. Zhou Min Ni’s family members, owns an equity interest in this entity.

The Company has reserved for 100% of the accounts receivable for Enson Seafood GA, Inc. as of June 30, 2024 and December 31, 2023. All other accounts receivable from these related parties are current and considered fully collectible. No additional allowance is deemed necessary as of June 30, 2024 and December 31, 2023.

Accounts Payable - Related Parties

All the accounts payable to related parties are payable upon demand without interest. Below is a summary of accounts payable with related parties recorded as of June 30, 2024 and December 31, 2023, respectively:


	(In thousands)	June 30, 2024		December 31, 2023
(a)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	$	627	$	379








	Others	24		18
	Total	$	651	$	397

_______________

(a)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

Note 12 - Stock-Based Compensation

In 2021, the Company began issuing awards under the HF Foods Group Inc. 2018 Omnibus Equity Incentive Plan (the “2018 Incentive Plan”), which reserves up to 3,000,000 shares of the Company's common stock for issuance of awards to employees and non-employee directors. On June 3, 2024, the Company’s shareholders approved an amendment to the 2018 Incentive Plan which increased the number of shares of the Company's common stock available for issuance under the 2018 Incentive Plan to 7,000,000, an increase of 4,000,000 shares. As of June 30, 2024, the Company had 1,065,174 time-based vesting restricted stock units unvested, 981,894 performance-based restricted stock units unvested, 1,086,403 shares of common stock vested and 3,866,529 shares remaining available for future awards under the 2018 Incentive Plan.

Stock-based compensation expense was $0.5 million and $0.8 million for the three months ended June 30, 2024 and 2023, respectively. Stock-based compensation expense was $1.3 million and $1.8 million for the six months ended June 30, 2024 and 2023, respectively. Stock-based compensation expense was included in distribution, selling and administrative expenses in the Company's condensed consolidated statements of operations and comprehensive income (loss).

As of June 30, 2024, there was $6.8 million of total unrecognized compensation cost related to all non-vested outstanding RSUs and PSUs outstanding under the 2018 Incentive Plan, with a weighted average remaining service period of 2.32 years.

Note 13 - Commitments and Contingencies

From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material. The Company continuously assesses the potential liability related to its pending litigation and revises its estimates when additional information becomes available. Adverse outcomes in some or all of these matters may result in significant monetary damages or injunctive relief against the Company that could adversely affect its ability to conduct business. There also exists the possibility of a material adverse effect on the Company’s financial statements for the period in which the effect of an unfavorable outcome becomes probable and reasonably estimable. Legal costs associated with loss contingencies are expensed as incurred.

On June 6, 2024, the SEC announced that it had accepted an Offer of Settlement submitted by the Company in order to resolve the previously disclosed formal, non-public SEC investigation of allegations that the Company and certain of its current and former directors and officers violated the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements. Under the settlement, without admitting or denying the SEC’s findings in this matter, the Company consented to the entry of an administrative civil cease-and-desist order by the SEC (the “Order”) with respect to violations of Sections 17(a) of the Securities Act, and of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Securities Exchange Act of 1934, as amended, and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13a-15(a), and 14a-9 thereunder, resulting from the materially false and misleading disclosures and other fraudulent conduct implemented by its former Chairman and CEO Zhou Min Ni and former CFO Jian Ming “Jonathan” Ni. The Company agreed to payment of a civil monetary penalty of $3.9 million, paid during the three months ended June 30, 2024, which was recorded in other income (expense), net in the Company’s condensed consolidated statements of operations and comprehensive income (loss).

The Order states that, in determining to accept the Company’s Offer of Settlement, the SEC considered the numerous remedial actions promptly undertaken by the Company and its cooperation during the investigation. The Company’s resolution follows charges brought by the SEC against the two former executives in a District Court action filed on June 3, 2024. As a result of the SEC’s district court complaint against them, the two former executives agreed to pay civil fines and disgorgement, and agreed to be subject to officer and director bars. Zhou Min Ni also agreed to a conduct-based injunction which enjoins him from directly or indirectly participating in the management of, or otherwise exercising any control of influence over the Company. The Special Litigation Committee of the Board of Directors previously obtained a monetary settlement from the former executives that was ratified by the Delaware Chancery Court.

AnHeart Lease Guarantee

The Company provided a guarantee for two separate leases for two properties located in Manhattan, New York, at 273 Fifth Avenue and 275 Fifth Avenue, for 30 years and 15 years, respectively. The Company previously determined that AnHeart was a VIE as a result of the guarantee. However, the Company concluded it was not the primary beneficiary of AnHeart and therefore did not consolidate, because it did not have the power to direct the activities of AnHeart that most significantly impact AnHeart's economic performance. During the three months ended June 30, 2024, the Company assumed the lease for 275 Fifth Avenue and no longer recognized AnHeart as a VIE. As a result of the lease assumption, the lease guarantee liability of $5.4 million was reversed and an operating lease right-of-use asset and liability of $4.9 million was recorded on the condensed consolidated balance sheets. As a result of the reversal, a gain of $5.4 million was recorded to other expense (income), net on the condensed consolidated statements of operations and comprehensive income (loss).

On February 10, 2021, the Company entered into an Assignment and Assumption of Lease Agreement (“Assignment”), dated effective as of January 21, 2021, with AnHeart and Premier 273 Fifth, LLC, pursuant to which it assumed the lease of the premises at 273 Fifth Avenue (the “273 Lease Agreement”). At the same time, the closing documents were delivered to effectuate the amendment of the 273 Lease Agreement pursuant to an Amendment to Lease (the “Lease Amendment”). The Assignment and the Lease Amendment were negotiated in light of the Company’s guarantee obligations as guarantor under the Lease Agreement. The Company agreed to observe all the covenants and conditions of the Lease Agreement, as amended, including the payment of all rents due. Under the terms of the Lease Agreement and the Assignment, the Company has undertaken to construct, at its own expense, a building on the premises at a minimum cost of $2.5 million. The Lease Amendment permits subletting of the premises, and the Company intends to sublease the newly constructed premises to defray the rental expense undertaken pursuant to its guaranty obligations. In March 2024, the Company began construction of a multi-use facility on 273 Fifth Avenue and committed $7.0 million for the completion of the construction project. The Company incurred $2.2 million in construction costs which was recorded in construction in progress within property and equipment, net in the Company’s condensed consolidated balance sheet as of June 30, 2024. The Company expects to complete construction in June 2025.

On January 17, 2022, the Company received notice that AnHeart had defaulted on its obligations as tenant under the lease for 275 Fifth Avenue. On February 7, 2022, the Company undertook its guaranty obligations by assuming responsibility for payment of monthly rent and other tenant obligations, including past due rent as well as property tax obligations beginning with the January 2022 rent due. On February 25, 2022, the Company instituted a legal action to pursue legal remedies against AnHeart and Minsheng. In March 2022, the Company agreed to stay that litigation against AnHeart in exchange for AnHeart’s payment of certain back rent from January to April 2022 and its continued partial payment of monthly rent. AnHeart subsequently defaulted on these obligations. On October 25, 2023, the Company commenced a new legal action by filing a complaint in New York County Supreme Court to pursue legal remedies against AnHeart and Minsheng (the “2023 Action”). As of the filing of the new summons and complaint, AnHeart and Minsheng are indebted to the Company in the amount of $474,000. AnHeart and the Company have since reached a settlement agreement (the “Settlement Agreement”) for AnHeart to pay the Company $40,000 a month in rent through December 2024 and commence regular monthly rental payments in accordance with the lease for 275 Fifth Avenue. The Settlement Agreement also provides that AnHeart will pay twenty-four monthly installments of $11,250 from January 2025 through December 2026 as payment for all back rent due.

Effective April 30, 2024, the Company through its subsidiary assumed the lease of a building located on the premises of 275 Fifth Avenue, New York, New York. The Company was the guarantor of this lease under a lease guarantee agreement dated July 2018, and in February 2022, upon receiving notice of default, the Company undertook its lease guarantee obligations. The assumption of the lease had no impact on the Company’s obligations as guarantor.

The lease covers certain portions of the ground floor, lower lever, and second floor of the building. The lease term ends on April 30, 2034 and is renewable at the option of the Company for up to two additional five-year terms. The Company shall pay rent of approximately $45,000 per month with provisions for yearly increases.

Note 14 - Subsequent Events

Other than as disclosed elsewhere, no subsequent events have occurred that would require recognition in the condensed consolidated financial statements or disclosure in the accompanying notes.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY

This Quarterly Report on Form 10-Q for HF Foods Group Inc. (“HF Foods”, the “Company,” “we,” “us,” or “our”) contains certain statements that are, or may deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “will” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, include without limitation:

•Low margins in the foodservice distribution industry and periods of significant or prolonged inflation or deflation;

•Qualified labor shortages;

•Unfavorable macroeconomic conditions in the United States;

•Competition in the foodservice distribution industry particularly the entry of new competitors into the Chinese/Asian restaurant supply market niche;

•Increases in fuel costs;

•Disruption of relationships with vendors and increases in product prices;

•Dependency on the timely delivery of products from vendors, particularly the prolonged diminution of global supply chains;

•The effects of the COVID-19 pandemic or other pandemics;

•The steps taken by the governments where our suppliers are located, including the People’s Republic of China, to address the COVID-19 pandemic or other pandemics;

•Disruption of relationships with or loss of customers;

•Changes in consumer eating and dining out habits;

•Related party transactions and possible conflicts of interests;

•Related parties and variable interest entities consolidation;

•Failure to protect our intellectual property rights;

•Our ability to renew or replace our current warehouse leases on favorable terms, or terminations prior to expiration of stated terms;

•Failure to retain our senior management and other key personnel, particularly our CEO, President and COO, CFO and General Counsel and CCO;

•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;

•Costs to comply with environmental laws and regulations;

•Litigation, regulatory investigations and potential enforcement actions;

•Increases in commodity prices;

•U.S. government tariffs on products imported into the United States, particularly from China;

•Severe weather, natural disasters and adverse climate change;

•Unfavorable geopolitical conditions;

•Any cyber security incident, other technology disruption or delay in implementing our information technology systems;

•Current indebtedness affecting our liquidity and ability of future financing;

•Failure to acquire other distributors or wholesalers and enlarge our customer base;

•Scarcity of and competition for acquisition opportunities;

•Our ability to obtain acquisition financing;

•The impact of non-cash charges relating to the amortization of intangible assets related to material acquisitions;

•Our ability to identify acquisition candidates;

•Increases in debt in order to successfully implement our acquisition strategy;

•Difficulties in integrating operations, personnel, and assets of acquired businesses that may disrupt our business, dilute stockholder value, and adversely affect our operating results;

•The impact on the price and demand for our common stock resulting from the relative illiquidity of the market for our common stock;

•Significant stockholders’ ability to significantly influence the Company; and

•The impact of state anti-takeover laws and related provisions in our governance documents.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other filings with the Securities and Exchange Commission (the "SEC") and public communications. We caution you that the important factors referenced above may not contain all of the risks, uncertainties (some of which are beyond our control) or other assumptions that are important to you. These risks and uncertainties include, but are not limited to, those factors described under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC.

In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. Except as otherwise required by law, we undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise.

Overview

We market and distribute Asian specialty food products, seafood, fresh produce, frozen and dry food, and non-food products primarily to Asian restaurants and other foodservice customers throughout the United States. HF Foods was formed through a merger between two complementary market leaders, HF Foods Group Inc. and B&R Global. In 2022, HF Foods acquired two frozen seafood suppliers, expanding its distribution network in Illinois, Texas and along the eastern seaboard, from Massachusetts to Florida, as well as Pennsylvania, West Virginia, Ohio, Kentucky, and Tennessee.

We aim to supply the increasing demand for Asian American restaurant cuisine, leveraging our nationwide network of distribution centers and our strong relations with growers and suppliers of fresh, high-quality specialty restaurant food products and supplies in the US, South America, and China. Capitalizing on our deep understanding of the Chinese culture, we have become a trusted partner serving Asian restaurants and other foodservice customers throughout the United States, providing sales and service support to customers who mainly converse in Mandarin or other Chinese dialects. We are dedicated to serving the vast array of Asian restaurants in need of high-quality and specialized food ingredients at competitive prices.

Transformation Plan

To position the business for long-term success, we have 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:

•Centralized Purchasing: We began the roll out of our centralized purchasing program with seafood 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.

•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.

•Digital Transformation: We will be implementing a modern ERP solution across all of our distribution centers. This is expected to deliver enhanced operational efficiency and responsiveness, streamlined processes, and greater data driven decision-making.

•Facility Upgrades: We will be reorganizing and upgrading our facilities and distribution centers to efficiently streamline costs, and to capitalize on cross-selling opportunities with both new and existing customers.

Financial Overview


	Three Months Ended June 30,						Six Months Ended June 30,
($ in thousands)	2024		2023		Change			2024		2023		Change
Net revenue	$	302,342	$	292,312	$	10,030		$	597,996	$	586,167	$	11,829
Net income (loss)	$	235	$	(1,560)	$	1,795		$	(324)	$	(7,357)	$	7,033
Adjusted EBITDA	$	10,561	$	8,357	$	2,204		$	19,263	$	14,106	$	5,157

For additional information on our non-GAAP financial measures, EBITDA and Adjusted EBITDA, see the section entitled “EBITDA and Adjusted EBITDA” below.

How to Assess HF Foods’ Performance

In assessing our performance, we consider a variety of performance and financial measures, including principal growth in net revenue, gross profit, distribution, selling and administrative expenses, as well as certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA. The key measures that we use to evaluate the performance of our business are set forth below:

Net Revenue

Net revenue is equal to gross sales minus sales returns, sales incentives that we offer to our customers, such as rebates and discounts that are offsets to gross sales; and certain other adjustments. Our net revenue is driven by changes in number of customers and average customer order amount, product inflation that is reflected in the pricing of our products and mix of products sold.

Gross Profit

Gross profit is equal to net revenue minus cost of revenue. Cost of revenue primarily includes inventory costs (net of supplier consideration), inbound freight, customs clearance fees and other miscellaneous expenses. Cost of revenue generally changes as we incur higher or lower costs from suppliers and as the customer and product mix changes.

Distribution, Selling and Administrative Expenses

Distribution, selling and administrative expenses consist primarily of salaries, stock-based compensation and benefits for employees and contract laborers, trucking and fuel expenses, utilities, maintenance and repair expenses, insurance expenses, depreciation and amortization expenses, selling and marketing expenses, professional fees and other operating expenses.

EBITDA and Adjusted EBITDA

Discussion of our results includes certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA, that we believe provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial performance with other companies in the same industry, many of which present similar non-GAAP financial measures to investors. We present EBITDA and Adjusted EBITDA in order to provide supplemental information that we consider relevant for the readers of our condensed consolidated financial statements included elsewhere in this report, and such information is not meant to replace or supersede GAAP measures.

Management uses EBITDA to measure operating performance, defined as net income before interest expense, interest income, income taxes, and depreciation and amortization. In addition, management uses Adjusted EBITDA, defined as net income before interest expense, interest income, income taxes, and depreciation and amortization, further adjusted to exclude certain unusual, non-cash, or non-recurring expenses. Management believes that Adjusted EBITDA is less susceptible to variances in actual performance resulting from non-recurring expenses, and other non-cash charges and is more reflective of other factors that affect our operating performance.

The definition of EBITDA and Adjusted EBITDA may not be the same as similarly titled measures used by other companies in the industry. EBITDA and Adjusted EBITDA are not defined under GAAP and are subject to important limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of HF Foods’ results as reported under GAAP. For example, Adjusted EBITDA:

•excludes certain tax payments that may represent a reduction in cash available;

•does not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future;

•does not reflect changes in, or cash requirements for, our working capital needs; and

•does not reflect the significant interest expense, or the cash requirements, necessary to service our debt.

For additional information on EBITDA and Adjusted EBITDA and a reconciliation to their most directly comparable U.S. GAAP financial measures, see “Results of Operations — EBITDA and Adjusted EBITDA” below.

Results of Operations

Comparison of Three Months Ended June 30, 2024 to Three Months Ended June 30, 2023

The following table sets forth a summary of our consolidated results of operations for the three months ended June 30, 2024 and 2023. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.


	Three Months Ended June 30,
($ in thousands)	2024		2023		Change

Net revenue	$	302,342	$	292,312	$	10,030
Cost of revenue	249,877		241,646		8,231
Gross profit	52,465		50,666		1,799
Distribution, selling and administrative expenses	49,840		52,243		(2,403)

Income (loss) from operations	2,625		(1,577)		4,202

Interest expense	3,119		2,847		272
Other expense (income), net	3,466		(127)		3,593
Change in fair value of interest rate swap contracts	(361)		(2,856)		2,495
Lease guarantee income	(5,433)		(90)		(5,343)
Income (loss) before income taxes	1,834		(1,351)		3,185
Income tax expense	1,599		209		1,390
Net income (loss) and comprehensive loss	235		(1,560)		1,795
Less: net income (loss) attributable to noncontrolling interests	218		(710)		928
Net income (loss) and comprehensive loss attributable to HF Foods Group Inc.	$	17	$	(850)	$	867

The following table sets forth the components of our consolidated results of operations expressed as a percentage of net revenue for the periods indicated:


	Three Months Ended June 30,
	2024		2023

Net revenue	100.0	%	100.0	%
Cost of revenue	82.6	%	82.7	%
Gross profit	17.4	%	17.3	%
Distribution, selling and administrative expenses	16.5	%	17.9	%

Income (loss) from operations	0.9	%	(0.5)	%

Interest expense	0.9	%	1.0	%
Other expense (income), net	1.1	%	—	%
Change in fair value of interest rate swap contracts	(0.1)	%	(1.0)	%
Lease guarantee income	(1.8)	%	—	%
Income (loss) before income taxes	0.6	%	(0.5)	%
Income tax expense	0.5	%	0.1	%
Net income (loss) and comprehensive income (loss)	0.1	%	(0.5)	%
Less: net income (loss) attributable to noncontrolling interests	0.1	%	(0.2)	%
Net income (loss) and comprehensive income (loss) attributable to HF Foods Group Inc.	—	%	(0.3)	%

Net Revenue

Net revenue for the three months ended June 30, 2024 increased by $10.0 million, or 3.4%, compared to the same period in 2023. This increase was primarily attributable to product cost inflation, volume increases and improved pricing in certain categories, such as chicken and seafood, partially offset by deflation in commodities, such as cooking oils, and the $3.1 million loss in revenue resulting from the exit of our chicken processing businesses in 2023.

Gross Profit

Gross profit was $52.5 million for three months ended June 30, 2024 compared to $50.7 million in the same period in 2023, an increase of $1.8 million, or 3.6%. The increase was primarily attributable to increased net revenue. Gross profit margin for the three months ended June 30, 2024 increased slightly to 17.4% compared to 17.3% in the same period in 2023.

Distribution, Selling and Administrative Expenses

Distribution, selling and administrative expenses decreased by $2.4 million, or 4.6%, for the three months ended June 30, 2024 primarily due to a decrease of $5.5 million in professional fees, partially offset by higher payroll and related labor costs. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.5% for the three months ended June 30, 2024 from 17.9% in the same period in 2023, primarily due to increased net revenue and lower professional fees, partially offset by increased headcount.

Interest Expense

Interest expense for the three months ended June 30, 2024 of $3.1 million remained consistent compared to the three months ended June 30, 2023, having increased slightly from $2.8 million. Average floating interest rates on our floating-rate debt for the three months ended June 30, 2024 increased by approximately 0.4% on our line of credit and 0.3% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2023. Our average daily line of credit balance increased by $19.2 million, or 51.7%, to $56.4 million for the three months ended June 30, 2024 from $37.2 million for the three months ended June 30, 2023, and our average daily JPMorgan Chase mortgage-secured term loan balance decreased by $5 million, or 4.6%, to $104.2 million for the three months ended June 30, 2024 from $109.3 million for the three months ended June 30, 2023.

Income Tax Expense

Income tax expense was $1.6 million for the three months ended June 30, 2024, compared to an income tax expense of $0.2 million for the three months ended June 30, 2023, primarily due to discrete tax items related to the SEC settlement and stock-based compensation shortfalls impacting the tax provision for the current period.

Net Income (Loss) Attributable to HF Foods Group Inc.

Net income attributable to HF Foods Group Inc. was $0.0 million for the three months ended June 30, 2024, compared to net loss of $0.9 million for the three months ended June 30, 2023. The improvement was primarily driven by an increase in our income from operations of $4.2 million, as well as the $5.3 million reversal of our lease guarantee liability, partially offset by our SEC settlement of $3.9 million, the decrease of the gain related to the fair value of interest rate swap contracts of $2.5 million and the increase of income tax expense of $1.4 million.

EBITDA and Adjusted EBITDA

The following table reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP measure:


	Three Months Ended June 30,
($ in thousands)	2024		2023		Change

Net income (loss)	$	235	$	(1,560)	$	1,795
Interest expense	3,119		2,847		272
Income tax expense	1,599		209		1,390
Depreciation and amortization	6,590		6,440		150
EBITDA	11,543		7,936		3,607
Lease guarantee income	(5,433)		(90)		(5,343)
Change in fair value of interest rate swap contracts	(361)		(2,856)		2,495
Stock-based compensation expense	522		752		(230)
SEC settlement	3,900		—		3,900
Asset impairment charges	—		1,200		(1,200)
Business transformation costs (1)	130		160		(30)
Other non-routine expense (2)	260		1,255		(995)
Adjusted EBITDA	$	10,561	$	8,357	$	2,204

_________________

(1) Represents non-recurring costs associated with the launch of strategic projects including supply chain management improvements and technology infrastructure initiatives.

(2) Includes contested proxy and related legal and consulting costs and facility closure costs.

Results of Operations

Comparison of Six Months Ended June 30, 2024 to Six Months Ended June 30, 2023

The following table sets forth a summary of our consolidated results of operations for the six months ended June 30, 2024 and 2023. The historical results presented below are not necessarily indicative of the results that may be expected for any future period.


	Six Months Ended June 30,
($ in thousands)	2024		2023		Change

Net revenue	$	597,996	$	586,167	$	11,829
Cost of revenue	495,120		485,329		9,791
Gross profit	102,876		100,838		2,038
Distribution, selling and administrative expenses	100,336		105,172		(4,836)

Income (loss) from operations	2,540		(4,334)		6,874

Interest expense	5,953		5,715		238
Other expense (income), net	3,372		(355)		3,727
Change in fair value of interest rate swap contracts	(2,331)		(110)		(2,221)
Lease guarantee income	(5,548)		(210)		(5,338)
Income (loss) before income taxes	1,094		(9,374)		10,468
Income tax expense (benefit)	1,418		(2,017)		3,435
Net loss and comprehensive loss	(324)		(7,357)		7,033
Less: net income (loss) attributable to noncontrolling interests	353		(574)		927
Net loss and comprehensive loss attributable to HF Foods Group Inc.	$	(677)	$	(6,783)	$	6,106

The following table sets forth the components of our consolidated results of operations expressed as a percentage of net revenue for the periods indicated:


	Six Months Ended June 30,
	2024		2023

Net revenue	100.0	%	100.0	%
Cost of revenue	82.8	%	82.8	%
Gross profit	17.2	%	17.2	%
Distribution, selling and administrative expenses	16.8	%	17.9	%

Income (loss) from operations	0.4	%	(0.7)	%

Interest expense	1.0	%	1.0	%
Other expense (income), net	0.6	%	(0.1)	%
Change in fair value of interest rate swap contracts	(0.4)	%	—	%
Lease guarantee income	(0.9)	%	—	%
Income (loss) before income taxes	0.1	%	(1.6)	%
Income tax expense (benefit)	0.2	%	(0.3)	%
Net loss and comprehensive loss	(0.1)	%	(1.3)	%
Less: net income (loss) attributable to noncontrolling interests	0.1	%	—	%
Net loss and comprehensive loss attributable to HF Foods Group Inc.	(0.2)	%	(1.3)	%

Net Revenue

Net revenue for the six months ended June 30, 2024 increased by $11.8 million, or 2.0%, compared to the same period in 2023. This increase was primarily attributable to product cost inflation and improved pricing in certain categories, partially offset by the $5.8 million loss in revenue resulting from the exit of our chicken processing businesses in 2023.

Gross Profit

Gross profit was $102.9 million for the six months ended June 30, 2024 compared to $100.8 million in the same period in 2023, an increase of $2.1 million, or 2.0%. The gross profit increase was primarily attributable to increased net revenue. Gross profit margin for the six months ended June 30, 2024 was flat at 17.2% in the same period in 2023.

Distribution, Selling and Administrative Expenses

Distribution, selling and administrative expenses of $100.3 million for the six months ended June 30, 2024 decreased compared to prior year expenses of $105.2 million primarily due to a decrease of $8.4 million in professional fees, partially offset by higher payroll and related labor costs. Distribution, selling and administrative expenses as a percentage of net revenue decreased to 16.8% for the six months ended June 30, 2024 from 17.9% in the same period in 2023, primarily due to lower professional fees and increased net revenue, partially offset by increased headcount.

Interest Expense

Interest expense for the six months ended June 30, 2024 increased by $0.2 million or 4.2%, compared to the six months ended June 30, 2023, primarily due to a slightly higher interest-rate environment. Average floating interest rates on our floating-rate debt for the six months ended June 30, 2024 increased by approximately 0.6% on the line of credit and 0.6% on the JPMorgan Chase mortgage-secured term loan, compared to the same period in 2023. Our average daily line of credit balance increased by $10.7 million, or 26.8%, to $50.6 million for the six months ended June 30, 2024 from $39.9 million for the six months ended June 30, 2023, and our average daily JPMorgan Chase mortgage-secured term loan balance decreased by $5.0 million, or 4.5%, to $104.9 million for the six months ended June 30, 2024 from $109.9 million for the six months ended June 30, 2023.

Income Tax Expense (Benefit)

Income tax expense was $1.4 million for the six months ended June 30, 2024, compared to an income tax benefit of $2.0 million for the six months ended June 30, 2023, primarily due to discrete tax expense items impacting the tax provision for the current period compared to losses from operations in the prior period.

Net Loss Attributable to HF Foods Group Inc.

Net loss attributable to HF Foods Group Inc. was $0.7 million for the six months ended June 30, 2024, compared to net loss of $6.8 million for the six months ended June 30, 2023. The improvement of $6.1 million was primarily driven by an increase in our income from operations of $6.9 million, the $5.3 million reversal of our lease guarantee liability and the increase of the gain related to the fair value of interest rate swap contracts of $2.2 million, partially offset by our SEC settlement of $3.9 million and the increase of income tax expense of $3.4 million.

EBITDA and Adjusted EBITDA

The following table reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP measure:


	Six Months Ended June 30,
($ in thousands)	2024		2023		Change

Net loss	$	(324)	$	(7,357)	$	7,033
Interest expense	5,953		5,715		238
Income tax expense (benefit)	1,418		(2,017)		3,435
Depreciation and amortization	13,266		13,129		137
EBITDA	20,313		9,470		10,843
Lease guarantee income	(5,548)		(210)		(5,338)
Change in fair value of interest rate swap contracts	(2,331)		(110)		(2,221)
Stock-based compensation expense	1,260		1,848		(588)
SEC settlement	3,900		—		3,900
Asset impairment charges	—		1,200		(1,200)
Business transformation costs (1)	1,103		204		899
Other non-routine expense (2)	566		1,704		(1,138)
Adjusted EBITDA	$	19,263	$	14,106	$	5,157

_________________

(1) Represents non-recurring costs associated with the launch of strategic projects including supply chain management improvements and technology infrastructure initiatives.

(2) Includes contested proxy and related legal and consulting costs and facility closure costs.

Liquidity and Capital Resources

As of June 30, 2024, we had cash of approximately $14.0 million, checks issued not presented for payment of $6.5 million and access to approximately $29.9 million in additional funds through our $100.0 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.

We believe that our cash flow generated from operations is sufficient to meet our normal working capital needs for at least the next twelve months. However, our ability to repay our current obligations will depend on the future realization of our current assets. Management has considered the historical experience, the economy, the trends in the foodservice distribution industry to determine the expected collectability of accounts receivable and the realization of inventories as of June 30, 2024.

We are party to an amortizing interest rate swap contract with JPMorgan Chase for an initial notional amount of $120.0 million, expiring in March 2028, as a means to partially hedge our existing floating rate loans exposure. Pursuant to the agreement, we will pay the swap counterparty a fixed rate of 4.11% in exchange for floating payments based on CME Term SOFR.

Our liquidity is also affected by the entry of an administrative civil cease-and-desist order by the SEC, whereby we agreed to payment of a civil monetary penalty of $3.9 million. We made this payment during the three months ended June 30, 2024.

Management believes we have sufficient funds to meet our working capital requirements and debt obligations in the next twelve months. However, there are a number of factors that could potentially arise which might result in shortfalls in anticipated cash flow, such as the demand for our products, economic conditions, competitive pricing in the foodservice distribution industry, and our bank and suppliers being able to provide continued support. If the future cash flow from operations and other capital resources is insufficient to fund our liquidity needs, we may have to resort to reducing or delaying our expected acquisition plans, liquidating assets, obtaining additional debt or equity capital, or refinancing all or a portion of our debt.

As of June 30, 2024, we have no off balance sheet arrangements that currently have or are reasonably likely to have a material effect on our consolidated financial position, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources.

The following table summarizes cash flow data for the three months ended June 30, 2024 and 2023:


	Six Months Ended June 30,
(In thousands)	2024		2023		Change

Net cash (used in) provided by operating activities	$	(17)	$	8,732	$	(8,749)
Net cash used in investing activities	(6,331)		(1,522)		(4,809)
Net cash provided by (used in) financing activities	5,084		(16,553)		21,637
Net decrease in cash and cash equivalents	$	(1,264)	$	(9,343)	$	8,079

Operating Activities

Net cash (used in) provided by operating activities consists primarily of net income, which includes a $3.9 million civil monetary penalty payment, 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 (used in) provided by operating activities decreased by $8.7 million primarily due to the timing of working capital outlays and the $3.9 million SEC settlement payment partially offset by improved operating income.

Investing Activities

Net cash used in investing activities increased by $4.8 million primarily due to increased capital project spend in the six months ended June 30, 2024.

Financing Activities

Net cash provided by (used in) financing activities decreased by $21.6 million to $5.1 million provided by financing activities primarily due to net line of credit activity, as well as the checks issued not presented for payment activity for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Critical Accounting Policies and Estimates

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 2023 Annual Report on Form 10-K 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 June 30, 2024. Additionally, see Note 6 - Goodwill and Acquired Intangible Assets of our condensed consolidated financial statements on this Form 10-Q for disclosure regarding the Company’s single reporting unit.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Note 2 - Summary of Significant Accounting Policies to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.

Interest Rate Risk

Our debt exposes us to risk of fluctuations in interest rates. Floating rate debt, where the interest rate fluctuates periodically, exposes us to short-term changes in market interest rates. Fixed rate debt, where the interest rate is fixed over the life of the instrument, exposes us to changes in market interest rates reflected in the fair value of the debt and to the risk that we may need to refinance maturing debt with new debt at higher rates. We manage our debt portfolio to achieve an overall desired proportion of fixed and floating rate debts and may employ interest rate swaps as a tool from time to time to achieve that position. To manage our interest rate risk exposure, we entered into four interest rate swap contracts to hedge the floating rate term loans. See Note 7 - Derivative Financial Instruments to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

As of June 30, 2024, our aggregate floating rate debt’s outstanding principal balance without hedging was $68.6 million, or 38.5% of total debt, consisting primarily of our revolving line of credit (see Note 8 - Debt to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q). Our floating rate debt interest is based on the floating 1-month SOFR plus a predetermined credit adjustment rate plus the bank spread. The remaining 61.5% of our debt is on a fixed rate or a floating rate with hedging. In a hypothetical scenario, a 1% change in the applicable rate would cause the interest expense on our floating rate debt to change by approximately $0.7 million per year.

Fuel Price Risk

We are also exposed to risks relating to fluctuations in the price and availability of diesel fuel. We require significant quantities of diesel fuel for our vehicle fleet, and the inbound delivery of the products we sell is also dependent upon shipment by diesel-fueled vehicles. Additionally, elevated fuel costs can negatively impact consumer confidence and discretionary spending and thus reduce the frequency and amount spent by consumers for food-away-from-home purchases. We currently are able to obtain adequate supplies of diesel fuel, and average prices in the second quarter of 2024 decreased in comparison to average prices in the same period in 2023, decreasing 1.6% on average. However, it is impossible to predict the future availability or price of diesel fuel. The price and supply of diesel fuel fluctuates based on external factors not within our control, including geopolitical developments, supply and demand for oil and gas, regional production patterns, weather conditions and environmental concerns. Increases in the cost of diesel fuel could increase our cost of goods sold and operating costs to deliver products to our customers.

We do not actively hedge the price fluctuation of diesel fuel in general. Instead, we seek to minimize fuel cost risk through delivery route optimization and fleet utilization improvement.

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. In connection with this review and the audit of our consolidated financial statements for the year ended December 31, 2023, we identified material weaknesses as were reported previously, which continue to exist as of June 30, 2024. We did not properly design or maintain effective controls over the control environment, risk assessment, control activities, information and communication components and monitoring of the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that as a result of the material weaknesses and control deficiencies as reported in our Annual Report on Form 10-K for the year ended December 31, 2023, our disclosure controls and procedures were not effective as of June 30, 2024. Notwithstanding the weaknesses, our management has concluded that the financial statements included elsewhere in this report present fairly, and in all material respects, our financial position, results of operation and cash flow in conformity with GAAP.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting and Disclosure Controls

Management remains committed to ongoing efforts to address material weaknesses. Although we will continue to implement measures to remedy our internal control deficiencies, there can be no assurance that our efforts will be successful or avoid potential future material weaknesses. In addition, until remediation steps have been completed and operated for a sufficient period of time, and subsequent evaluation of their effectiveness is completed, the material weaknesses previously identified will continue to exist.

Other than the remediation efforts previously disclosed, there have been no changes in our internal controls over financial reporting for the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings.

From time to time, we are a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to our outstanding legal matters, we believe that the amount or estimable range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. For information relating to legal proceedings, see Note 13 - Commitments and Contingencies to our condensed consolidated financial statements.

ITEM 1A. Risk Factors.

Except as set forth below, there have been no material changes from the risk factors disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

Turnover among our senior management, directors and other key personnel may create uncertainty and adversely affect our operations.

Our success is substantially dependent on our senior management, directors and other key personnel. Our senior management, directors and other key personnel have been primarily responsible for determining the strategic direction of our business and for executing our growth strategy, and are integral to our brand, culture and reputation with suppliers and consumers. The loss of the services of any senior management, directors or other key personnel could have a material adverse effect on our business and prospects. We have recently appointed four new members to our board of directors as part of our continuous efforts to enhance our corporate governance and our future strategies and plans. Our new directors have different professional experiences and industry knowledge from those individuals who previously served, and we expect they will have different views on the issues that will determine our future strategies and plans. Such changes to strategic or operating goals may ultimately be unsuccessful. In addition, transition periods relating to such changes are often difficult as new personnel gain more detailed knowledge of our operations and management. If we do not integrate any new personnel successfully, including our new directors, we may be unable to manage and grow our business, and our financial condition and profitability may suffer as a result. Any departure of senior management, directors and other key personnel could be viewed in a negative light by investors and analysts, which may cause our stock price to decline.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities.

None.

ITEM 3. Defaults Upon Senior Securities.

None.

ITEM 4. Mine Safety Disclosures.

Not applicable.

ITEM 5. Other Information.

Securities Trading Plans of Directors and Executive Officers

During the three months ended June 30, 2024, none of our officers or directors adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K.

ITEM 6. Exhibits

The following exhibits are incorporated herein by reference or are filed or furnished with this report as indicated below:

Incorporated by Reference

Exhibit Number

Description

Form

Exhibit

Filing Date

3.1

Second Amended and Restated Certificate of Incorporation

8-K

3.1

8/11/2017

3.2

Certificate of Amendment to Certificate of Incorporation

8-K

3.1.2

8/27/2018

3.3

Amended and Restated Bylaws

8-K

3.02

11/4/2022

3.4

First Amendment to Amended and Restated Bylaws, dated April 25, 2023

8-K

3.1

4/26/2023

3.5

Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock

8-K

3.1

4/11/2023

4.1

Specimen Common Stock Certificate

S-1/A

4.2

7/28/2017

4.2

Form of Unit Purchase Option between the Registrant and Chardan Capital Markets, LLC

S-1/A

4.5

7/28/2017

4.3

Amendment to Preferred Stock Rights Agreement, dated as of April 11, 2024, by and between HF Foods Group Inc. and Equiniti Trust Company, LLC (f/k/a American Stock Transfer & Trust Company, LLC), as rights agent

8-A

4.2

4/12/2024

10.1†

Offer Letter, dated April 22, 2024, by and among HF Foods Group Inc. and Cindy Yao.

8-K

10.1

4/25/2024

10.2

Lease dated July 2, 2018, between Anheart Inc. and 825 Broadway Realty, LLC, Samayabeneli RE LLC, AS 2 East 30, LLC, 273 Yoco LLC, and UBA 2 East 30, LLC.

8-K

10.1

5/6/2024

10.3

Amendment to Lease, dated as of January 21, 2021, between Anheart, Inc. and 825 Broadway Realty, LLC, Samayabeneli RE LLC, AS 2 East 30, LLC, 273 Yoco LLC, and UBA 2 East 30, LLC.

8-K

10.2

5/6/2024

10.4

Assignment and Assumption of Lease Agreement, dated as of August 16, 2022 and effective as of April 30, 2024, between Anheart, Inc. and 273 Fifth Avenue, L.L.C.

8-K

10.3

5/6/2024

10.5†

Form of Restricted Stock Unit Award Agreement

S-8

4.2

6/5/2024

10.6†

Form of Performance Awards Agreement

S-8

4.3

6/5/2024

10.7†

First Amendment to HF Foods Group Inc. 2018 Omnibus Equity Incentive Plan

S-8

4.4

6/5/2024

10.8†

Second Amendment to HF Foods Group Inc. 2018 Omnibus Equity Incentive Plan

DEF14A

Annex

4/24/2024

10.9†

Separation Agreement, effective May 31, 2024, between HF Foods Group Inc. and Carlos Rodriguez.

8-K

10.1

6/5/2024

10.10†

Form of Director Letter Agreement

8-K

10.1

6/28/2024

31.1*

Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

31.2*

Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

32.1**

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*

XBRL Instance Document

101.SCH*

XBRL Taxonomy Extension Schema Document

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*			Filed herewith.
**			Furnished herewith.
†			Indicates a management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			HF Foods Group Inc.

			By: /s/ Xiao Mou Zhang
			Xiao Mou Zhang Chief Executive Officer

			By: /s/ Cindy Yao
			Cindy Yao Chief Financial Officer (Principal accounting and financial officer)

Date: August 9, 2024

Exhibit 31.1

Certification of Chief Executive Officer

I, Xiao Mou Zhang, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of HF Foods Group Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 9, 2024	By:	/s/ Xiao Mou Zhang
		Xiao Mou Zhang
		Chief Executive Officer

Exhibit 31.2

Certification of Chief Financial Officer

I, Cindy Yao, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of HF Foods Group Inc.;

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 9, 2024	By:	/s/ Cindy Yao
		Cindy Yao Chief Financial Officer

Exhibit 32.1

Section 1350 Certification of Chief Executive Officer

In connection with the Quarterly Report on Form 10-Q of HF Foods Group Inc. (the “Company”) for the quarterly period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Xiao Mou Zhang, Chief Executive Officer of the Company, certify, to the best of my knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 9, 2024	By:	/s/ Xiao Mou Zhang
		Xiao Mou Zhang
		Chief Executive Officer

Exhibit 32.2

Section 1350 Certification of Chief Financial Officer

In connection with the Quarterly Report on Form 10-Q of HF Foods Group Inc. (the “Company”) for the quarterly period ended June 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Cindy Yao, Chief Financial Officer, certify, to the best of my knowledge and belief, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 9, 2024	By:	/s/ Cindy Yao
		Cindy Yao Chief Financial Officer

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2024	Aug. 05, 2024
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity File Number	001-38180
Entity Registrant Name	HF FOODS GROUP INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-2717873
Entity Address, Address Line One	6325 South Rainbow Boulevard
Entity Address, Address Line Two	Suite 420
Entity Address, City or Town	Las Vegas
Entity Address, State or Province	NV
Entity Address, Postal Zip Code	89118
City Area Code	888
Local Phone Number	905-0988
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		52,730,183
Entity Central Index Key	0001680873
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	HFFG
Security Exchange Name	NASDAQ
Preferred Stock
Title of 12(b) Security	Preferred Share Purchase Rights

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
CURRENT ASSETS:
Cash	$ 13,968	$ 15,232
Inventories	119,232	105,618
Prepaid expenses and other current assets	8,996	10,145
TOTAL CURRENT ASSETS	193,611	178,827
Property and equipment, net	143,538	133,136
Operating lease right-of-use assets	16,006	12,714
Long-term investments	2,390	2,388
Customer relationships, net	141,898	147,181
Trademarks, trade names and other intangibles, net	27,768	30,625
Goodwill	85,118	85,118
Other long-term assets	6,538	6,531
TOTAL ASSETS	616,867	596,520
CURRENT LIABILITIES:
Checks issued not presented for payment	6,452	4,494
Line of credit	66,350	58,564
Current portion of long-term debt, net	5,414	5,450
Current portion of obligations under finance leases	3,025	1,749
Current portion of obligations under operating leases	4,116	3,706
Accrued expenses and other liabilities	15,554	17,287
TOTAL CURRENT LIABILITIES	164,059	143,264
Long-term debt, net of current portion	106,000	108,711
Obligations under finance leases, non-current	17,434	11,229
Obligations under operating leases, non-current	12,219	9,414
Deferred tax liabilities	28,204	29,028
Other long-term liabilities	160	6,891
TOTAL LIABILITIES	328,076	308,537
COMMITMENTS AND CONTINGENCIES (Note 13)
SHAREHOLDERS’ EQUITY:
Preferred Stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding	0	0
Common Stock, $0.0001 par value; 100,000,000 shares authorized; 54,668,169 and 54,153,391 shares issued and 52,670,746 and 52,155,968 shares outstanding as of June 30, 2024 and December 31, 2023, respectively	5	5
Treasury Stock, Common, Value	(7,750)	(7,750)
Additional paid-in capital	603,454	603,094
Accumulated deficit	(309,365)	(308,688)
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO HF FOODS GROUP INC.	286,344	286,661
Noncontrolling interests	2,447	1,322
TOTAL SHAREHOLDERS’ EQUITY	288,791	287,983
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	616,867	596,520
Series A Preferred Stock
SHAREHOLDERS’ EQUITY:
Preferred Stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding	0	0
Nonrelated Party
CURRENT ASSETS:
Accounts receivable, net of allowances of $2,077 and $2,119	50,867	47,524
CURRENT LIABILITIES:
Accounts payable	62,497	51,617
Related Party
CURRENT ASSETS:
Accounts receivable, net of allowances of $2,077 and $2,119	548	308
CURRENT LIABILITIES:
Accounts payable	$ 651	$ 397

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Allowance for credit loss, current	$ 2,077	$ 2,119
Preferred stock. par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	1,000,000	1,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	100,000,000	100,000,000
Common stock, issued (in shares)	54,668,169	54,153,391
Common stock, outstanding (in shares)	52,670,746	52,155,968
Series A Preferred Stock
Preferred stock. par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	100,000	100,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
TOTAL NET REVENUE	$ 302,342	$ 292,312	$ 597,996	$ 586,167
TOTAL COST OF REVENUE	249,877	241,646	495,120	485,329
GROSS PROFIT	52,465	50,666	102,876	100,838
Distribution, selling and administrative expenses	49,840	52,243	100,336	105,172
INCOME (LOSS) FROM OPERATIONS	2,625	(1,577)	2,540	(4,334)
Other expenses (income):
Interest expense	3,119	2,847	5,953	5,715
Other expense (income), net	3,466	(127)	3,372	(355)
Change in fair value of interest rate swap contracts	(361)	(2,856)	(2,331)	(110)
Lease guarantee income	(5,433)	(90)	(5,548)	(210)
INCOME (LOSS) BEFORE INCOME TAXES	1,834	(1,351)	1,094	(9,374)
Income tax expense (benefit)	1,599	209	1,418	(2,017)
NET INCOME (LOSS) AND COMPREHENSIVE LOSS	235	(1,560)	(324)	(7,357)
Less: net income (loss) attributable to noncontrolling interests	218	(710)	353	(574)
NET INCOME (LOSS) AND COMPREHENSIVE LOSS ATTRIBUTABLE TO HF FOODS GROUP INC.	$ 17	$ (850)	$ (677)	$ (6,783)
(LOSS) EARNINGS PER COMMON SHARE - BASIC (in USD per share)	$ 0.00	$ (0.02)	$ (0.01)	$ (0.13)
(LOSS) EARNINGS PER COMMON SHARE - DILUTED (in USD per share)	$ 0.00	$ (0.02)	$ (0.01)	$ (0.13)
WEIGHTED AVERAGE SHARES - BASIC (in shares)	52,585,715	54,046,328	52,370,842	53,935,178
WEIGHTED AVERAGE SHARES - DILUTED (in shares)	52,661,119	54,046,328	52,370,842	53,935,178
Third Party
TOTAL NET REVENUE	$ 301,331	$ 290,364	$ 596,167	$ 581,926
TOTAL COST OF REVENUE	248,957	239,724	493,441	481,181
Related Party
TOTAL NET REVENUE	1,011	1,948	1,829	4,241
TOTAL COST OF REVENUE	$ 920	$ 1,922	$ 1,679	$ 4,148

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash flows from operating activities:
Net loss	$ (324)	$ (7,357)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization expense	13,266	13,129
Asset impairment charges	0	1,200
Provision for credit losses	(40)	56
Deferred tax benefit	(824)	(1,324)
Change in fair value of interest rate swap contracts	(2,331)	(110)
Stock-based compensation	1,260	1,848
Non-cash lease expense	1,930	1,916
Lease guarantee income	(5,548)	(210)
Other non-cash expense	485	389
Changes in operating assets and liabilities:
Accounts receivable	(3,303)	(1,456)
Accounts receivable - related parties	(240)	(394)
Inventories	(13,614)	9,225
Prepaid expenses and other current assets	1,149	(3,545)
Other long-term assets	723	(1,519)
Accounts payable	10,880	(667)
Accounts payable - related parties	254	(659)
Operating lease liabilities	(2,007)	(1,765)
Accrued expenses and other liabilities	(1,733)	(25)
Net cash (used in) provided by operating activities	(17)	8,732
Cash flows from investing activities:
Purchase of property and equipment	(6,331)	(1,522)
Net cash used in investing activities	(6,331)	(1,522)
Cash flows from financing activities:
Payments for tax withholding related to vested stock awards	(128)	0
Checks issued not presented for payment	1,958	(1,072)
Proceeds from line of credit	735,717	594,916
Repayment of line of credit	(727,958)	(605,826)
Repayment of long-term debt	(2,768)	(3,172)
Repayment of obligations under finance leases	(1,737)	(1,399)
Net cash provided by (used in) financing activities	5,084	(16,553)
Net decrease in cash	(1,264)	(9,343)
Cash at beginning of the period	15,232	24,289
Cash at end of the period	13,968	14,946
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease liabilities	5,222	88
Property acquired in exchange for finance leases	9,218	1,059
Dissolution of noncontrolling interests	$ 772	$ 0

Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Total Shareholders’ Equity Attributable to HF Foods Group Inc.	Common Stock	Treasury Stock	Additional Paid-in Capital	Accumulated Deficit	Noncontrolling Interests
Beginning balance (in shares) at Dec. 31, 2022			53,813,777
Beginning balance at Dec. 31, 2022	$ 296,249	$ 291,813	$ 5	$ 0	$ 598,322	$ (306,514)	$ 4,436
Beginning balance, Treasury Stock (in shares) at Dec. 31, 2022				0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(5,797)	(5,933)				(5,933)	136
Issuance of common stock pursuant to equity compensation plan (in shares)			37,847
Shares withheld for tax withholdings on vested awards (in shares)			(7,132)
Shares withheld for tax withholdings on vested awards	(34)	(34)			(34)
Stock-based compensation	1,096	1,096			1,096
Ending balance (in shares) at Mar. 31, 2023			53,844,492
Ending balance at Mar. 31, 2023	291,514	286,942	$ 5	$ 0	599,384	(312,447)	4,572
Ending balance, Treasury Stock (in shares) at Mar. 31, 2023				0
Beginning balance (in shares) at Dec. 31, 2022			53,813,777
Beginning balance at Dec. 31, 2022	296,249	291,813	$ 5	$ 0	598,322	(306,514)	4,436
Beginning balance, Treasury Stock (in shares) at Dec. 31, 2022				0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(7,357)
Ending balance (in shares) at Jun. 30, 2023			54,086,164
Ending balance at Jun. 30, 2023	290,600	286,738	$ 5	$ 0	600,030	(313,297)	3,862
Ending balance, Treasury Stock (in shares) at Jun. 30, 2023				0
Beginning balance (in shares) at Mar. 31, 2023			53,844,492
Beginning balance at Mar. 31, 2023	291,514	286,942	$ 5	$ 0	599,384	(312,447)	4,572
Beginning balance, Treasury Stock (in shares) at Mar. 31, 2023				0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(1,560)	(850)				(850)	(710)
Issuance of common stock pursuant to equity compensation plan (in shares)			269,113
Shares withheld for tax withholdings on vested awards (in shares)			(27,441)
Shares withheld for tax withholdings on vested awards	(106)	(106)			(106)
Stock-based compensation	752	752			752
Ending balance (in shares) at Jun. 30, 2023			54,086,164
Ending balance at Jun. 30, 2023	290,600	286,738	$ 5	$ 0	600,030	(313,297)	3,862
Ending balance, Treasury Stock (in shares) at Jun. 30, 2023				0
Beginning balance (in shares) at Dec. 31, 2023			54,153,391
Beginning balance at Dec. 31, 2023	$ 287,983	286,661	$ 5	$ (7,750)	603,094	(308,688)	1,322
Beginning balance, Treasury Stock (in shares) at Dec. 31, 2023	(1,997,423)			1,997,423
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	$ (559)	(694)				(694)	135
Stock-based compensation	738	738			738
Ending balance (in shares) at Mar. 31, 2024			54,153,391
Ending balance at Mar. 31, 2024	288,162	286,705	$ 5	$ (7,750)	603,832	(309,382)	1,457
Ending balance, Treasury Stock (in shares) at Mar. 31, 2024				1,997,423
Beginning balance (in shares) at Dec. 31, 2023			54,153,391
Beginning balance at Dec. 31, 2023	$ 287,983	286,661	$ 5	$ (7,750)	603,094	(308,688)	1,322
Beginning balance, Treasury Stock (in shares) at Dec. 31, 2023	(1,997,423)			1,997,423
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	$ (324)
Ending balance (in shares) at Jun. 30, 2024			54,668,169
Ending balance at Jun. 30, 2024	$ 288,791	286,344	$ 5	$ (7,750)	603,454	(309,365)	2,447
Ending balance, Treasury Stock (in shares) at Jun. 30, 2024	(1,997,423)			1,997,423
Beginning balance (in shares) at Mar. 31, 2024			54,153,391
Beginning balance at Mar. 31, 2024	$ 288,162	286,705	$ 5	$ (7,750)	603,832	(309,382)	1,457
Beginning balance, Treasury Stock (in shares) at Mar. 31, 2024				1,997,423
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	235	17				17	218
Issuance of common stock pursuant to equity compensation plan (in shares)			555,181
Shares withheld for tax withholdings on vested awards (in shares)			(40,403)
Shares withheld for tax withholdings on vested awards	(128)	(128)			(128)
Dissolution of noncontrolling interests	0	(772)			(772)		772
Stock-based compensation	522	522			522
Ending balance (in shares) at Jun. 30, 2024			54,668,169
Ending balance at Jun. 30, 2024	$ 288,791	$ 286,344	$ 5	$ (7,750)	$ 603,454	$ (309,365)	$ 2,447
Ending balance, Treasury Stock (in shares) at Jun. 30, 2024	(1,997,423)			1,997,423

Organization and Description of Business	6 Months Ended
Organization and Description of Business	Jun. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Description of Business	Note 1 - Organization and Description of Business Organization and General HF Foods Group Inc. and subsidiaries (collectively “HF Foods” or the “Company”) is an Asian foodservice distributor that markets and distributes fresh produce, seafood, frozen and dry food, and non-food products to primarily Asian restaurants and other foodservice customers throughout the United States. The Company's business consists of one operating segment, which is also its one reportable segment: HF Foods, which operates solely in the United States. The Company's customer base consists primarily of Asian restaurants, and it provides sales and service support to customers who mainly converse in Mandarin or Chinese dialects.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Variable Interest Entities

Noncontrolling Interests

As of June 30, 2024 and December 31, 2023, noncontrolling interest equity consisted of the following:


($ in thousands)	Ownership of noncontrolling interest at June 30, 2024	June 30, 2024		December 31, 2023
HF Foods Industrial, LLC ("HFFI")(a)	—%	$	—	$	(759)
Min Food, Inc.	39.75%	2,078		1,715
Monterey Food Service, LLC	35.00%	369		366
Total		$	2,447	$	1,322

_______________

Uses of Estimates

Recent Accounting Pronouncements

Revenue

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue

Note 3 - Revenue

The following table presents the Company's net revenue disaggregated by principal product categories:


	Three Months Ended June 30,								Six Months Ended June 30,
($ in thousands)	2024				2023				2024				2023
Seafood	$	99,530	33	%	$	91,382	31	%	$	193,925	32	%	$	184,272	32	%
Asian Specialty	77,493		26	%	76,337		26	%	157,702		26	%	154,161		26	%
Meat and Poultry	63,792		20	%	56,012		19	%	121,542		20	%	108,061		18	%
Produce	32,171		11	%	31,636		11	%	64,254		11	%	63,847		11	%
Packaging and Other	15,645		5	%	18,037		6	%	32,019		6	%	37,433		6	%
Commodity	13,711		5	%	18,908		7	%	28,554		5	%	38,393		7	%
Total	$	302,342	100	%	$	292,312	100	%	$	597,996	100	%	$	586,167	100	%

Balance Sheet Components

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Components

Note 4 - Balance Sheet Components

Accounts receivable, net consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Accounts receivable	$	52,944	$	49,643
Less: allowance for expected credit losses	(2,077)		(2,119)
Accounts receivable, net	$	50,867	$	47,524

Movement of allowance for expected credit losses was as follows:


	Six Months Ended June 30,
(In thousands)	2024		2023
Beginning balance	$	2,119	$	1,442

(Decrease) increase in provision for expected credit losses	(40)		56
Bad debt write-offs	(2)		(24)
Ending balance	$	2,077	$	1,474

Prepaid expenses and other current assets consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Prepaid expenses	$	2,093	$	4,591
Advances to suppliers	6,112		3,340
Other current assets	791		2,214
Prepaid expenses and other current assets	$	8,996	$	10,145

Property and equipment, net consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Automobiles(1)	$	47,312	$	37,256
Buildings	63,045		63,045
Building improvements	22,278		22,014
Furniture and fixtures	419		474
Land	49,929		49,929
Machinery and equipment	11,970		11,532
Construction in progress	5,172		1,391
Subtotal	200,125		185,641
Less: accumulated depreciation	(56,587)		(52,505)
Property and equipment, net	$	143,538	$	133,136

_________________

Long-term investments consisted of the following:


(In thousands)	Ownership as of June 30, 2024	June 30, 2024		December 31, 2023
Asahi Food, Inc. ("Asahi")	49%	$	590	$	588
Pt. Tamron Akuatik Produk Industri ("Tamron")	12%	1,800		1,800
Total long-term investments		$	2,390	$	2,388

Accrued expenses and other liabilities consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Accrued compensation	$	5,617	$	7,941
Accrued professional fees	663		1,353

Accrued interest and fees	1,056		1,276
Self-insurance liability	2,439		1,723
Other	5,779		4,994
Total accrued expenses and other liabilities	$	15,554	$	17,287

Fair Value Measurements

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 5 - Fair Value Measurements

The following table presents the Company's hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the dates indicated:


	June 30, 2024								December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(In thousands)
Assets:
Interest rate swaps	$	—	$	1,142	$	—	$	1,142	$	—	$	412	$	—	$	412

Liabilities:
Interest rate swaps	$	—	$	—	$	—	$	—	$	—	$	(1,601)	$	—	$	(1,601)

•Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

See Note 7 - Derivative Financial Instruments for additional information regarding the Company’s interest rate swaps.


	Fair Value Measurements
(In thousands)	Level 1		Level 2		Level 3		Carrying Value
June 30, 2024
Fixed rate debt:

Bank of America	$	—	$	—	$	126	$	141


Other finance institutions	—		—		4		4
Variable rate debt:
JPMorgan Chase	$	—	$	103,549	$	—	$	103,549
Bank of America	—		2,123		—		2,123
East West Bank	—		5,597		—		5,597

December 31, 2023
Fixed rate debt:

Bank of America	$	—	$	—	$	151	$	169


Other finance institutions	—		—		43		45
Variable rate debt:
JPMorgan Chase	$	—	$	106,079	$	—	$	106,079
Bank of America	—		2,193		—		2,193
East West Bank	—		5,675		—		5,675

See Note 8 - Debt for additional information regarding the Company's debt.

Nonrecurring Fair Values

There were no assets carried at nonrecurring fair value at June 30, 2024 and December 31, 2023.

Goodwill and Acquired Intangible Assets

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Acquired Intangible Assets

Note 6 - Goodwill and Acquired Intangible Assets

Goodwill

Acquired Intangible Assets

The components of the intangible assets are as follows:


	June 30, 2024						December 31, 2023
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Non-competition agreement	$	3,892	$	(3,076)	$	816	$	3,892	$	(2,429)	$	1,463
Trademarks and trade names	44,207		(17,255)		26,952		44,207		(15,045)		29,162
Customer relationships	185,266		(43,368)		141,898		185,266		(38,085)		147,181
Total	$	233,365	$	(63,699)	$	169,666	$	233,365	$	(55,559)	$	177,806

Derivative Financial Instruments	6 Months Ended
Derivative Financial Instruments	Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Financial Instruments	Note 7 - Derivative Financial Instruments Derivative Instruments The Company utilizes interest rate swaps ("IRS") for the sole purpose of mitigating interest rate fluctuation risk associated with floating rate debt instruments (as defined in Note 8 - Debt). The Company does not use any other derivative financial instruments for trading or speculative purposes. On August 20, 2019, HF Foods entered into two IRS contracts with East West Bank (the "EWB IRS") for initial notional amounts of $1.1 million and $2.6 million, respectively. On April 20, 2023, the Company amended the corresponding mortgage term loans, which pegged the two mortgage term loans to 1-month Term SOFR (Secured Overnight Financing Rate) + 2.29% per annum for the remaining duration of the term loans. The amended EWB IRS contracts fixed the two term loans at 4.23% per annum until maturity in September 2029. On December 19, 2019, HF Foods entered into an IRS contract with Bank of America (the "BOA IRS") for an initial notional amount of $2.7 million in conjunction with a newly contracted mortgage term loan of corresponding amount. On December 19, 2021, the Company entered into the Second Amendment to Loan Agreement, which pegged the mortgage term loan to Term SOFR + 2.5%. The BOA IRS was modified accordingly to fix the SOFR based loan to approximately 4.50%. The term loan and corresponding BOA IRS contract mature in December 2029. On March 15, 2023, the Company entered into an amortizing IRS contract with JPMorgan Chase for an initial notional amount of $120.0 million, effective from March 1, 2023 and expiring in March 2028, as a means to partially hedge its existing floating rate loans exposure. Pursuant to the agreement, the Company will pay the swap counterparty a fixed rate of 4.11% in exchange for floating payments based on Term SOFR. The Company evaluated the aforementioned IRS contracts currently in place and did not designate those as cash flow hedges. Hence, the fair value changes of these IRS contracts are accounted for and recognized as a change in fair value of interest rate swap contracts in the condensed consolidated statements of operations and comprehensive income (loss). As of June 30, 2024, the Company determined that the fair values of the IRS contracts were $1.1 million in an asset position. As of December 31, 2023, the fair values of the IRS contracts were $0.4 million in an asset position and $1.6 million in a liability position. The Company includes these in other long-term assets and other long-term liabilities, respectively, on the consolidated balance sheets. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, as well as consider counterparty credit risk in its assessment of fair value. The inputs used to determine the fair value of the IRS are classified as Level 2 on the fair value hierarchy.

Debt

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Debt

Note 8 - Debt

Long-term debt at June 30, 2024 and December 31, 2023 is summarized as follows:


($ in thousands)
Bank Name	Maturity	Interest Rate at June 30, 2024	June 30, 2024		December 31, 2023
Bank of America (a)	October 2026 - December 2029	4.34% - 7.93%	$	2,264	$	2,362
East West Bank (b)	August 2027 - September 2029	7.62% - 9.00%	5,597		5,675

JPMorgan Chase (c)	January 2030	7.30%	103,786		106,337
Other finance institutions (d)	July 2024	N/A	4		45
Total debt, principal amount			111,651		114,419
Less: debt issuance costs			(237)		(258)
Total debt, carrying value			111,414		114,161
Less: current portion			(5,414)		(5,450)
Long-term debt			$	106,000	$	108,711

_______________

(a)Loan balance consists of real estate term loan and equipment term loan, collateralized by one real property and specific equipment. The real estate term loan is pegged to TERM SOFR + 2.5%.

(b)Real estate term loans with East West Bank are collateralized by three real properties. Balloon payments of $1.9 million and $3.0 million are due at maturity in 2027 and 2029, respectively.

(d)Secured by vehicles.

Credit Facility

Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

Note 9 - Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted EPS:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands, except share and per share data)	2024		2023		2024		2023
Numerator:
Net income (loss) attributable to HF Foods Group Inc.	$	17	$	(850)	$	(677)	$	(6,783)
Denominator:
Weighted-average common shares outstanding	52,585,715		54,046,328		52,370,842		53,935,178
Effect of dilutive securities	75,404		—		—		—
Weighted-average dilutive shares outstanding	52,661,119		54,046,328		52,370,842		53,935,178
Earnings (loss) per common share:
Basic	$	0.00	$	(0.02)	$	(0.01)	$	(0.13)
Diluted	$	0.00	$	(0.02)	$	(0.01)	$	(0.13)

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2024
Income Tax Disclosure [Abstract]
Income Taxes	Note 10 - Income Taxes The determination of the Company’s overall effective income tax rate requires the use of estimates. The effective income tax rate reflects the income earned and taxed in U.S. federal and various state jurisdictions based on enacted tax law, permanent differences between book and tax items, tax credits and the Company’s change in relative income in each jurisdiction. Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and the Company’s effective income tax rate in the future. As of June 30, 2024, the Company had no subsidiaries outside the U.S., as such, no foreign income tax was recorded. For the three and six months ended June 30, 2024, the Company's effective income tax rate of 87.2% and 129.6%, respectively, differed from the federal statutory tax rate primarily as a result of discrete tax items, permanent differences and state income taxes. The Company’s tax provision for the three and six months ended June 30, 2024 includes a discrete tax expense of $1.0 million related to the Company’s SEC settlement and $0.1 million tax expense related to stock-based compensation shortfalls. Absent the discrete items, the estimated annual effective income tax rate from continuing operations for the three and six months ended June 30, 2024 was 25.5% and 25.1%, respectively. For the three and six months ended June 30, 2023, the Company's effective income tax rate of (15.5)% and 21.5%, respectively, differed from the federal statutory tax rate primarily as a result of permanent differences and state income taxes. During the three months ended June 30, 2024, the Company dissolved one of its subsidiaries, HFFI. The Company is in the process of determining the tax impact of the dissolution. However, the Company does not expect the dissolution of HFFI to have a significant impact on the income tax provision as HFFI’s deferred tax assets were subject to a full valuation allowance.

Related Party Transactions

6 Months Ended

Jun. 30, 2024

Related Party Transactions

Note 11 - Related Party Transactions

The related party transactions as of June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and 2023 are identified as follows:

Related Party Sales, Purchases, and Lease Agreements

Purchases

Below is a summary of purchases of goods and services from related parties recorded for the three and six months ended June 30, 2024 and 2023:


			Three Months Ended June 30,				Six Months Ended June 30,
	(In thousands)	Nature	2024		2023		2024		2023
(a)	Asahi Food, Inc.	Trade	$	29	$	17	$	56	$	39
(b)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	Trade	1,763		2,729		2,913		4,813


(c)	Enson Seafood GA, Inc. (formerly “GA-GW Seafood, Inc.”)	Trade	—		—		—		37





(c)	Ocean Pacific Seafood Group, Inc.	Trade	60		74		140		242




(c)	Rainfield Ranches, LP	Trade	38		6		95		36
	Total		$	1,890	$	2,826	$	3,204	$	5,167

_______________

(a)The Company, through its subsidiary Mountain Food, LLC, owns an equity interest in this entity.

(b)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

(c)Mr. Zhou Min Ni owns an equity interest in this entity.

Sales

Below is a summary of sales to related parties recorded for the three and six months ended June 30, 2024 and 2023:


		Three Months Ended June 30,				Six Months Ended June 30,
	(In thousands)	2024		2023		2024		2023
(a)	ABC Food Trading, LLC	$	431	$	722	$	834	$	1,315
(b)	Asahi Food, Inc.	148		191		287		386
(a)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	335		93		588		526
(c)	Eagle Food Service, LLC	—		922		—		1,942




(d)	First Choice Seafood, Inc.	6		8		13		16
(d)	Fortune One Foods, Inc.	91		4		107		23

(e)	N&F Logistics, Inc.	—		—		—		6
(f)	Union Food LLC	—		8		—		27

	Total	$	1,011	$	1,948	$	1,829	$	4,241

_______________

(a)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

(b)The Company, through its subsidiary Mountain Food, LLC, owns an equity interest in this entity.

(c)Tina Ni, one of Mr. Zhou Min Ni’s family members, owns an equity interest in this entity indirectly through its parent company.

(d)Mr. Zhou Min Ni owns an equity interest in this entity indirectly through its parent company.

(e)Mr. Zhou Min Ni owns an equity interest in this entity.

(f)Tina Ni, one of Mr. Zhou Min Ni’s family members, owns an equity interest in this entity.

Lease Agreements

The Company leases various facilities to related parties.

Related Party Balances

Accounts Receivable - Related Parties, Net

Below is a summary of accounts receivable with related parties recorded as of June 30, 2024 and December 31, 2023, respectively:


	(In thousands)	June 30, 2024		December 31, 2023
(a)	ABC Food Trading, LLC	$	194	$	94
(b)	Asahi Food, Inc.	80		69
(a)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	168		84

(c)	Enson Seafood GA, Inc. (formerly known as GA-GW Seafood, Inc.)	59		59
(d)	Fortune One Foods, Inc.	47		—
(e)	Union Food LLC	—		2




	Total	$	548	$	308

_______________

(a)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

(b)The Company, through its subsidiary Mountain Food, LLC, owns an equity interest in this entity.

(c)Mr. Zhou Min Ni owns an equity interest in this entity.

(d)Mr. Zhou Min Ni owns an equity interest in this entity indirectly through its parent company.

(e)Tina Ni, one of Mr. Zhou Min Ni’s family members, owns an equity interest in this entity.

Accounts Payable - Related Parties


	(In thousands)	June 30, 2024		December 31, 2023
(a)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	$	627	$	379








	Others	24		18
	Total	$	651	$	397

_______________

(a)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

Stock-Based Compensation	6 Months Ended
Stock-Based Compensation	Jun. 30, 2024
Share-Based Payment Arrangement [Abstract]
Stock-Based Compensation	Note 12 - Stock-Based Compensation In 2021, the Company began issuing awards under the HF Foods Group Inc. 2018 Omnibus Equity Incentive Plan (the “2018 Incentive Plan”), which reserves up to 3,000,000 shares of the Company's common stock for issuance of awards to employees and non-employee directors. On June 3, 2024, the Company’s shareholders approved an amendment to the 2018 Incentive Plan which increased the number of shares of the Company's common stock available for issuance under the 2018 Incentive Plan to 7,000,000, an increase of 4,000,000 shares. As of June 30, 2024, the Company had 1,065,174 time-based vesting restricted stock units unvested, 981,894 performance-based restricted stock units unvested, 1,086,403 shares of common stock vested and 3,866,529 shares remaining available for future awards under the 2018 Incentive Plan. Stock-based compensation expense was $0.5 million and $0.8 million for the three months ended June 30, 2024 and 2023, respectively. Stock-based compensation expense was $1.3 million and $1.8 million for the six months ended June 30, 2024 and 2023, respectively. Stock-based compensation expense was included in distribution, selling and administrative expenses in the Company's condensed consolidated statements of operations and comprehensive income (loss). As of June 30, 2024, there was $6.8 million of total unrecognized compensation cost related to all non-vested outstanding RSUs and PSUs outstanding under the 2018 Incentive Plan, with a weighted average remaining service period of 2.32 years.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 13 - Commitments and Contingencies From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. If the loss is not probable or the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the specific claim if the likelihood of a potential loss is reasonably possible and the amount involved is material. The Company continuously assesses the potential liability related to its pending litigation and revises its estimates when additional information becomes available. Adverse outcomes in some or all of these matters may result in significant monetary damages or injunctive relief against the Company that could adversely affect its ability to conduct business. There also exists the possibility of a material adverse effect on the Company’s financial statements for the period in which the effect of an unfavorable outcome becomes probable and reasonably estimable. Legal costs associated with loss contingencies are expensed as incurred. On June 6, 2024, the SEC announced that it had accepted an Offer of Settlement submitted by the Company in order to resolve the previously disclosed formal, non-public SEC investigation of allegations that the Company and certain of its current and former directors and officers violated the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements. Under the settlement, without admitting or denying the SEC’s findings in this matter, the Company consented to the entry of an administrative civil cease-and-desist order by the SEC (the “Order”) with respect to violations of Sections 17(a) of the Securities Act, and of Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Securities Exchange Act of 1934, as amended, and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13a-15(a), and 14a-9 thereunder, resulting from the materially false and misleading disclosures and other fraudulent conduct implemented by its former Chairman and CEO Zhou Min Ni and former CFO Jian Ming “Jonathan” Ni. The Company agreed to payment of a civil monetary penalty of $3.9 million, paid during the three months ended June 30, 2024, which was recorded in other income (expense), net in the Company’s condensed consolidated statements of operations and comprehensive income (loss). The Order states that, in determining to accept the Company’s Offer of Settlement, the SEC considered the numerous remedial actions promptly undertaken by the Company and its cooperation during the investigation. The Company’s resolution follows charges brought by the SEC against the two former executives in a District Court action filed on June 3, 2024. As a result of the SEC’s district court complaint against them, the two former executives agreed to pay civil fines and disgorgement, and agreed to be subject to officer and director bars. Zhou Min Ni also agreed to a conduct-based injunction which enjoins him from directly or indirectly participating in the management of, or otherwise exercising any control of influence over the Company. The Special Litigation Committee of the Board of Directors previously obtained a monetary settlement from the former executives that was ratified by the Delaware Chancery Court. AnHeart Lease Guarantee The Company provided a guarantee for two separate leases for two properties located in Manhattan, New York, at 273 Fifth Avenue and 275 Fifth Avenue, for 30 years and 15 years, respectively. The Company previously determined that AnHeart was a VIE as a result of the guarantee. However, the Company concluded it was not the primary beneficiary of AnHeart and therefore did not consolidate, because it did not have the power to direct the activities of AnHeart that most significantly impact AnHeart's economic performance. During the three months ended June 30, 2024, the Company assumed the lease for 275 Fifth Avenue and no longer recognized AnHeart as a VIE. As a result of the lease assumption, the lease guarantee liability of $5.4 million was reversed and an operating lease right-of-use asset and liability of $4.9 million was recorded on the condensed consolidated balance sheets. As a result of the reversal, a gain of $5.4 million was recorded to other expense (income), net on the condensed consolidated statements of operations and comprehensive income (loss). On February 10, 2021, the Company entered into an Assignment and Assumption of Lease Agreement (“Assignment”), dated effective as of January 21, 2021, with AnHeart and Premier 273 Fifth, LLC, pursuant to which it assumed the lease of the premises at 273 Fifth Avenue (the “273 Lease Agreement”). At the same time, the closing documents were delivered to effectuate the amendment of the 273 Lease Agreement pursuant to an Amendment to Lease (the “Lease Amendment”). The Assignment and the Lease Amendment were negotiated in light of the Company’s guarantee obligations as guarantor under the Lease Agreement. The Company agreed to observe all the covenants and conditions of the Lease Agreement, as amended, including the payment of all rents due. Under the terms of the Lease Agreement and the Assignment, the Company has undertaken to construct, at its own expense, a building on the premises at a minimum cost of $2.5 million. The Lease Amendment permits subletting of the premises, and the Company intends to sublease the newly constructed premises to defray the rental expense undertaken pursuant to its guaranty obligations. In March 2024, the Company began construction of a multi-use facility on 273 Fifth Avenue and committed $7.0 million for the completion of the construction project. The Company incurred $2.2 million in construction costs which was recorded in construction in progress within property and equipment, net in the Company’s condensed consolidated balance sheet as of June 30, 2024. The Company expects to complete construction in June 2025. On January 17, 2022, the Company received notice that AnHeart had defaulted on its obligations as tenant under the lease for 275 Fifth Avenue. On February 7, 2022, the Company undertook its guaranty obligations by assuming responsibility for payment of monthly rent and other tenant obligations, including past due rent as well as property tax obligations beginning with the January 2022 rent due. On February 25, 2022, the Company instituted a legal action to pursue legal remedies against AnHeart and Minsheng. In March 2022, the Company agreed to stay that litigation against AnHeart in exchange for AnHeart’s payment of certain back rent from January to April 2022 and its continued partial payment of monthly rent. AnHeart subsequently defaulted on these obligations. On October 25, 2023, the Company commenced a new legal action by filing a complaint in New York County Supreme Court to pursue legal remedies against AnHeart and Minsheng (the “2023 Action”). As of the filing of the new summons and complaint, AnHeart and Minsheng are indebted to the Company in the amount of $474,000. AnHeart and the Company have since reached a settlement agreement (the “Settlement Agreement”) for AnHeart to pay the Company $40,000 a month in rent through December 2024 and commence regular monthly rental payments in accordance with the lease for 275 Fifth Avenue. The Settlement Agreement also provides that AnHeart will pay twenty-four monthly installments of $11,250 from January 2025 through December 2026 as payment for all back rent due. Effective April 30, 2024, the Company through its subsidiary assumed the lease of a building located on the premises of 275 Fifth Avenue, New York, New York. The Company was the guarantor of this lease under a lease guarantee agreement dated July 2018, and in February 2022, upon receiving notice of default, the Company undertook its lease guarantee obligations. The assumption of the lease had no impact on the Company’s obligations as guarantor. The lease covers certain portions of the ground floor, lower lever, and second floor of the building. The lease term ends on April 30, 2034 and is renewable at the option of the Company for up to two additional five-year terms. The Company shall pay rent of approximately $45,000 per month with provisions for yearly increases.

Subsequent Events	6 Months Ended
Subsequent Events	Jun. 30, 2024
Subsequent Events [Abstract]
Subsequent Events	Note 14 - Subsequent Events Other than as disclosed elsewhere, no subsequent events have occurred that would require recognition in the condensed consolidated financial statements or disclosure in the accompanying notes.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss) Attributable to Parent	$ 17	$ (850)	$ (677)	$ (6,783)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. All adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 26, 2024 (the “2023 Annual Report”). There have been no material changes to the Company’s significant accounting policies as compared to the significant accounting policies described in the 2023 Annual Report. All significant intercompany balances and transactions have been eliminated in consolidation. For consolidated entities where we own or are exposed to less than 100% of the economics, the Company records net income (loss) attributable to noncontrolling interest in its condensed consolidated statements of operations and comprehensive loss equal to the percentage of the economic or ownership interest retained in such entity by the respective noncontrolling party.
Noncontrolling Interests	Noncontrolling Interests GAAP requires that noncontrolling interests in subsidiaries and affiliates be reported in the equity section of the Company’s condensed consolidated balance sheets. In addition, the amounts attributable to the net income (loss) of those noncontrolling interests are reported separately in the condensed consolidated statements of operations and comprehensive loss.
Use of Estimates	Uses of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during each reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, inventory reserves, impairment of long-lived assets, impairment of goodwill, and the purchase price allocation and fair value of assets and liabilities acquired with respect to business combinations.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In November 2023, the FASB issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires enhanced disclosures about segment expenses on an annual and interim basis. This standard is effective for the Company’s consolidated financial statements for the year ending December 31, 2024 and for interim periods beginning in 2025. The impact of the adoption of this ASU is not expected to have a material effect on the Company’s financial position, or operations, however, the Company is currently evaluating the impact of this standard on its disclosures to the consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (“Topic 740”): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public entities to disclose specific categories in its annual effective tax rate reconciliation and disaggregated information about significant reconciling items by jurisdiction and by nature. ASU 2023-09 also requires entities to disclose their income tax payments (net of refunds) to international, federal, and state and local jurisdictions. This guidance is effective for fiscal years beginning after December 15, 2024, and requires prospective application with the option to apply it retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on the consolidated financial statements and disclosures.

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2024

Accounting Policies [Abstract]

Schedule of Noncontrolling Interest

As of June 30, 2024 and December 31, 2023, noncontrolling interest equity consisted of the following:


($ in thousands)	Ownership of noncontrolling interest at June 30, 2024	June 30, 2024		December 31, 2023
HF Foods Industrial, LLC ("HFFI")(a)	—%	$	—	$	(759)
Min Food, Inc.	39.75%	2,078		1,715
Monterey Food Service, LLC	35.00%	369		366
Total		$	2,447	$	1,322

_______________

Revenue (Tables)

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

The following table presents the Company's net revenue disaggregated by principal product categories:


	Three Months Ended June 30,								Six Months Ended June 30,
($ in thousands)	2024				2023				2024				2023
Seafood	$	99,530	33	%	$	91,382	31	%	$	193,925	32	%	$	184,272	32	%
Asian Specialty	77,493		26	%	76,337		26	%	157,702		26	%	154,161		26	%
Meat and Poultry	63,792		20	%	56,012		19	%	121,542		20	%	108,061		18	%
Produce	32,171		11	%	31,636		11	%	64,254		11	%	63,847		11	%
Packaging and Other	15,645		5	%	18,037		6	%	32,019		6	%	37,433		6	%
Commodity	13,711		5	%	18,908		7	%	28,554		5	%	38,393		7	%
Total	$	302,342	100	%	$	292,312	100	%	$	597,996	100	%	$	586,167	100	%

Balance Sheet Components (Tables)

6 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable

Accounts receivable, net consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Accounts receivable	$	52,944	$	49,643
Less: allowance for expected credit losses	(2,077)		(2,119)
Accounts receivable, net	$	50,867	$	47,524

Schedule of Financing Receivable, Allowance for Credit Loss

Movement of allowance for expected credit losses was as follows:


	Six Months Ended June 30,
(In thousands)	2024		2023
Beginning balance	$	2,119	$	1,442

(Decrease) increase in provision for expected credit losses	(40)		56
Bad debt write-offs	(2)		(24)
Ending balance	$	2,077	$	1,474

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Prepaid expenses	$	2,093	$	4,591
Advances to suppliers	6,112		3,340
Other current assets	791		2,214
Prepaid expenses and other current assets	$	8,996	$	10,145

Schedule of Property and Equipment

Property and equipment, net consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Automobiles(1)	$	47,312	$	37,256
Buildings	63,045		63,045
Building improvements	22,278		22,014
Furniture and fixtures	419		474
Land	49,929		49,929
Machinery and equipment	11,970		11,532
Construction in progress	5,172		1,391
Subtotal	200,125		185,641
Less: accumulated depreciation	(56,587)		(52,505)
Property and equipment, net	$	143,538	$	133,136

_________________

Schedule of Long-Term Investments

Long-term investments consisted of the following:


(In thousands)	Ownership as of June 30, 2024	June 30, 2024		December 31, 2023
Asahi Food, Inc. ("Asahi")	49%	$	590	$	588
Pt. Tamron Akuatik Produk Industri ("Tamron")	12%	1,800		1,800
Total long-term investments		$	2,390	$	2,388

Schedule of Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following:


(In thousands)	June 30, 2024		December 31, 2023
Accrued compensation	$	5,617	$	7,941
Accrued professional fees	663		1,353

Accrued interest and fees	1,056		1,276
Self-insurance liability	2,439		1,723
Other	5,779		4,994
Total accrued expenses and other liabilities	$	15,554	$	17,287

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements, Assets and Liabilities

The following table presents the Company's hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the dates indicated:


	June 30, 2024								December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(In thousands)
Assets:
Interest rate swaps	$	—	$	1,142	$	—	$	1,142	$	—	$	412	$	—	$	412

Liabilities:
Interest rate swaps	$	—	$	—	$	—	$	—	$	—	$	(1,601)	$	—	$	(1,601)

Schedule of Debt Securities, Carrying Value and Fair Value

The following table presents the carrying value and estimated fair value of the Company’s outstanding debt as described in Note 8 - Debt, including the current portion, as of the dates indicated:


	Fair Value Measurements
(In thousands)	Level 1		Level 2		Level 3		Carrying Value
June 30, 2024
Fixed rate debt:

Bank of America	$	—	$	—	$	126	$	141


Other finance institutions	—		—		4		4
Variable rate debt:
JPMorgan Chase	$	—	$	103,549	$	—	$	103,549
Bank of America	—		2,123		—		2,123
East West Bank	—		5,597		—		5,597

December 31, 2023
Fixed rate debt:

Bank of America	$	—	$	—	$	151	$	169


Other finance institutions	—		—		43		45
Variable rate debt:
JPMorgan Chase	$	—	$	106,079	$	—	$	106,079
Bank of America	—		2,193		—		2,193
East West Bank	—		5,675		—		5,675

See Note 8 - Debt for additional information regarding the Company's debt.

Nonrecurring Fair Values

There were no assets carried at nonrecurring fair value at June 30, 2024 and December 31, 2023.

Goodwill and Acquired Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

The components of the intangible assets are as follows:


	June 30, 2024						December 31, 2023
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Non-competition agreement	$	3,892	$	(3,076)	$	816	$	3,892	$	(2,429)	$	1,463
Trademarks and trade names	44,207		(17,255)		26,952		44,207		(15,045)		29,162
Customer relationships	185,266		(43,368)		141,898		185,266		(38,085)		147,181
Total	$	233,365	$	(63,699)	$	169,666	$	233,365	$	(55,559)	$	177,806

Debt (Tables)

6 Months Ended

Jun. 30, 2024

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt at June 30, 2024 and December 31, 2023 is summarized as follows:


($ in thousands)
Bank Name	Maturity	Interest Rate at June 30, 2024	June 30, 2024		December 31, 2023
Bank of America (a)	October 2026 - December 2029	4.34% - 7.93%	$	2,264	$	2,362
East West Bank (b)	August 2027 - September 2029	7.62% - 9.00%	5,597		5,675

JPMorgan Chase (c)	January 2030	7.30%	103,786		106,337
Other finance institutions (d)	July 2024	N/A	4		45
Total debt, principal amount			111,651		114,419
Less: debt issuance costs			(237)		(258)
Total debt, carrying value			111,414		114,161
Less: current portion			(5,414)		(5,450)
Long-term debt			$	106,000	$	108,711

_______________

(a)Loan balance consists of real estate term loan and equipment term loan, collateralized by one real property and specific equipment. The real estate term loan is pegged to TERM SOFR + 2.5%.

(b)Real estate term loans with East West Bank are collateralized by three real properties. Balloon payments of $1.9 million and $3.0 million are due at maturity in 2027 and 2029, respectively.

(d)Secured by vehicles.

Earnings (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2024

Earnings Per Share [Abstract]

Schedule of Earnings Per Share Basic and Diluted

The following table sets forth the computation of basic and diluted EPS:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands, except share and per share data)	2024		2023		2024		2023
Numerator:
Net income (loss) attributable to HF Foods Group Inc.	$	17	$	(850)	$	(677)	$	(6,783)
Denominator:
Weighted-average common shares outstanding	52,585,715		54,046,328		52,370,842		53,935,178
Effect of dilutive securities	75,404		—		—		—
Weighted-average dilutive shares outstanding	52,661,119		54,046,328		52,370,842		53,935,178
Earnings (loss) per common share:
Basic	$	0.00	$	(0.02)	$	(0.01)	$	(0.13)
Diluted	$	0.00	$	(0.02)	$	(0.01)	$	(0.13)

Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2024

Schedule of Purchases With Related Parties

Below is a summary of purchases of goods and services from related parties recorded for the three and six months ended June 30, 2024 and 2023:


			Three Months Ended June 30,				Six Months Ended June 30,
	(In thousands)	Nature	2024		2023		2024		2023
(a)	Asahi Food, Inc.	Trade	$	29	$	17	$	56	$	39
(b)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	Trade	1,763		2,729		2,913		4,813


(c)	Enson Seafood GA, Inc. (formerly “GA-GW Seafood, Inc.”)	Trade	—		—		—		37





(c)	Ocean Pacific Seafood Group, Inc.	Trade	60		74		140		242




(c)	Rainfield Ranches, LP	Trade	38		6		95		36
	Total		$	1,890	$	2,826	$	3,204	$	5,167

_______________

(a)The Company, through its subsidiary Mountain Food, LLC, owns an equity interest in this entity.

(b)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

(c)Mr. Zhou Min Ni owns an equity interest in this entity.

Schedule of Revenue With Related Parties

Below is a summary of sales to related parties recorded for the three and six months ended June 30, 2024 and 2023:


		Three Months Ended June 30,				Six Months Ended June 30,
	(In thousands)	2024		2023		2024		2023
(a)	ABC Food Trading, LLC	$	431	$	722	$	834	$	1,315
(b)	Asahi Food, Inc.	148		191		287		386
(a)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	335		93		588		526
(c)	Eagle Food Service, LLC	—		922		—		1,942




(d)	First Choice Seafood, Inc.	6		8		13		16
(d)	Fortune One Foods, Inc.	91		4		107		23

(e)	N&F Logistics, Inc.	—		—		—		6
(f)	Union Food LLC	—		8		—		27

	Total	$	1,011	$	1,948	$	1,829	$	4,241

_______________

(a)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

(b)The Company, through its subsidiary Mountain Food, LLC, owns an equity interest in this entity.

(c)Tina Ni, one of Mr. Zhou Min Ni’s family members, owns an equity interest in this entity indirectly through its parent company.

(d)Mr. Zhou Min Ni owns an equity interest in this entity indirectly through its parent company.

(e)Mr. Zhou Min Ni owns an equity interest in this entity.

(f)Tina Ni, one of Mr. Zhou Min Ni’s family members, owns an equity interest in this entity.

Schedule of Accounts Receivable With Related Parties

Below is a summary of accounts receivable with related parties recorded as of June 30, 2024 and December 31, 2023, respectively:


	(In thousands)	June 30, 2024		December 31, 2023
(a)	ABC Food Trading, LLC	$	194	$	94
(b)	Asahi Food, Inc.	80		69
(a)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	168		84

(c)	Enson Seafood GA, Inc. (formerly known as GA-GW Seafood, Inc.)	59		59
(d)	Fortune One Foods, Inc.	47		—
(e)	Union Food LLC	—		2




	Total	$	548	$	308

_______________

(a)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

(b)The Company, through its subsidiary Mountain Food, LLC, owns an equity interest in this entity.

(c)Mr. Zhou Min Ni owns an equity interest in this entity.

(d)Mr. Zhou Min Ni owns an equity interest in this entity indirectly through its parent company.

(e)Tina Ni, one of Mr. Zhou Min Ni’s family members, owns an equity interest in this entity.

Schedule of Accounts Payable With Related Parties


	(In thousands)	June 30, 2024		December 31, 2023
(a)	Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)	$	627	$	379








	Others	24		18
	Total	$	651	$	397

_______________

(a)An equity interest is held by three Irrevocable Trusts for the benefit of Mr. Zhang's children.

Organization and Description of Business (Details)	6 Months Ended
Organization and Description of Business (Details)	Jun. 30, 2024 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments	1
Number of reportable segments	1

Summary of Significant Accounting Policies (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2024 USD ($) variableInterestEntity	Mar. 31, 2024 variableInterestEntity	Dec. 31, 2023 USD ($)
Noncontrolling Interest [Line Items]
Number of VIEs \| variableInterestEntity	0	1
Noncontrolling interests	$ 2,447		$ 1,322
Acquisition of noncontrolling interest	0
Noncontrolling Interests
Noncontrolling Interest [Line Items]
Acquisition of noncontrolling interest	$ (772)
HF Foods Industrial, LLC ("HFFI")(a)
Noncontrolling Interest [Line Items]
Ownership of noncontrolling interest at June 30, 2024	0.00%
Noncontrolling interests	$ 0		(759)
Min Food, Inc.
Noncontrolling Interest [Line Items]
Ownership of noncontrolling interest at June 30, 2024	39.75%
Noncontrolling interests	$ 2,078		1,715
Monterey Food Service, LLC
Noncontrolling Interest [Line Items]
Ownership of noncontrolling interest at June 30, 2024	35.00%
Noncontrolling interests	$ 369		$ 366

Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Revenue (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Disaggregation of Revenue [Line Items]
TOTAL NET REVENUE	$ 302,342	$ 292,312	$ 597,996	$ 586,167
Revenue Benchmark \| Product Concentration Risk
Disaggregation of Revenue [Line Items]
Operating concentration risk (percentage)	100.00%	100.00%	100.00%	100.00%
Seafood
Disaggregation of Revenue [Line Items]
TOTAL NET REVENUE	$ 99,530	$ 91,382	$ 193,925	$ 184,272
Seafood \| Revenue Benchmark \| Product Concentration Risk
Disaggregation of Revenue [Line Items]
Operating concentration risk (percentage)	33.00%	31.00%	32.00%	32.00%
Asian Specialty
Disaggregation of Revenue [Line Items]
TOTAL NET REVENUE	$ 77,493	$ 76,337	$ 157,702	$ 154,161
Asian Specialty \| Revenue Benchmark \| Product Concentration Risk
Disaggregation of Revenue [Line Items]
Operating concentration risk (percentage)	26.00%	26.00%	26.00%	26.00%
Meat and Poultry
Disaggregation of Revenue [Line Items]
TOTAL NET REVENUE	$ 63,792	$ 56,012	$ 121,542	$ 108,061
Meat and Poultry \| Revenue Benchmark \| Product Concentration Risk
Disaggregation of Revenue [Line Items]
Operating concentration risk (percentage)	20.00%	19.00%	20.00%	18.00%
Produce
Disaggregation of Revenue [Line Items]
TOTAL NET REVENUE	$ 32,171	$ 31,636	$ 64,254	$ 63,847
Produce \| Revenue Benchmark \| Product Concentration Risk
Disaggregation of Revenue [Line Items]
Operating concentration risk (percentage)	11.00%	11.00%	11.00%	11.00%
Packaging and Other
Disaggregation of Revenue [Line Items]
TOTAL NET REVENUE	$ 15,645	$ 18,037	$ 32,019	$ 37,433
Packaging and Other \| Revenue Benchmark \| Product Concentration Risk
Disaggregation of Revenue [Line Items]
Operating concentration risk (percentage)	5.00%	6.00%	6.00%	6.00%
Commodity
Disaggregation of Revenue [Line Items]
TOTAL NET REVENUE	$ 13,711	$ 18,908	$ 28,554	$ 38,393
Commodity \| Revenue Benchmark \| Product Concentration Risk
Disaggregation of Revenue [Line Items]
Operating concentration risk (percentage)	5.00%	7.00%	5.00%	7.00%

Balance Sheet Components - Accounts Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023	Jun. 30, 2023	Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Less: allowance for expected credit losses	$ (2,077)	$ (2,119)	$ (1,474)	$ (1,442)
Nonrelated Party
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	52,944	49,643
Less: allowance for expected credit losses	(2,077)	(2,119)
Accounts receivable, net	$ 50,867	$ 47,524

Balance Sheet Components - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance	$ 2,119	$ 1,442
(Decrease) increase in provision for expected credit losses	(40)	56
Bad debt write-offs	(2)	(24)
Ending balance	$ 2,077	$ 1,474

Balance Sheet Components - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Prepaid expenses	$ 2,093	$ 4,591
Advances to suppliers	6,112	3,340
Other current assets	791	2,214
Prepaid expenses and other current assets	$ 8,996	$ 10,145

Balance Sheet Components - Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	$ 200,125	$ 185,641
Less: accumulated depreciation	(56,587)	(52,505)
Property and equipment, net	143,538	133,136
Property and equipment, at cost	31,000	22,200
Finance lease, accumulated depreciation	$ 12,300	10,300
Weighted average discount rate	6.60%
Total future minimum lease payments under finance leases	$ 30,100
Future minimum lease payments.	$ 16,900
Minimum
Property, Plant and Equipment [Line Items]
Lease maturity	4 years
Maximum
Property, Plant and Equipment [Line Items]
Lease maturity	6 years
Automobiles(1)
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	$ 47,312	37,256
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	63,045	63,045
Building improvements
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	22,278	22,014
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	419	474
Land
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	49,929	49,929
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	11,970	11,532
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	$ 5,172	$ 1,391

Balance Sheet Components - Narrative (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Depreciation	$ 2,500,000		$ 2,400,000	$ 5,100,000	$ 5,000,000.0
Other than temporary impairment		$ 0		0
Asset impairment charges			$ 1,200,000	$ 0	$ 1,200,000

Balance Sheet Components - Schedule of Long-Term Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Schedule of Equity Method Investments [Line Items]
Long-term investments	$ 2,390	$ 2,388
Asahi Food, Inc. ("Asahi")
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage	49.00%
Long-term investments	$ 590	588
Pt. Tamron Akuatik Produk Industri ("Tamron")
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage	12.00%
Long-term investments	$ 1,800	$ 1,800

Balance Sheet Components - Schedule of Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accrued compensation	$ 5,617	$ 7,941
Accrued professional fees	663	1,353
Accrued interest and fees	1,056	1,276
Self-insurance liability	2,439	1,723
Other	5,779	4,994
Total accrued expenses and other liabilities	$ 15,554	$ 17,287

Fair Value Measurements - Schedule of Fair Value Measurements, Assets and Liabilities (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Assets
Derivative Asset, Statement Of Financial Position, Extensible Enumeration Not Disclosed Flag	Interest rate swaps	Interest rate swaps
Liabilities
Derivative Liability, Statement Of Financial Position, Extensible Enumeration Not Disclosed Flag	Interest rate swaps	Interest rate swaps
Recurring
Assets
Assets:	$ 1,142	$ 412
Liabilities
Liabilities:	0	(1,601)
Recurring \| Level 1
Assets
Assets:	0	0
Liabilities
Liabilities:	0	0
Recurring \| Level 2
Assets
Assets:	1,142	412
Liabilities
Liabilities:	0	(1,601)
Recurring \| Level 3
Assets
Assets:	0	0
Liabilities
Liabilities:	$ 0	$ 0

Fair Value Measurements - Schedule of Debt Securities, Carrying Value and Fair Value (Details) - Reported Value Measurement - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Bank of America \| Fixed Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	$ 141	$ 169
Bank of America \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	2,123	2,193
Bank of America \| Level 1 \| Fixed Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	0	0
Bank of America \| Level 1 \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	0	0
Bank of America \| Level 2 \| Fixed Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	0	0
Bank of America \| Level 2 \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	2,123	2,193
Bank of America \| Level 3 \| Fixed Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	126	151
Bank of America \| Level 3 \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	0	0
East West Bank \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	5,597	5,675
East West Bank \| Level 1 \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	0	0
East West Bank \| Level 2 \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	5,597	5,675
East West Bank \| Level 3 \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	0	0
Other Finance Institutions \| Fixed Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	4	45
Other Finance Institutions \| Level 1 \| Fixed Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	0	0
Other Finance Institutions \| Level 2 \| Fixed Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	0	0
Other Finance Institutions \| Level 3 \| Fixed Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	4	43
JP Morgan \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	103,549	106,079
JP Morgan \| Level 1 \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	0	0
JP Morgan \| Level 2 \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	103,549	106,079
JP Morgan \| Level 3 \| Variable Rate Debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt instrument, fair value disclosure	$ 0	$ 0

Goodwill and Acquired Intangible Assets - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 85,118		$ 85,118		$ 85,118
Amortization expense	$ 4,100	$ 4,100	$ 8,100	$ 8,100

Goodwill and Acquired Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 233,365		$ 233,365		$ 233,365
Accumulated Amortization	(63,699)		(63,699)		(55,559)
Net Carrying Amount	169,666		169,666		177,806
Amortization expense	4,100	$ 4,100	8,100	$ 8,100
Non-competition agreement
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	3,892		3,892		3,892
Accumulated Amortization	(3,076)		(3,076)		(2,429)
Net Carrying Amount	816		816		1,463
Tradenames
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	44,207		44,207		44,207
Accumulated Amortization	(17,255)		(17,255)		(15,045)
Net Carrying Amount	26,952		26,952		29,162
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	185,266		185,266		185,266
Accumulated Amortization	(43,368)		(43,368)		(38,085)
Net Carrying Amount	$ 141,898		$ 141,898		$ 147,181

Derivative Financial Instruments (Details) $ in Millions			6 Months Ended
Derivative Financial Instruments (Details) $ in Millions	Dec. 19, 2021	Aug. 20, 2019 USD ($) termLoan derivative	Jun. 30, 2024	Dec. 31, 2023 USD ($)	Mar. 15, 2023 USD ($)	Dec. 19, 2019 USD ($)
Derivative [Line Items]
Number of mortgage term loans \| termLoan		2
Derivative Asset, Noncurrent, Statement of Financial Position [Extensible Enumeration]			Other long-term assets
Derivative Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]			Other long-term liabilities
Derivative asset				$ 0.4
Derivative liability				$ 1.6
Mortgage-Secured Term Loans
Derivative [Line Items]
Derivative, fixed interest rate					4.11%
Mortgage-Secured Term Loans \| East West Bank
Derivative [Line Items]
Basis spread on variable rate		2.29%
Derivative, fixed interest rate		4.23%
Mortgage-Secured Term Loans \| Bank of America
Derivative [Line Items]
Basis spread on variable rate	2.50%		2.50%
Derivative, fixed interest rate						4.50%
Interest Rate Swap
Derivative [Line Items]
Number of derivatives \| derivative		2
Interest Rate Swap \| Not Designated as Hedging Instrument
Derivative [Line Items]
Derivative liability, notional amount		$ 1.1			$ 120.0	$ 2.7
Interest Rate Swap Two \| Not Designated as Hedging Instrument
Derivative [Line Items]
Derivative liability, notional amount		$ 2.6

Debt - Long-term Debt (Details) $ in Thousands			6 Months Ended
Debt - Long-term Debt (Details) $ in Thousands	Dec. 19, 2021	Aug. 20, 2019	Jun. 30, 2024 USD ($) property	Dec. 31, 2023 USD ($)
Debt Instrument [Line Items]
Total debt, principal amount			$ 111,651	$ 114,419
Less: debt issuance costs			(237)	(258)
Total			111,414	114,161
Less: current portion			(5,414)	(5,450)
Long-term debt			106,000	108,711
Bank of America
Debt Instrument [Line Items]
Total debt, principal amount			$ 2,264	2,362
Number of real properties secured \| property			1
Bank of America \| Mortgage-Secured Term Loans
Debt Instrument [Line Items]
Basis spread on variable rate	2.50%		2.50%
Bank of America \| Minimum
Debt Instrument [Line Items]
Interest rate, stated percentage			4.34%
Bank of America \| Maximum
Debt Instrument [Line Items]
Interest rate, stated percentage			7.93%
East West Bank
Debt Instrument [Line Items]
Total debt, principal amount			$ 5,597	5,675
Number of real properties secured \| property			3
East West Bank \| Mortgage-Secured Term Loans
Debt Instrument [Line Items]
Basis spread on variable rate		2.29%
East West Bank \| Minimum
Debt Instrument [Line Items]
Interest rate, stated percentage			7.62%
Collateral amount			$ 1,900
East West Bank \| Maximum
Debt Instrument [Line Items]
Interest rate, stated percentage			9.00%
Collateral amount			$ 3,000
JP Morgan Chase
Debt Instrument [Line Items]
Total debt, principal amount			103,786	106,337
JP Morgan Chase \| Assets Held by Subsidiaries
Debt Instrument [Line Items]
Collateral amount			$ 103,800	106,300
JP Morgan Chase \| Maximum
Debt Instrument [Line Items]
Interest rate, stated percentage			7.30%
Other finance institutions
Debt Instrument [Line Items]
Total debt, principal amount			$ 4	$ 45

Debt - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Jun. 30, 2024
Debt Instrument [Line Items]
Letters of Credit Outstanding, Amount		$ 3,800
JP Morgan \| Third Amended Credit Agreement \| Mortgage-Secured Term Loans
Debt Instrument [Line Items]
Long-term line of credit		66,400
JP Morgan \| Second Amended Credit Agreement \| Revolving Credit Facility
Debt Instrument [Line Items]
Additional funds remaining		29,900
Maximum borrowing capacity		$ 100,000
Expiration	5 years

Earnings (Loss) Per Share - Narrative (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	37,084	967,779	1,354,908	620,402

Earnings (Loss) Per Share - Schedule of Computation of Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Numerator:
Net income (loss) attributable to HF Foods Group Inc.	$ 17	$ (850)	$ (677)	$ (6,783)
Denominator:
Weighted-average common shares outstanding (in shares)	52,585,715	54,046,328	52,370,842	53,935,178
Effect of dilutive securities (in shares)	75,404	0	0	0
Weighted-average dilutive shares outstanding (in shares)	52,661,119	54,046,328	52,370,842	53,935,178
Earnings (loss) per common share:
Basic (in dollars per share)	$ 0.00	$ (0.02)	$ (0.01)	$ (0.13)
Diluted (in dollars per share)	$ 0.00	$ (0.02)	$ (0.01)	$ (0.13)

Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Effective tax rate	87.20%	(15.50%)	129.60%	21.50%
SEC settlement	$ 1.0		$ 1.0
Stock-based compensation shortfalls	$ 0.1		$ 0.1
Estimated annual effective income tax rate from continuing operations	25.50%		25.10%

Related Party Transactions - Narrative (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Feb. 28, 2021 renewalPeriod
Kirnland \| Buildings
Related Party Transaction [Line Items]
Operating lease, term of contract (in years)					5 years
Rental income	$ 100	$ 100	$ 100	$ 200
Asahi Food, Inc. \| Buildings
Related Party Transaction [Line Items]
Rental income	$ 36	$ 36	$ 72	$ 72
Term of contract					1 year
Number of renewal periods \| renewalPeriod					4
Length of renewal term option					1 year
Enson Seafood GA, Inc. (formerly known as GA-GW Seafood, Inc.)
Related Party Transaction [Line Items]
Accounts receivables reserved percentage	1		1
HF Foods \| Shareholder
Related Party Transaction [Line Items]
Ownership of noncontrolling interest at June 30, 2024	10.00%		10.00%
HF Foods \| Mr. Zhou Min Ni (“Mr. Ni”), Former Co-Chief Executive Officer and various trusts
Related Party Transaction [Line Items]
Ownership of noncontrolling interest at June 30, 2024	1000.00%		1000.00%

Related Party Transactions - Summary of Purchases with Related Parties (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($) trust	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) trust	Jun. 30, 2023 USD ($)	Dec. 31, 2023 trust
Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)
Related Party Transaction [Line Items]
Number of irrecoverable trusts \| trust	3		3		3
Related Party
Related Party Transaction [Line Items]
Related Party Transaction, Purchases from Related Party	$ 1,890	$ 2,826	$ 3,204	$ 5,167
Related Party \| Asahi Food, Inc.
Related Party Transaction [Line Items]
Related Party Transaction, Purchases from Related Party	29	17	56	39
Related Party \| Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)
Related Party Transaction [Line Items]
Related Party Transaction, Purchases from Related Party	1,763	2,729	2,913	4,813
Related Party \| Enson Seafood GA, Inc. (formerly “GA-GW Seafood, Inc.”)
Related Party Transaction [Line Items]
Related Party Transaction, Purchases from Related Party	0	0	0	37
Related Party \| Ocean Pacific Seafood Group, Inc.
Related Party Transaction [Line Items]
Related Party Transaction, Purchases from Related Party	60	74	140	242
Related Party \| Rainfield Ranches, LP
Related Party Transaction [Line Items]
Related Party Transaction, Purchases from Related Party	$ 38	$ 6	$ 95	$ 36

Related Party Transactions - Summary of Sales to Related Parties (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024 USD ($) trust	Jun. 30, 2023 USD ($)	Jun. 30, 2024 USD ($) trust	Jun. 30, 2023 USD ($)	Dec. 31, 2023 trust
Sales
Related Party Transaction [Line Items]
Sales - related party	$ 1,011	$ 1,948	$ 1,829	$ 4,241
ABC Food Trading, LLC \| Sales
Related Party Transaction [Line Items]
Sales - related party	431	722	834	1,315
Asahi Food, Inc. \| Sales
Related Party Transaction [Line Items]
Sales - related party	$ 148	191	$ 287	386
Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)
Related Party Transaction [Line Items]
Number of irrecoverable trusts \| trust	3		3		3
Conexus Food Solutions LLC (formerly known as Best Food Services, LLC) \| Sales
Related Party Transaction [Line Items]
Sales - related party	$ 335	93	$ 588	526
Eagle Food Services, LLC \| Sales
Related Party Transaction [Line Items]
Sales - related party	0	922	0	1,942
First Choice Seafood, Inc. \| Sales
Related Party Transaction [Line Items]
Sales - related party	6	8	13	16
Fortune One Foods, Inc. \| Sales
Related Party Transaction [Line Items]
Sales - related party	91	4	107	23
N&F Logistics, Inc. \| Sales
Related Party Transaction [Line Items]
Sales - related party	0	0	0	6
Union Food LLC \| Sales
Related Party Transaction [Line Items]
Sales - related party	$ 0	$ 8	$ 0	$ 27

Related Party Transactions - Summary of Accounts Receivable With Related Parties (Details) $ in Thousands	Jun. 30, 2024 USD ($) trust	Dec. 31, 2023 USD ($) trust
Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)
Related Party Transaction [Line Items]
Number of irrecoverable trusts \| trust	3	3
Related Party
Related Party Transaction [Line Items]
Accounts receivable, net of allowances of $2,077 and $2,119	$ 548	$ 308
Related Party \| ABC Trading, LLC
Related Party Transaction [Line Items]
Accounts receivable, net of allowances of $2,077 and $2,119	194	94
Related Party \| Asahi Food, Inc.
Related Party Transaction [Line Items]
Accounts receivable, net of allowances of $2,077 and $2,119	80	69
Related Party \| Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)
Related Party Transaction [Line Items]
Accounts receivable, net of allowances of $2,077 and $2,119	168	84
Related Party \| Enson Seafood GA, Inc. (formerly known as GA-GW Seafood, Inc.)
Related Party Transaction [Line Items]
Accounts receivable, net of allowances of $2,077 and $2,119	59	59
Related Party \| Fortune One Foods, Inc.
Related Party Transaction [Line Items]
Accounts receivable, net of allowances of $2,077 and $2,119	47	0
Related Party \| Union Food LLC
Related Party Transaction [Line Items]
Accounts receivable, net of allowances of $2,077 and $2,119	$ 0	$ 2

Related Party Transactions - Summary of Accounts Payable with Related Parties (Details) $ in Thousands	Jun. 30, 2024 USD ($) trust	Dec. 31, 2023 USD ($) trust
Related Party
Related Party Transaction [Line Items]
Accounts payable	$ 651	$ 397
Conexus Food Solutions LLC (formerly known as Best Food Services, LLC)
Related Party Transaction [Line Items]
Number of irrecoverable trusts \| trust	3	3
Conexus Food Solutions LLC (formerly known as Best Food Services, LLC) \| Related Party
Related Party Transaction [Line Items]
Accounts payable	$ 627	$ 379
Other \| Related Party
Related Party Transaction [Line Items]
Accounts payable	$ 24	$ 18

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Mar. 31, 2024
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Number of shares authorized under plan (in shares)	7,000,000		7,000,000		3,000,000
Shares remaining available for future unvested awards (in shares)	1,086,403		1,086,403
Shares remaining available for future awards (in shares)	3,866,529		3,866,529
Total stock-based compensation expense	$ 0.5	$ 0.8	$ 1.3	$ 1.8
Unrecognized compensation cost	$ 6.8		$ 6.8
Unrecognized compensation cost, period for recognition			2 years 3 months 25 days
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized	4,000,000
RSUs
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Equity instruments outstanding (in shares)	1,065,174		1,065,174
PSUs
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Equity instruments outstanding (in shares)	981,894		981,894

Commitments and Contingencies - Narrative (Details)			1 Months Ended	3 Months Ended	6 Months Ended
Commitments and Contingencies - Narrative (Details)	Apr. 30, 2024 USD ($) extension	Feb. 10, 2021 USD ($)	Mar. 31, 2024 USD ($)	Jun. 30, 2024 USD ($)	Jun. 30, 2024 USD ($) property lease installment	Dec. 31, 2023 USD ($)	Oct. 25, 2023 USD ($)
Loss Contingencies [Line Items]
Payment of a civil monetary penalty				$ 3,900,000
Operating lease right-of-use assets				16,006,000	$ 16,006,000	$ 12,714,000
Amount committed for construction project			$ 7,000,000
AnHeart construction			$ 2,200,000
Number of extensions \| extension	2
Extension term	5 years
Monthly rent	$ 45,000
Minimum
Loss Contingencies [Line Items]
Payment to construct building		$ 2,500,000
AnHeart and Minsheng Case
Loss Contingencies [Line Items]
Amount receivable							$ 474,000
Monthly Sublease Income					40,000
Monthly installments					$ 11,250
Monthly installment period \| installment					24
Lease Fifth Avenue, Manhattan, New York
Loss Contingencies [Line Items]
Number of leases \| lease					2
Number of properties \| property					2
Lease guarantee liability activity				5,400,000
Operating lease right-of-use assets				4,900,000	$ 4,900,000
Gain on lease assumption				$ 5,400,000
Lease for 273 Fifth Avenue, Manhattan,New York
Loss Contingencies [Line Items]
Operating lease, term of contract (in years)				30 years	30 years
Lease for 275 Fifth Avenue, Manhattan,New York
Loss Contingencies [Line Items]
Operating lease, term of contract (in years)				15 years	15 years

HF Foods (NASDAQ:HFFG)
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