Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 05, 2023 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
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 | 54,086,164 | |
Entity Central Index Key | 0001680873 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Stock | ||
Title of 12(b) Security | Common Stock, $0.0001 par value | |
Trading Symbol | HFFG | |
Security Exchange Name | NASDAQ | |
Preferred Stock | ||
Title of 12(b) Security | Preferred Share Purchase Rights | |
Trading Symbol | N/A | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | ||
Cash | $ 17,477 | $ 24,289 |
Accounts receivable, net | 43,095 | 44,186 |
Accounts receivable - related parties | 629 | 213 |
Inventories | 110,469 | 120,291 |
Prepaid expenses and other current assets | 7,699 | 8,937 |
TOTAL CURRENT ASSETS | 179,369 | 197,916 |
Property and equipment, net | 138,984 | 140,330 |
Operating lease right-of-use assets | 13,278 | 14,164 |
Long-term investments | 2,666 | 2,679 |
Customer relationships, net | 155,106 | 157,748 |
Trademarks and other intangibles, net | 34,914 | 36,343 |
Goodwill | 85,118 | 85,118 |
Other long-term assets | 3,944 | 3,231 |
TOTAL ASSETS | 613,379 | 637,529 |
CURRENT LIABILITIES: | ||
Checks issued not presented for payment | 14,094 | 21,946 |
Line of credit | 44,456 | 53,056 |
Accounts payable | 57,842 | 55,515 |
Accounts payable - related parties | 753 | 1,529 |
Current portion of long-term debt, net | 6,031 | 6,266 |
Current portion of obligations under finance leases | 2,116 | 2,254 |
Current portion of obligations under operating leases | 3,592 | 3,676 |
Accrued expenses and other liabilities | 16,408 | 19,648 |
TOTAL CURRENT LIABILITIES | 145,292 | 163,890 |
Long-term debt, net of current portion | 114,047 | 115,443 |
Obligations under finance leases, non-current | 11,576 | 11,441 |
Obligations under operating leases, non-current | 9,793 | 10,591 |
Deferred tax liabilities | 33,119 | 34,443 |
Other long-term liabilities | 8,038 | 5,472 |
TOTAL LIABILITIES | 321,865 | 341,280 |
COMMITMENTS AND CONTINGENCIES (Note 14) | ||
SHAREHOLDERS’ EQUITY: | ||
Preferred Stock, $0.0001 par value, 1,000,000 shares authorized, no shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 0 | 0 |
Common Stock, $0.0001 par value, 100,000,000 shares authorized, 53,844,492 shares issued and outstanding as of March 31, 2023 and 53,813,777 shares issued and outstanding as of December 31, 2022 | 5 | 5 |
Additional paid-in capital | 599,384 | 598,322 |
Accumulated deficit | (312,447) | (306,514) |
TOTAL SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO HF FOODS GROUP INC. | 286,942 | 291,813 |
Noncontrolling interests | 4,572 | 4,436 |
TOTAL SHAREHOLDERS’ EQUITY | 291,514 | 296,249 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 613,379 | $ 637,529 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock. par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
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) | 53,844,492 | 53,813,777 |
Common stock, outstanding (in shares) | 53,844,492 | 53,813,777 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
TOTAL NET REVENUE | $ 293,855 | $ 278,215 |
TOTAL COST OF REVENUE | 243,683 | 227,488 |
GROSS PROFIT | 50,172 | 50,727 |
Distribution, selling and administrative expenses | 52,929 | 40,408 |
(LOSS) INCOME FROM OPERATIONS | (2,757) | 10,319 |
Other expenses (income): | ||
Interest expense | 2,868 | 1,278 |
Other income | (228) | (776) |
Change in fair value of interest rate swap contracts | 2,746 | (358) |
Lease guarantee expense | (120) | 5,931 |
Total Other expenses, net | 5,266 | 6,075 |
(LOSS) INCOME BEFORE INCOME TAX PROVISION | (8,023) | 4,244 |
Income tax (benefit) provision | (2,226) | 1,104 |
NET (LOSS) INCOME AND COMPREHENSIVE INCOME (LOSS) | (5,797) | 3,140 |
Less: net income attributable to noncontrolling interests | 136 | 26 |
NET (LOSS) INCOME AND COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HF FOODS GROUP INC. | $ (5,933) | $ 3,114 |
(LOSS) EARNINGS PER COMMON SHARE - BASIC (in USD per share) | $ (0.11) | $ 0.06 |
(LOSS) EARNINGS PER COMMON SHARE - DILUTED (in USD per share) | $ (0.11) | $ 0.06 |
WEIGHTED AVERAGE SHARES - BASIC (in shares) | 53,822,794 | 53,706,392 |
WEIGHTED AVERAGE SHARES - DILUTED (in shares) | 53,822,794 | 53,884,510 |
Third Party | ||
TOTAL NET REVENUE | $ 291,562 | $ 276,151 |
TOTAL COST OF REVENUE | 241,457 | 225,633 |
Related Party | ||
TOTAL NET REVENUE | 2,293 | 2,064 |
TOTAL COST OF REVENUE | $ 2,226 | $ 1,855 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (5,797) | $ 3,140 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 6,689 | 5,779 |
Gain from disposal of property and equipment | 0 | (65) |
Provision for credit losses | 57 | (12) |
Deferred tax benefit | (1,324) | (2,154) |
Change in fair value of interest rate swap contracts | 2,746 | (358) |
Stock-based compensation | 1,096 | 290 |
Non-cash lease expense | 965 | 737 |
Lease guarantee expense | (120) | 5,931 |
Other expense (income) | 93 | 0 |
Changes in operating assets and liabilities (excluding effects of acquisitions): | ||
Accounts receivable | 1,034 | (7,026) |
Accounts receivable - related parties | (416) | (669) |
Inventories | 9,822 | (12,070) |
Prepaid expenses and other current assets | 1,238 | (2,758) |
Other long-term assets | (829) | 268 |
Accounts payable | 2,327 | 16,805 |
Accounts payable - related parties | (776) | (309) |
Operating lease liabilities | (961) | (715) |
Accrued expenses and other liabilities | (3,274) | 3,299 |
Net cash provided by operating activities | 12,570 | 10,113 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (629) | (2,672) |
Proceeds from sale of property and equipment | 0 | 79 |
Payment made for acquisition of Great Wall Group | 0 | (17,339) |
Net cash used in investing activities | (629) | (19,932) |
Cash flows from financing activities: | ||
Checks issued not presented for payment | (7,852) | 679 |
Proceeds from line of credit | 298,195 | 281,616 |
Repayment of line of credit | (306,808) | (268,298) |
Repayment of long-term debt | (1,642) | (1,475) |
Payment of debt financing costs | 0 | (604) |
Repayment of obligations under finance leases | (646) | (616) |
Proceeds from noncontrolling interests shareholders | 0 | 240 |
Cash distribution to shareholders | 0 | (89) |
Net cash (used in) provided by financing activities | (18,753) | 11,453 |
Net (decrease) increase in cash | (6,812) | 1,634 |
Cash at beginning of the period | 24,289 | 14,792 |
Cash at end of the period | 17,477 | 16,426 |
Supplemental disclosure of cash flow data: | ||
Cash paid for interest | 2,644 | 927 |
Cash paid for income taxes | 96 | 382 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Right-of-use assets obtained in exchange for operating lease liabilities | 79 | 1,483 |
Property acquired via a finance lease | 643 | 815 |
Intangible asset acquired in exchange for noncontrolling interests | $ 0 | $ 566 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Cumulative Effect, Period of Adoption, Adjusted Balance | Total Shareholders’ Equity Attributable to HF Foods Group Inc. | Total Shareholders’ Equity Attributable to HF Foods Group Inc. Cumulative Effect, Period of Adoption, Adjustment | Total Shareholders’ Equity Attributable to HF Foods Group Inc. Cumulative Effect, Period of Adoption, Adjusted Balance | Common Stock | Common Stock Cumulative Effect, Period of Adoption, Adjusted Balance | Additional Paid-in Capital | Additional Paid-in Capital Cumulative Effect, Period of Adoption, Adjusted Balance | Retained Earnings (Accumulated Deficit) | Retained Earnings (Accumulated Deficit) Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings (Accumulated Deficit) Cumulative Effect, Period of Adoption, Adjusted Balance | Noncontrolling Interests | Noncontrolling Interests Cumulative Effect, Period of Adoption, Adjusted Balance |
Beginning balance (in shares) at Dec. 31, 2021 | 53,706,392 | 53,706,392 | |||||||||||||
Beginning balance at Dec. 31, 2021 | $ 294,989 | $ (690) | $ 294,299 | $ 290,948 | $ (690) | $ 290,258 | $ 5 | $ 5 | $ 597,227 | $ 597,227 | $ (306,284) | $ (690) | $ (306,974) | $ 4,041 | $ 4,041 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income | 3,140 | 3,114 | 3,114 | 26 | |||||||||||
Capital contribution by shareholders | 806 | 806 | |||||||||||||
Distribution to shareholders | (89) | (89) | |||||||||||||
Stock-based compensation | 290 | 290 | 290 | 0 | |||||||||||
Ending balance (in shares) at Mar. 31, 2022 | 53,706,392 | ||||||||||||||
Ending balance at Mar. 31, 2022 | $ 298,446 | 293,662 | $ 5 | 597,517 | (303,860) | 4,784 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2016-13 [Member] | ||||||||||||||
Beginning balance (in shares) at Dec. 31, 2022 | 53,813,777 | ||||||||||||||
Beginning balance at Dec. 31, 2022 | $ 296,249 | 291,813 | $ 5 | 598,322 | (306,514) | 4,436 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net income | (5,797) | (5,933) | (5,933) | 136 | |||||||||||
Stock-based compensation | 1,096 | 1,096 | 1,096 | 0 | |||||||||||
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) | ||||||||||||
Ending balance (in shares) at Mar. 31, 2023 | 53,844,492 | ||||||||||||||
Ending balance at Mar. 31, 2023 | $ 291,514 | $ 286,942 | $ 5 | $ 599,384 | $ (312,447) | $ 4,572 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2023 | |
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 Group”, 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 Group, which operates solely in the United States. The Company's customer base consists primarily of Chinese and Asian restaurants, and it provides sales and service support to customers who mainly converse in Mandarin or Chinese dialects. On April 29, 2022, the Company completed the acquisition of substantially all of the operating assets of Sealand Food, Inc. ("Sealand") including equipment, machinery and vehicles. The acquisition was completed to expand the Company's territory along the East Coast, from Massachusetts to Florida, as well as Pennsylvania, West Virginia, Ohio, Kentucky, and Tennessee. See Note 6 - Acquisitions for additional information on the Sealand acquisition. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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”) for interim financial information pursuant to the rules and regulations of the SEC and have been consistently applied. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements are condensed and should be read in conjunction with the audited financial statements and notes thereto for the fiscal years ended December 31, 2022 and 2021. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The accompanying condensed consolidated financial statements include the accounts of HF Group and a variable interest entity for which the Company is the primary beneficiary. All 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 income (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 VIEs and financial reporting for entities 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. On February 8, 2022, FUSO Trucking LLC, a VIE for which the Company was the primary beneficiary and consolidated, was dissolved. The Company also has a VIE, AnHeart, Inc. (“AnHeart”), for which the Company is not the primary beneficiary and therefore does not consolidate. The Company did not incur expenses from VIEs and did not have any sales to or income from any VIEs during the three months ended March 31, 2023 and 2022. See Note 14 - 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 income (loss). As of March 31, 2023 and December 31, 2022, noncontrolling interest equity consisted of the following: ($ in thousands) Ownership of noncontrolling interest at March 31, 2023 March 31, 2023 December 31, 2022 HF Foods Industrial, LLC ("HFFI") 45.00 % $ 107 $ 204 Min Food, Inc. 39.75 % 1,798 1,704 Monterey Food Service, LLC 35.00 % 448 452 Ocean West Food Services, LLC 32.50 % 2,129 1,986 Syncglobal Inc. 43.00 % 90 90 Total $ 4,572 $ 4,436 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, allowance for expected credit losses, inventory reserves, useful lives of property and equipment, lease assumptions, impairment of long-lived assets, impairment of long-term investments, impairment of goodwill, the purchase price allocation and fair value of assets and liabilities acquired with respect to business combinations, realization of deferred tax assets, uncertain income tax positions, the liability for self-insurance and stock-based compensation. Recent Accounting Pronouncements The Company has implemented all new pronouncements that are in effect and that may impact its condensed consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its condensed consolidated financial statements or results of operations. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 3 - Revenue For the three months ended March 31, 2023 and 2022, revenue recognized from performance obligations related to prior periods was immaterial. Revenue expected to be recognized in any future periods related to remaining performance obligations is immaterial. The following table presents the Company's net revenue disaggregated by principal product categories: Three Months Ended March 31, ($ in thousands) 2023 2022 Seafood $ 92,890 32 % $ 74,806 27 % Asian Specialty 77,824 25 % 74,676 27 % Meat and Poultry 52,049 18 % 60,915 22 % Fresh Produce 32,211 11 % 29,879 11 % Packaging and Other 19,396 7 % 22,013 8 % Commodity 19,485 7 % 15,926 5 % Total $ 293,855 100 % $ 278,215 100 % |
Balance Sheet Components
Balance Sheet Components | 3 Months Ended |
Mar. 31, 2023 | |
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) March 31, 2023 December 31, 2022 Accounts receivable $ 44,570 $ 45,628 Less: allowance for expected credit losses (1,475) (1,442) Accounts receivable, net $ 43,095 $ 44,186 Movement of allowance for expected credit losses was as follows: Three Months Ended March 31, (In thousands) 2023 2022 Beginning balance $ 1,442 $ 840 Adjustment for adoption of the CECL standard — 690 Increase (decrease) in provision for expected credit losses 57 (12) Bad debt write-offs (24) (1) Ending balance $ 1,475 $ 1,517 Property and equipment, net consisted of the following: (In thousands) March 31, 2023 December 31, 2022 Automobiles $ 36,863 $ 34,891 Buildings 63,045 63,045 Building improvements 22,321 20,637 Furniture and fixtures 446 444 Land 49,929 49,929 Machinery and equipment 14,853 17,210 Subtotal 187,457 186,156 Less: accumulated depreciation (48,473) (45,826) Property and equipment, net $ 138,984 $ 140,330 Depreciation expense was $2.6 million and $2.2 million for the three months ended March 31, 2023 and 2022, respectively. Long-term investments consisted of the following: (In thousands) Ownership as of March 31, March 31, 2023 December 31, 2022 Asahi Food, Inc. ("Asahi") 49% $ 866 $ 879 Pt. Tamron Akuatik Produk Industri ("Tamron") 12% 1,800 1,800 Total long-term investments $ 2,666 $ 2,679 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 March 31, 2023 and December 31, 2022 for these investments. Accrued expenses and other liabilities consisted of the following: (In thousands) March 31, 2023 December 31, 2022 Accrued compensation $ 4,863 $ 6,798 Accrued professional fees 2,080 3,866 Accrued interest and fees 1,190 1,082 Self-insurance liability 1,349 1,286 Accrued other 6,926 6,616 Total accrued expenses and other liabilities $ 16,408 $ 19,648 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
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: March 31, 2023 December 31, 2022 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 $ — $ 414 $ — $ 414 $ — $ 530 $ — $ 530 Liabilities: Interest rate swaps $ — $ 2,630 $ — $ 2,630 $ — $ — $ — $ — 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, advances to suppliers, 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. Please refer to Note 8 - 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 9 - Debt of the Notes to the Unaudited Condensed Consolidated Financial Statements, including the current portion, as of the dates indicated: Fair Value Measurements (In thousands) Level 1 Level 2 Level 3 Carrying Value March 31, 2023 Fixed rate debt: Bank of America $ — $ — $ 1,565 $ 1,858 East West Bank — — 1,761 2,335 Other finance institutions — — 117 117 Variable rate debt: JPMorgan Chase & Co. $ — $ 110,019 $ — $ 110,019 Bank of America — 2,296 — 2,296 East West Bank — 3,453 — 3,453 December 31, 2022 Fixed rate debt: Bank of America $ — $ — $ 1,630 $ 1,948 East West Bank — — 1,786 2,351 Other finance institutions — — 186 197 Variable rate debt: JPMorgan Chase & Co. $ — $ 111,413 $ — $ 111,413 Bank of America — 2,330 — 2,330 East West Bank — 3,471 — 3,471 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. Please refer to Note 9 - Debt for additional information regarding the Company's debt. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Note 6 - Acquisitions Acquisition of Sealand On April 29, 2022, the Company completed the acquisition of substantially all of the operating assets of Sealand, including equipment, machinery and vehicles. The acquisition was completed to expand the Company's territory along the East Coast, from Massachusetts to Florida, as well as Pennsylvania, West Virginia, Ohio, Kentucky, and Tennessee. The price for the purchased assets was $20.0 million paid in cash at closing. In addition to the closing cash payment, the Company separately acquired all of the sellers' saleable product inventory, for approximately $14.4 million and additional fixed assets for approximately $0.5 million. The Company finalized its purchase accounting as of December 31, 2022. The Company accounted for this transaction under ASC 805 Business Combinations, by applying the acquisition method of accounting and established a new basis of accounting on the date of acquisition. The assets acquired by the Company were measured at their estimated fair values as of the date of acquisition. Goodwill is calculated as the excess of the purchase price over the net assets recognized and represent synergies and benefits expected as a result from combining operations with an emerging national presence. The transaction costs for the acquisition for the three months ended March 31, 2022 totaled approximately $0.3 million and were reflected in distribution, selling and administrative expenses in the condensed consolidated statement of operations and comprehensive income. The information included herein was prepared based on the allocation of the purchase price using estimates of the fair value of assets acquired and liabilities assumed which were determined using a combination of quoted market prices, discounted cash flows, and other estimates made by management. The Company finalized the valuation of assets acquired and liabilities assumed for the Sealand acquisition as of March 31, 2023. Purchase Price Allocation The total consideration paid to acquire the assets and liabilities of Sealand, as set forth below: (In thousands) Amount Inventory $ 13,846 Property plant, and equipment 1,424 Right-of-use assets 127 Intangible assets 14,717 Total assets acquired 30,114 Obligations under operating leases 127 Total liabilities assumed 127 Net assets 29,987 Goodwill 4,861 Total consideration $ 34,848 The Company recorded acquired intangible assets of $14.7 million, which were measured at fair value using Level 3 inputs. These intangible assets include tradenames and trademarks of $4.4 million, customer relationships of $8.9 million and non-competition agreements of $1.4 million. The fair value of customer relationships was determined by applying the income approach utilizing the excess earnings methodology and Level 3 inputs including a discount rate. The fair value of tradenames and trademarks was determined by applying the income approach utilizing the relief from royalty methodology and Level 3 inputs including a royalty rate of 1% and a discount rate. The fair value of non-competition agreements was determined by applying the income approach and Level 3 inputs including a discount rate. Discount rates used in determining fair values for customer relationships, tradenames and trademarks, and non-competition agreements ranged from 17.5% to 18.0%. The useful lives of the tradenames and trademarks are ten years, customer relationships are ten years and non-competition agreements are three years, with a weighted average amortization period of approximately nine years. The associated goodwill is deductible for tax purposes. Unaudited Supplemental Pro Forma Financial Information The following table presents the Company’s unaudited pro forma results for the three months ended March 31, 2022 as if the acquisition of Sealand had been consummated on January 1, 2022. The unaudited pro forma financial information presented includes the effects of adjustments related to the amortization of acquired intangible assets and excludes other non-recurring transaction costs directly associated with the acquisition such as legal and other professional service fees. Statutory rates were used to calculate income taxes. (In thousands, except share and per share data) Three Months Ended March 31, 2022 Pro forma net revenue $ 302,098 Pro forma net income attributable to HF Group $ 5,996 Pro forma earnings per common share - basic $ 0.11 Pro forma earnings per common share - diluted $ 0.11 Pro forma weighted average shares - basic 53,706,392 Pro forma weighted average shares - diluted 53,884,510 |
Goodwill and Acquired Intangibl
Goodwill and Acquired Intangible Assets | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Acquired Intangible Assets | Note 7 - Goodwill and Acquired Intangible Assets Goodwill Goodwill was $85.1 million as of March 31, 2023 and December 31, 2022. There was no change in the carrying amount of goodwill for the three months ended March 31, 2023. Acquired Intangible Assets The components of the intangible assets are as follows: March 31, 2023 December 31, 2022 (In thousands) Gross Accumulated Net Gross Accumulated Net Non-competition agreement $ 3,892 $ (1,456) $ 2,436 $ 3,892 $ (1,132) $ 2,760 Trademarks 44,256 (11,778) 32,478 44,256 (10,673) 33,583 Customer relationships 185,266 (30,160) 155,106 185,266 (27,518) 157,748 Total $ 233,414 $ (43,394) $ 190,020 $ 233,414 $ (39,323) $ 194,091 |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Note 8 - 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 9 - Debt ). The Company does not use any other derivative financial instruments for trading or speculative purposes. On August 20, 2019, HF Group 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. The EWB IRS contracts were entered into in conjunction with two mortgage term loans of corresponding amounts that were priced at USD 1-month LIBOR plus 2.25% per annum for the entire duration of the term loans. The EWB IRS contracts fixed the two term loans at 4.23% per annum until maturity in September 2029. On December 19, 2019, HF Group 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. The term loan was contracted at USD 1-month LIBOR plus 2.15% per annum, but was fixed at 4.25% per annum resulting from the corresponding BOA IRS contract. On December 19, 2021, the Company entered into the Second Amendment to Loan Agreement, which pegged the mortgage term loan to Secured Overnight Financing Rate ("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 J.P. Morgan Chase for an initial notional amount of $120.0 million, effective from March 1, 2023 and expiring in March 2028, as a means to partially hedge its existing floating rate loans exposure. Pursuant to the agreement, the Company will pay the swap counterparty a fixed rate of 4.11% in exchange for floating payments based on CME Term SOFR. The Company evaluated the aforementioned IRS contracts currently in place and did not designate those as cash flow hedges. Hence, the fair value change on these IRS contracts are accounted for and recognized as a change in fair value of IRS contracts in the condensed consolidated statements of operations and comprehensive income (loss). other long-term assets other long-term liabilities |
Debt
Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Note 9 - Debt Long-term debt at March 31, 2023 and December 31, 2022 is summarized as follows: ($ in thousands) Bank Name Maturity Interest Rate at March 31, 2023 March 31, 2023 December 31, 2022 Bank of America (a) October 2026 - December 2029 4.28% - 5.80% $ 4,155 $ 4,315 East West Bank (b) August 2027 - September 2029 4.40% - 8.25% 5,788 5,822 JPMorgan Chase & Co. (c) December 2023 - January 2030 6.10% - 6.77% 110,309 111,714 Other finance institutions (d) April 2023 - March 2024 5.99% - 6.14% 117 160 Total debt, principal amount 120,369 122,011 Less: debt issuance costs (291) (302) Total debt, carrying value 120,078 121,709 Less: current portion (6,031) (6,266) Long-term debt $ 114,047 $ 115,443 _______________ (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 is pegged to TERM SOFR + 2.5%. (b) Real estate term loans with East West Bank are collateralized by four real properties. Balloon payments of $1.8 million and $2.9 million are due at maturity in 2027 and 2029, respectively. (c) Real estate term loan with a principal balance of $110.1 million as of March 31, 2023 and 111.4 million as of December 31, 2022 is secured by assets held by the Company and has a maturity date of January 2030. Equipment term loan with a principal balance of $0.2 million as of March 31, 2023 and $0.3 million as of December 31, 2022 is secured by specific vehicles and equipment as defined in loan agreements. Equipment term loan matures in December 2023. (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 March 31, 2023, the Company was in compliance with its covenants. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Note 10 - 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 60,558 potential common shares related to performance-based restricted stock units and 50,256 potential common shares related to restricted stock units that were excluded from the calculation of diluted EPS for the three months ended March 31, 2023 because their effect would have been anti-dilutive. There were 14,381 potential common shares related to total shareholder return performance-based restricted stock units that were excluded from the calculation of diluted EPS for the three months ended March 31, 2022 because their effect would have been anti-dilutive. The following table sets forth the computation of basic and diluted EPS: Three Months Ended March 31, ($ in thousands, except share and per share data) 2023 2022 Numerator: Net (loss) income attributable to HF Foods Group Inc. $ (5,933) $ 3,114 Denominator: Weighted-average common shares outstanding 53,822,794 53,706,392 Effect of dilutive securities — 178,118 Weighted-average dilutive shares outstanding 53,822,794 53,884,510 (Loss) earnings per common share: Basic $ (0.11) $ 0.06 Diluted $ (0.11) $ 0.06 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 11 - 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. The Company has no operations outside the U.S., as such, no foreign income tax was recorded. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 12 - 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”) became the sole Chief Executive Officer on February 23, 2021. Mr. Xiao Mou Zhang and certain of his immediate family also 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. 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 the beneficial owners of approximately 25% of the Company’s outstanding shares of 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. For the year ended December 31, 2022, North Carolina Good Taste Noodle, Inc. (“NC Noodle”) was a related party due to Mr. Jian Ming Ni's, a former Chief Financial Officer of the Company, continued ownership interest in NC Noodle. As of January 1, 2023, NC Noodle is no longer considered a related party since it has been three years since Mr. Jian Ming Ni resigned. The related party transactions as of March 31, 2023 and December 31, 2022 and for the three months ended March 31, 2023 and 2022 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 months ended March 31, 2023 and 2022, respectively: Three Months Ended March 31, (In thousands) Nature 2023 2022 (a) Best Food Services, LLC Trade $ 2,084 $ 2,945 (b) Eastern Fresh NJ, LLC Trade — 1,093 (c) Enson Seafood GA, Inc. (formerly “GA-GW Seafood, Inc.”) Trade 37 — (d) First Choice Seafood, Inc. Trade — 83 (e) Fujian RongFeng Plastic Co., Ltd Trade — 398 (f) North Carolina Good Taste Noodle, Inc. Trade — 1,658 (g) Ocean Pacific Seafood Group, Inc. Trade 168 136 Other Trade 52 32 Total $ 2,341 $ 6,345 _______________ (a) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020. (b) Mr. Ni owns an equity interest in this entity. (c) Mr. Ni owns an equity interest in this entity. (d) Mr. Ni owns an equity interest in this entity indirectly through its parent company. (e) Mr. Ni owns an equity interest in this entity indirectly through its parent company. (f) Mr. Jian Ming Ni, former Chief Financial Officer owns an equity interest in this entity. Mr. Zhou Min Ni previously owned an equity in this entity as of 12/31/2019. The Company has been informed by Mr. Zhou Min Ni that his equity interest was disposed of on 1/1/2020. No longer considered a related party as of 1/1/2023 since it has been three . (g) Mr. Ni owns an equity interest in this entity. Sales Below is a summary of sales to related parties recorded for the three months ended March 31, 2023 and 2022, respectively: Three Months Ended March 31, (In thousands) 2023 2022 (a) ABC Food Trading, LLC $ 593 $ 1,192 (b) Asahi Food, Inc. 195 181 (c) Best Food Services, LLC 433 645 (d) Eagle Food Service, LLC 1,020 — (e) First Choice Seafood, Inc. 8 10 (f) Fortune One Foods, Inc. 19 — (g) N&F Logistics, Inc. 6 36 (h) Union Food LLC 19 — Total $ 2,293 $ 2,064 _______________ (a) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020. (b) The Company, through its subsidiary MF, owns an equity interest in this entity. (c) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020. (d) Tina Ni, one of Mr. Ni’s family members, owns an equity interest in this entity indirectly through its parent company. (e) Mr. Ni owns an equity interest in this entity indirectly through its parent company. (f) Mr. Ni owns an equity interest in this entity indirectly through its parent company. (g) Mr. Ni owns an equity interest in this entity. (h) Tina Ni, one of Mr. Ni’s family members, owns an equity interest in this entity. Lease Agreements The Company leases various facilities to related parties. The Company leased a warehouse to Enson Seafood GA Inc. (formerly GA-GW Seafood, Inc.) under an operating lease agreement expiring on September 21, 2027. On May 18, 2022, the Company sold the warehouse to Enson Seafood GA Inc., a related party, for approximately $7.2 million, recognized a gain of $1.5 million and used a portion of the proceeds to pay the outstanding balance of the Company's $4.5 million loan with First Horizon Bank. Rental income for the three months ended March 31, 2023 and 2022 was nil and $80,000, respectively, which is included in other income in the condensed consolidated statements of operations and comprehensive income (loss). 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 incurred was $99,000 and $72,000 for the three months ended March 31, 2023 and 2022, respectively, which is included in distribution, selling and administrative expenses 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 March 31, 2023 and December 31, 2022, respectively: (In thousands) March 31, 2023 December 31, 2022 (a) ABC Food Trading, LLC $ 291 $ — (b) Asahi Food, Inc. 47 81 (c) Best Food Services. LLC 147 — (d) Eagle Food Service, LLC 83 69 (e) Enson Seafood GA, Inc. (formerly as GA-GW Seafood, Inc.) 59 59 (f) Fortune One Foods, Inc. — 4 (g) Union Food LLC 2 — Total $ 629 $ 213 _______________ (a) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020. (b) The Company, through its subsidiary MF, owns an equity interest in this entity. (c) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020. (d) Tina Ni, one of Mr. Ni’s family members, owns an equity interest in this entity indirectly through its parent company. (e) Mr. Ni owns an equity interest in this entity. (f) Mr. Ni owns an equity interest in this entity indirectly through its parent company. (g) Tina Ni, one of Mr. Ni’s family members, owns an equity interest in this entity. The Company has reserved for 80% of the accounts receivable for Enson Seafood GA, Inc. All other accounts receivable from these related parties are current and considered fully collectible. No other allowance is deemed necessary as of March 31, 2023 and December 31, 2022. 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 March 31, 2023 and December 31, 2022, respectively: (In thousands) March 31, 2023 December 31, 2022 (a) Best Food Services, LLC $ 707 $ 729 (b) North Carolina Good Taste Noodle, Inc. — 731 Others 46 69 Total $ 753 $ 1,529 _______________ (a) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefits of Mr. Zhang's children effective November 1, 2020. (b) Mr. Jian Ming Ni, former Chief Financial Officer owns an equity interest in this entity. Mr. Zhou Min Ni previously owned an equity in this entity as of 12/31/2019. The Company has been informed by Mr. Zhou Min Ni that his equity interest was disposed of on 1/1/2020. No longer considered a related party as of 1/1/2023 since it has been three years since Mr. Jian Ming Ni resigned . Promissory Note Payable - Related Party The Company issued a $7.0 million unsecured subordinated promissory note to B&R Group Realty Holding, LLC. As of March 31, 2022, the outstanding balance was $4.5 million and there was no accrued interest payable. Interest payments were $0.1 million for the three months ended March 31, 2022. No principal payment was made during the three months ended March 31, 2022. During the three months ended June 30, 2022, the Company paid the remaining $4.5 million principal balance of this related party promissory note payable. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Note 13 - Stock-Based Compensation In July 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, non-employee directors and consultants. As of March 31, 2023, the Company had 575,906 time-based vesting restricted stock units unvested, 339,255 performance-based restricted stock units unvested, 180,506 shares of common stock vested and 1,904,333 shares remaining available for future awards under the 2018 Incentive Plan. For the three months ended March 31, 2023 and 2022, stock-based compensation expense was $1.1 million and $0.3 million, respectively, and was included in distribution, selling and administrative expenses in the Company's unaudited condensed consolidated statements of income and comprehensive income. As of March 31, 2023, there was $3.0 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 1.83 years. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 14 - 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 its 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. As previously disclosed, in March 2020, an analyst report suggested certain improprieties in the Company’s operations, and in response to those allegations, the Company’s Board of Directors appointed a Special Committee of Independent Directors (the “Special Investigation Committee”) to conduct an internal independent investigation with the assistance of counsel. These allegations became the subject of two putative stockholder class actions filed on or after March 29, 2020 in the United States District Court for the Central District of California generally alleging 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 (the “Class Actions”). These Class Actions have since been dismissed and are now closed. In addition, the SEC initiated a formal, non-public investigation of the Company, and the SEC informally requested, and later issued a subpoena for, documents and other information. The subpoena relates to but is not necessarily limited to the matters identified in the Class Actions. The Special Investigation Committee and the Company are cooperating with the SEC. While the SEC investigation is ongoing, the Special Investigation Committee has made certain factual findings based on evidence adduced during its investigation, and made recommendations to management regarding improvements to Company operations and structure, including but not limited to its dealings with related parties. The Company is working to implement those improvements. As with any SEC investigation, there is also the possibility of potential fines and penalties. At this time, however, there has not been any demand made by the SEC nor is it possible to estimate the amount of any such fines and penalties, should they occur. On May 20, 2022, the Board of Directors of HF Group received a letter from a stockholder, James Bishop (the “Bishop Demand”). The Bishop Demand alleges that certain current and former officers and directors of HF Group engaged in misconduct and breached their fiduciary duties, and demands that HF Group investigate the allegations and, if warranted, assert claims against those current or former officers and directors. Many of the allegations contained in the Bishop Demand were the subject of the Class Actions. On June 30, 2022, the Board of Directors of HF Group resolved to form a special committee (the “Special Litigation Committee”) comprised of independent directors and advised by counsel to analyze and evaluate the allegations in the Bishop Demand in order to determine whether the Company should assert any claims against the current or former officers and directors. On August 19, 2022, James Bishop filed a verified stockholder derivative complaint (the “Delaware Action”) in the Court of Chancery of the State of Delaware (the “Court of Chancery”), which asserts similar allegations to those set forth in the Bishop Demand. On September 21, 2022, Bishop and the Company filed a stipulation to stay the Delaware Action for 90 days, which the court granted on September 22, 2022. On December 20, 2022, Bishop and the Company filed a stipulation to extend the stay of the Delaware Action for an additional 60 days, which the court granted on December 21, 2022. On March 15, 2023, the Court of Chancery entered an order approving a joint stipulation submitted by Bishop and HF Foods to stay the case for an additional 60 days. Subsequent to March 31, 2023, effective as of April 20, 2023, the Company and certain parties to the Delaware Action reached an agreement to settle the Delaware Action on the terms and conditions set forth in a binding term sheet (the “Binding Term Sheet”), which was incorporated into a long-form settlement agreement on May 5, 2023 and filed with the Court of Chancery on May 8, 2023. The Binding Term Sheet provided for, among other things, the dismissal of the Delaware Action with prejudice, thereby resolving all existing and potential liability against all named defendants in the Delaware Action, in exchange for Zhou Min Ni, a former Chairman and Chief Executive Officer of the Company, and Chan Sin Wong, a former President and Chief Operating Officer of the Company, making a payment to the Company in the sum of $9.25 million and the Company adopting certain changes to its Certificate of Incorporation, Bylaws and/or other internal governance policies and procedures. The full terms of the settlement of the Delaware Action were incorporated into the long-form settlement agreement, which is subject to approval of the Court of Chancery. 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 has determined that AnHeart is a VIE as a result of the guarantee. However, the Company concluded it is not the primary beneficiary of AnHeart and therefore does not consolidate, because it does not have the power to direct the activities of AnHeart that most significantly impact AnHeart's economic performance. 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. 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 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. While the case remains pending in New York, the Company is not actively litigating the claim. In accordance with ASC Topic 460, Guarantees , the Company has determined that its maximum exposure resulting from the 275 Fifth Avenue lease guarantee includes future minimum lease payments plus potential additional payments to satisfy maintenance, property tax and insurance requirements under the leases with a remaining term of approximately 11 years. The Company elected a policy to apply the discounted cash flow method to loss contingencies with more than 18 months of payments. AnHeart is obligated to pay all costs associated with the properties, including taxes, insurance, utilities, maintenance and repairs. During the three months ended March 31, 2022, the Company recorded a lease guarantee liability of $5.9 million. The Company determined the discounted value of the lease guarantee liability using a discount rate of 4.55% and is classified as Level 2 in the fair value hierarchy. As of March 31, 2023, the Company had a lease guarantee liability of $5.7 million. The current portion of the lease guarantee liability of $0.3 million is recorded in Accrued expenses and other liabilities, while the long-term portion is recorded in Other long-term liabilities on the condensed consolidated balance sheet. The Company's monthly rental payments range from approximately $42,000 per month to $63,000 per month, with the final payment due in 2034. The estimated future minimum lease payments as of March 31, 2023 are presented below: (In thousands) Amount Year Ended December 31, 2023 (remaining nine months) $ 416 2024 582 2025 604 2026 621 2027 638 Thereafter 4,478 Total 7,339 Less: imputed interest (1,642) Total minimum lease payments $ 5,697 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15 - Subsequent Events Shareholder Rights Plan On April 11, 2023, the Company’s Board of Directors, authorized and declared a dividend distribution of one right (each, a “Right”) for each outstanding share of common stock of the Company to stockholders of record as of the close of business on April 24, 2023. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Participating Preferred Stock of the Company at an exercise price of $19.50 subject to adjustment. The complete terms of the Rights are set forth in a Preferred Stock Rights Agreement (the “Rights Agreement”), dated as of April 11, 2023, between the Company and American Stock Transfer & Trust Company, LLC, as rights agent. The Company’s Board of Directors adopted the Rights Agreement to protect stockholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group that acquires fifteen percent (15%) or more of the shares of common stock without the approval of the Company’s Board of Directors. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Company’s Board of Directors. See Note 14 - Commitments and Contingencies for a subsequent event related to the settlement of the Delaware Action. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
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”) for interim financial information pursuant to the rules and regulations of the SEC and have been consistently applied. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements are condensed and should be read in conjunction with the audited financial statements and notes thereto for the fiscal years ended December 31, 2022 and 2021. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The accompanying condensed consolidated financial statements include the accounts of HF Group and a variable interest entity for which the Company is the primary beneficiary. All 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 income (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 income (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, allowance for expected credit losses, inventory reserves, useful lives of property and equipment, lease assumptions, impairment of long-lived assets, impairment of long-term investments, impairment of goodwill, the purchase price allocation and fair value of assets and liabilities acquired with respect to business combinations, realization of deferred tax assets, uncertain income tax positions, the liability for self-insurance and stock-based compensation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has implemented all new pronouncements that are in effect and that may impact its condensed consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its condensed consolidated financial statements or results of operations. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Noncontrolling Interest | As of March 31, 2023 and December 31, 2022, noncontrolling interest equity consisted of the following: ($ in thousands) Ownership of noncontrolling interest at March 31, 2023 March 31, 2023 December 31, 2022 HF Foods Industrial, LLC ("HFFI") 45.00 % $ 107 $ 204 Min Food, Inc. 39.75 % 1,798 1,704 Monterey Food Service, LLC 35.00 % 448 452 Ocean West Food Services, LLC 32.50 % 2,129 1,986 Syncglobal Inc. 43.00 % 90 90 Total $ 4,572 $ 4,436 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, ($ in thousands) 2023 2022 Seafood $ 92,890 32 % $ 74,806 27 % Asian Specialty 77,824 25 % 74,676 27 % Meat and Poultry 52,049 18 % 60,915 22 % Fresh Produce 32,211 11 % 29,879 11 % Packaging and Other 19,396 7 % 22,013 8 % Commodity 19,485 7 % 15,926 5 % Total $ 293,855 100 % $ 278,215 100 % |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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) March 31, 2023 December 31, 2022 Accounts receivable $ 44,570 $ 45,628 Less: allowance for expected credit losses (1,475) (1,442) Accounts receivable, net $ 43,095 $ 44,186 |
Schedule of Financing Receivable, Allowance for Credit Loss | Movement of allowance for expected credit losses was as follows: Three Months Ended March 31, (In thousands) 2023 2022 Beginning balance $ 1,442 $ 840 Adjustment for adoption of the CECL standard — 690 Increase (decrease) in provision for expected credit losses 57 (12) Bad debt write-offs (24) (1) Ending balance $ 1,475 $ 1,517 |
Schedule of Property and Equipment | Property and equipment, net consisted of the following: (In thousands) March 31, 2023 December 31, 2022 Automobiles $ 36,863 $ 34,891 Buildings 63,045 63,045 Building improvements 22,321 20,637 Furniture and fixtures 446 444 Land 49,929 49,929 Machinery and equipment 14,853 17,210 Subtotal 187,457 186,156 Less: accumulated depreciation (48,473) (45,826) Property and equipment, net $ 138,984 $ 140,330 |
Schedule of Long-Term Investments | Long-term investments consisted of the following: (In thousands) Ownership as of March 31, March 31, 2023 December 31, 2022 Asahi Food, Inc. ("Asahi") 49% $ 866 $ 879 Pt. Tamron Akuatik Produk Industri ("Tamron") 12% 1,800 1,800 Total long-term investments $ 2,666 $ 2,679 |
Schedule of Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities consisted of the following: (In thousands) March 31, 2023 December 31, 2022 Accrued compensation $ 4,863 $ 6,798 Accrued professional fees 2,080 3,866 Accrued interest and fees 1,190 1,082 Self-insurance liability 1,349 1,286 Accrued other 6,926 6,616 Total accrued expenses and other liabilities $ 16,408 $ 19,648 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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: March 31, 2023 December 31, 2022 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 $ — $ 414 $ — $ 414 $ — $ 530 $ — $ 530 Liabilities: Interest rate swaps $ — $ 2,630 $ — $ 2,630 $ — $ — $ — $ — |
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 9 - Debt of the Notes to the Unaudited Condensed Consolidated Financial Statements, including the current portion, as of the dates indicated: Fair Value Measurements (In thousands) Level 1 Level 2 Level 3 Carrying Value March 31, 2023 Fixed rate debt: Bank of America $ — $ — $ 1,565 $ 1,858 East West Bank — — 1,761 2,335 Other finance institutions — — 117 117 Variable rate debt: JPMorgan Chase & Co. $ — $ 110,019 $ — $ 110,019 Bank of America — 2,296 — 2,296 East West Bank — 3,453 — 3,453 December 31, 2022 Fixed rate debt: Bank of America $ — $ — $ 1,630 $ 1,948 East West Bank — — 1,786 2,351 Other finance institutions — — 186 197 Variable rate debt: JPMorgan Chase & Co. $ — $ 111,413 $ — $ 111,413 Bank of America — 2,330 — 2,330 East West Bank — 3,471 — 3,471 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. Please refer to Note 9 - Debt for additional information regarding the Company's debt. |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The total consideration paid to acquire the assets and liabilities of Sealand, as set forth below: (In thousands) Amount Inventory $ 13,846 Property plant, and equipment 1,424 Right-of-use assets 127 Intangible assets 14,717 Total assets acquired 30,114 Obligations under operating leases 127 Total liabilities assumed 127 Net assets 29,987 Goodwill 4,861 Total consideration $ 34,848 |
Schedule of Pro Forma Information | The following table presents the Company’s unaudited pro forma results for the three months ended March 31, 2022 as if the acquisition of Sealand had been consummated on January 1, 2022. The unaudited pro forma financial information presented includes the effects of adjustments related to the amortization of acquired intangible assets and excludes other non-recurring transaction costs directly associated with the acquisition such as legal and other professional service fees. Statutory rates were used to calculate income taxes. (In thousands, except share and per share data) Three Months Ended March 31, 2022 Pro forma net revenue $ 302,098 Pro forma net income attributable to HF Group $ 5,996 Pro forma earnings per common share - basic $ 0.11 Pro forma earnings per common share - diluted $ 0.11 Pro forma weighted average shares - basic 53,706,392 Pro forma weighted average shares - diluted 53,884,510 |
Goodwill and Acquired Intangi_2
Goodwill and Acquired Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The components of the intangible assets are as follows: March 31, 2023 December 31, 2022 (In thousands) Gross Accumulated Net Gross Accumulated Net Non-competition agreement $ 3,892 $ (1,456) $ 2,436 $ 3,892 $ (1,132) $ 2,760 Trademarks 44,256 (11,778) 32,478 44,256 (10,673) 33,583 Customer relationships 185,266 (30,160) 155,106 185,266 (27,518) 157,748 Total $ 233,414 $ (43,394) $ 190,020 $ 233,414 $ (39,323) $ 194,091 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt at March 31, 2023 and December 31, 2022 is summarized as follows: ($ in thousands) Bank Name Maturity Interest Rate at March 31, 2023 March 31, 2023 December 31, 2022 Bank of America (a) October 2026 - December 2029 4.28% - 5.80% $ 4,155 $ 4,315 East West Bank (b) August 2027 - September 2029 4.40% - 8.25% 5,788 5,822 JPMorgan Chase & Co. (c) December 2023 - January 2030 6.10% - 6.77% 110,309 111,714 Other finance institutions (d) April 2023 - March 2024 5.99% - 6.14% 117 160 Total debt, principal amount 120,369 122,011 Less: debt issuance costs (291) (302) Total debt, carrying value 120,078 121,709 Less: current portion (6,031) (6,266) Long-term debt $ 114,047 $ 115,443 _______________ (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 is pegged to TERM SOFR + 2.5%. (b) Real estate term loans with East West Bank are collateralized by four real properties. Balloon payments of $1.8 million and $2.9 million are due at maturity in 2027 and 2029, respectively. (c) Real estate term loan with a principal balance of $110.1 million as of March 31, 2023 and 111.4 million as of December 31, 2022 is secured by assets held by the Company and has a maturity date of January 2030. Equipment term loan with a principal balance of $0.2 million as of March 31, 2023 and $0.3 million as of December 31, 2022 is secured by specific vehicles and equipment as defined in loan agreements. Equipment term loan matures in December 2023. (d) Secured by vehicles. |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share Basic and Diluted | The following table sets forth the computation of basic and diluted EPS: Three Months Ended March 31, ($ in thousands, except share and per share data) 2023 2022 Numerator: Net (loss) income attributable to HF Foods Group Inc. $ (5,933) $ 3,114 Denominator: Weighted-average common shares outstanding 53,822,794 53,706,392 Effect of dilutive securities — 178,118 Weighted-average dilutive shares outstanding 53,822,794 53,884,510 (Loss) earnings per common share: Basic $ (0.11) $ 0.06 Diluted $ (0.11) $ 0.06 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Purchases With Related Parties | Below is a summary of purchases of goods and services from related parties recorded for the three months ended March 31, 2023 and 2022, respectively: Three Months Ended March 31, (In thousands) Nature 2023 2022 (a) Best Food Services, LLC Trade $ 2,084 $ 2,945 (b) Eastern Fresh NJ, LLC Trade — 1,093 (c) Enson Seafood GA, Inc. (formerly “GA-GW Seafood, Inc.”) Trade 37 — (d) First Choice Seafood, Inc. Trade — 83 (e) Fujian RongFeng Plastic Co., Ltd Trade — 398 (f) North Carolina Good Taste Noodle, Inc. Trade — 1,658 (g) Ocean Pacific Seafood Group, Inc. Trade 168 136 Other Trade 52 32 Total $ 2,341 $ 6,345 _______________ (a) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020. (b) Mr. Ni owns an equity interest in this entity. (c) Mr. Ni owns an equity interest in this entity. (d) Mr. Ni owns an equity interest in this entity indirectly through its parent company. (e) Mr. Ni owns an equity interest in this entity indirectly through its parent company. (f) Mr. Jian Ming Ni, former Chief Financial Officer owns an equity interest in this entity. Mr. Zhou Min Ni previously owned an equity in this entity as of 12/31/2019. The Company has been informed by Mr. Zhou Min Ni that his equity interest was disposed of on 1/1/2020. No longer considered a related party as of 1/1/2023 since it has been three . (g) Mr. 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 months ended March 31, 2023 and 2022, respectively: Three Months Ended March 31, (In thousands) 2023 2022 (a) ABC Food Trading, LLC $ 593 $ 1,192 (b) Asahi Food, Inc. 195 181 (c) Best Food Services, LLC 433 645 (d) Eagle Food Service, LLC 1,020 — (e) First Choice Seafood, Inc. 8 10 (f) Fortune One Foods, Inc. 19 — (g) N&F Logistics, Inc. 6 36 (h) Union Food LLC 19 — Total $ 2,293 $ 2,064 _______________ (a) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020. (b) The Company, through its subsidiary MF, owns an equity interest in this entity. (c) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020. (d) Tina Ni, one of Mr. Ni’s family members, owns an equity interest in this entity indirectly through its parent company. (e) Mr. Ni owns an equity interest in this entity indirectly through its parent company. (f) Mr. Ni owns an equity interest in this entity indirectly through its parent company. (g) Mr. Ni owns an equity interest in this entity. (h) Tina Ni, one of Mr. 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 March 31, 2023 and December 31, 2022, respectively: (In thousands) March 31, 2023 December 31, 2022 (a) ABC Food Trading, LLC $ 291 $ — (b) Asahi Food, Inc. 47 81 (c) Best Food Services. LLC 147 — (d) Eagle Food Service, LLC 83 69 (e) Enson Seafood GA, Inc. (formerly as GA-GW Seafood, Inc.) 59 59 (f) Fortune One Foods, Inc. — 4 (g) Union Food LLC 2 — Total $ 629 $ 213 _______________ (a) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020. (b) The Company, through its subsidiary MF, owns an equity interest in this entity. (c) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefit of Mr. Zhang's children effective November 1, 2020. (d) Tina Ni, one of Mr. Ni’s family members, owns an equity interest in this entity indirectly through its parent company. (e) Mr. Ni owns an equity interest in this entity. (f) Mr. Ni owns an equity interest in this entity indirectly through its parent company. |
Schedule of Accounts Payable With 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 March 31, 2023 and December 31, 2022, respectively: (In thousands) March 31, 2023 December 31, 2022 (a) Best Food Services, LLC $ 707 $ 729 (b) North Carolina Good Taste Noodle, Inc. — 731 Others 46 69 Total $ 753 $ 1,529 _______________ (a) Mr. Zhang previously owned an equity interest in this entity indirectly through its parent company as of October 31, 2020. This equity interest was transferred to three Irrevocable Trusts for the benefits of Mr. Zhang's children effective November 1, 2020. (b) Mr. Jian Ming Ni, former Chief Financial Officer owns an equity interest in this entity. Mr. Zhou Min Ni previously owned an equity in this entity as of 12/31/2019. The Company has been informed by Mr. Zhou Min Ni that his equity interest was disposed of on 1/1/2020. No longer considered a related party as of 1/1/2023 since it has been three years since Mr. Jian Ming Ni resigned . |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Operating Lease Maturities | The estimated future minimum lease payments as of March 31, 2023 are presented below: (In thousands) Amount Year Ended December 31, 2023 (remaining nine months) $ 416 2024 582 2025 604 2026 621 2027 638 Thereafter 4,478 Total 7,339 Less: imputed interest (1,642) Total minimum lease payments $ 5,697 |
Organization and Description _2
Organization and Description of Business (Details) | 3 Months Ended |
Mar. 31, 2023 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Noncontrolling Interest (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Noncontrolling Interest [Line Items] | ||
Noncontrolling interests | $ 4,572 | $ 4,436 |
HF Foods Industrial, LLC ("HFFI") | ||
Noncontrolling Interest [Line Items] | ||
Ownership of noncontrolling interest at March 31, 2023 | 45% | |
Noncontrolling interests | $ 107 | 204 |
Min Food, Inc. | ||
Noncontrolling Interest [Line Items] | ||
Ownership of noncontrolling interest at March 31, 2023 | 39.75% | |
Noncontrolling interests | $ 1,798 | 1,704 |
Monterey Food Service, LLC | ||
Noncontrolling Interest [Line Items] | ||
Ownership of noncontrolling interest at March 31, 2023 | 35% | |
Noncontrolling interests | $ 448 | 452 |
Ocean West Food Services, LLC | ||
Noncontrolling Interest [Line Items] | ||
Ownership of noncontrolling interest at March 31, 2023 | 32.50% | |
Noncontrolling interests | $ 2,129 | 1,986 |
Syncglobal Inc. | ||
Noncontrolling Interest [Line Items] | ||
Ownership of noncontrolling interest at March 31, 2023 | 43% | |
Noncontrolling interests | $ 90 | $ 90 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
TOTAL NET REVENUE | $ 293,855 | $ 278,215 |
Revenue Benchmark | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Operating concentration risk (percentage) | 100% | 100% |
Seafood | ||
Disaggregation of Revenue [Line Items] | ||
TOTAL NET REVENUE | $ 92,890 | $ 74,806 |
Seafood | Revenue Benchmark | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Operating concentration risk (percentage) | 32% | 27% |
Asian Specialty | ||
Disaggregation of Revenue [Line Items] | ||
TOTAL NET REVENUE | $ 77,824 | $ 74,676 |
Asian Specialty | Revenue Benchmark | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Operating concentration risk (percentage) | 25% | 27% |
Meat and Poultry | ||
Disaggregation of Revenue [Line Items] | ||
TOTAL NET REVENUE | $ 52,049 | $ 60,915 |
Meat and Poultry | Revenue Benchmark | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Operating concentration risk (percentage) | 18% | 22% |
Fresh Produce | ||
Disaggregation of Revenue [Line Items] | ||
TOTAL NET REVENUE | $ 32,211 | $ 29,879 |
Fresh Produce | Revenue Benchmark | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Operating concentration risk (percentage) | 11% | 11% |
Packaging and Other | ||
Disaggregation of Revenue [Line Items] | ||
TOTAL NET REVENUE | $ 19,396 | $ 22,013 |
Packaging and Other | Revenue Benchmark | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Operating concentration risk (percentage) | 7% | 8% |
Commodity | ||
Disaggregation of Revenue [Line Items] | ||
TOTAL NET REVENUE | $ 19,485 | $ 15,926 |
Commodity | Revenue Benchmark | Product Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Operating concentration risk (percentage) | 7% | 5% |
Balance Sheet Components - Acco
Balance Sheet Components - Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Accounts receivable | $ 44,570 | $ 45,628 | ||
Less: allowance for expected credit losses | (1,475) | (1,442) | $ (1,517) | $ (840) |
Accounts receivable, net | $ 43,095 | $ 44,186 |
Balance Sheet Components - Allo
Balance Sheet Components - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 1,442 | $ 840 |
Adjustment for adoption of the CECL standard | 0 | 690 |
Increase (decrease) in provision for expected credit losses | 57 | (12) |
Bad debt write-offs | (24) | (1) |
Ending balance | $ 1,475 | $ 1,517 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | $ 187,457 | $ 186,156 |
Less: accumulated depreciation | (48,473) | (45,826) |
Property and equipment, net | 138,984 | 140,330 |
Automobiles | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 36,863 | 34,891 |
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 | 22,321 | 20,637 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, at cost | 446 | 444 |
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 | $ 14,853 | $ 17,210 |
Balance Sheet Components - Narr
Balance Sheet Components - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Depreciation | $ 2,600,000 | $ 2,200,000 | |
Other than temporary impairment | $ 0 | $ 0 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Long-Term Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Schedule of Equity Method Investments [Line Items] | ||
Long-term investments | $ 2,666 | $ 2,679 |
Asahi Food, Inc. ("Asahi") | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investment, ownership percentage | 49% | |
Long-term investments | $ 866 | 879 |
Pt. Tamron Akuatik Produk Industri ("Tamron") | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investment, ownership percentage | 12% | |
Long-term investments | $ 1,800 | $ 1,800 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued compensation | $ 4,863 | $ 6,798 |
Accrued professional fees | 2,080 | 3,866 |
Accrued interest and fees | 1,190 | 1,082 |
Self-insurance liability | 1,349 | 1,286 |
Accrued other | 6,926 | 6,616 |
Total accrued expenses and other liabilities | $ 16,408 | $ 19,648 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value Measurements, Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Assets | |||
DerivativeAssetsStatementOfFinancialPositionExtensibleEnumerationNotDisclosedFlag | Interest rate swaps | Interest rate swaps | |
Liability | |||
DerivativeLiabilityStatementOfFinancialPositionExtensibleEnumerationNotDisclosedFlag | Interest rate swaps | Interest rate swaps | |
Recurring | |||
Assets | |||
Assets: | $ 414 | $ 530 | |
Liability | |||
Liabilities: | 2,630 | 0 | |
Recurring | Level 1 | |||
Assets | |||
Assets: | 0 | 0 | |
Liability | |||
Liabilities: | 0 | 0 | |
Recurring | Level 2 | |||
Assets | |||
Assets: | 414 | 530 | |
Liability | |||
Liabilities: | 2,630 | 0 | |
Recurring | Level 3 | |||
Assets | |||
Assets: | 0 | 0 | |
Liability | |||
Liabilities: | $ 0 | $ 0 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Debt Securities, Carrying Value and Fair Value (Details) - Reported Value Measurement - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Bank of America | Fixed Rate Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument, fair value disclosure | $ 1,858 | $ 1,948 |
Bank of America | Variable Rate Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument, fair value disclosure | 2,296 | 2,330 |
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 | 2,296 | 2,330 |
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 | 1,565 | 1,630 |
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 | Fixed Rate Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument, fair value disclosure | 2,335 | 2,351 |
East West Bank | Variable Rate Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument, fair value disclosure | 3,453 | 3,471 |
East West Bank | 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 |
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 | Fixed 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 | 3,453 | 3,471 |
East West Bank | Level 3 | Fixed Rate Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument, fair value disclosure | 1,761 | 1,786 |
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 | 117 | 197 |
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 | 117 | 186 |
JP Morgan | Variable Rate Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt instrument, fair value disclosure | 110,019 | 111,413 |
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 | 110,019 | 111,413 |
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 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ in Thousands | Apr. 29, 2022 | Mar. 31, 2022 |
Trademarks and Trade Names | ||
Business Acquisition [Line Items] | ||
Royalty rate | 1% | |
Sealand Food Inc Asset Purchase Agreement | ||
Business Acquisition [Line Items] | ||
Consideration transferred | $ 20,000 | |
Payment to acquire saleable product inventory | 14,400 | |
Automobile | 500 | |
Transaction costs | $ 300 | |
Intangible assets | $ 14,717 | |
Estimated amortization period (in years) | 9 years | |
Sealand Food Inc Asset Purchase Agreement | Trademarks and Trade Names | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 4,400 | |
Estimated amortization period (in years) | 10 years | |
Sealand Food Inc Asset Purchase Agreement | Trademarks and Trade Names | Minimum | ||
Business Acquisition [Line Items] | ||
Discount rates | 17.50% | |
Sealand Food Inc Asset Purchase Agreement | Trademarks and Trade Names | Maximum | ||
Business Acquisition [Line Items] | ||
Discount rates | 18% | |
Sealand Food Inc Asset Purchase Agreement | Customer relationships | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 8,900 | |
Estimated amortization period (in years) | 10 years | |
Sealand Food Inc Asset Purchase Agreement | Customer relationships | Minimum | ||
Business Acquisition [Line Items] | ||
Discount rates | 17.50% | |
Sealand Food Inc Asset Purchase Agreement | Customer relationships | Maximum | ||
Business Acquisition [Line Items] | ||
Discount rates | 18% | |
Sealand Food Inc Asset Purchase Agreement | Non-competition agreement | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 1,400 | |
Estimated amortization period (in years) | 3 years | |
Sealand Food Inc Asset Purchase Agreement | Non-competition agreement | Minimum | ||
Business Acquisition [Line Items] | ||
Discount rates | 17.50% | |
Sealand Food Inc Asset Purchase Agreement | Non-competition agreement | Maximum | ||
Business Acquisition [Line Items] | ||
Discount rates | 18% | |
Sealand Food Inc Asset Purchase Agreement | Level 3 | ||
Business Acquisition [Line Items] | ||
Intangible assets | $ 14,700 |
Acquisitions - Assets Acquired
Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Apr. 29, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 85,118 | $ 85,118 | |
Sealand Food Inc Asset Purchase Agreement | |||
Business Acquisition [Line Items] | |||
Inventory | $ 13,846 | ||
Property plant, and equipment | 1,424 | ||
Right-of-use assets | 127 | ||
Intangible assets | 14,717 | ||
Total assets acquired | 30,114 | ||
Obligations under operating leases | 127 | ||
Total liabilities assumed | 127 | ||
Net assets | 29,987 | ||
Goodwill | 4,861 | ||
Total consideration | $ 34,848 |
Acquisitions - Pro Forma Inform
Acquisitions - Pro Forma Information (Details) - Sealand Food Inc Asset Purchase Agreement $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2022 USD ($) $ / shares shares | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |
Pro forma net revenue | $ | $ 302,098 |
Pro forma net income attributable to HF Group | $ | $ 5,996 |
Pro forma (loss) earnings per common share- basic (in dollars per share) | $ / shares | $ 0.11 |
Pro forma (loss) earnings per common share- diluted (in dollars per share) | $ / shares | $ 0.11 |
Weighted average shares - basic (in shares) | shares | 53,706,392 |
Weighted average shares - diluted (in shares) | shares | 53,884,510 |
Goodwill and Acquired Intangi_3
Goodwill and Acquired Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 85,118 | $ 85,118 | |
Amortization expense | $ 4,100 | $ 3,600 |
Goodwill and Acquired Intangi_4
Goodwill and Acquired Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 233,414 | $ 233,414 |
Accumulated Amortization | (43,394) | (39,323) |
Net Carrying Amount | 190,020 | 194,091 |
Non-competition agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,892 | 3,892 |
Accumulated Amortization | (1,456) | (1,132) |
Net Carrying Amount | 2,436 | 2,760 |
Tradenames | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 44,256 | 44,256 |
Accumulated Amortization | (11,778) | (10,673) |
Net Carrying Amount | 32,478 | 33,583 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 185,266 | 185,266 |
Accumulated Amortization | (30,160) | (27,518) |
Net Carrying Amount | $ 155,106 | $ 157,748 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Details) $ in Millions | 3 Months Ended | |||||
Dec. 19, 2021 | Dec. 19, 2019 USD ($) | Aug. 20, 2019 USD ($) termLoan derivative | Mar. 31, 2023 USD ($) | Mar. 15, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Derivative [Line Items] | ||||||
Number of mortgage term loans | termLoan | 2 | |||||
Derivative asset | $ 0.4 | $ 0.5 | ||||
Derivative liability | $ 2.6 | |||||
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 | |||||
Mortgage-Secured Term Loans | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||||||
Derivative [Line Items] | ||||||
Derivative, fixed interest rate | 4.11% | |||||
Mortgage-Secured Term Loans | East West Bank | London Interbank Offered Rate (LIBOR) | ||||||
Derivative [Line Items] | ||||||
Basis spread on variable rate | 2.25% | |||||
Derivative, fixed interest rate | 4.23% | |||||
Mortgage-Secured Term Loans | Bank of America | London Interbank Offered Rate (LIBOR) | ||||||
Derivative [Line Items] | ||||||
Basis spread on variable rate | 2.15% | |||||
Derivative, fixed interest rate | 4.25% | |||||
Mortgage-Secured Term Loans | Bank of America | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||||||
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 | $ 2.7 | $ 1.1 | $ 120 | |||
Interest Rate Swap Two | Not Designated as Hedging Instrument | ||||||
Derivative [Line Items] | ||||||
Derivative liability, notional amount | $ 2.6 |
Debt - Long-term Debt (Details)
Debt - Long-term Debt (Details) $ in Thousands | 3 Months Ended | ||
Dec. 19, 2021 | Mar. 31, 2023 USD ($) property | Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | |||
Total debt, principal amount | $ 120,369 | $ 122,011 | |
Less: debt issuance costs | (291) | (302) | |
Total | 120,078 | 121,709 | |
Less: current portion | (6,031) | (6,266) | |
Long-term debt | 114,047 | 115,443 | |
Bank of America | |||
Debt Instrument [Line Items] | |||
Total debt, principal amount | $ 4,155 | 4,315 | |
Number of real properties secured | property | 1 | ||
Bank of America | Mortgage-Secured Term Loans | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||
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 | 4.28% | ||
Bank of America | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 5.80% | ||
East West Bank | |||
Debt Instrument [Line Items] | |||
Total debt, principal amount | $ 5,788 | 5,822 | |
Number of real properties secured | property | 4 | ||
East West Bank | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 4.40% | ||
Collateral amount | $ 1,800 | ||
East West Bank | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 8.25% | ||
Collateral amount | $ 2,900 | ||
JP Morgan Chase | |||
Debt Instrument [Line Items] | |||
Total debt, principal amount | 110,309 | 111,714 | |
JP Morgan Chase | Assets Held by Subsidiaries | |||
Debt Instrument [Line Items] | |||
Collateral amount | 110,100 | 111,400 | |
JP Morgan Chase | Vehicles and Equipment | |||
Debt Instrument [Line Items] | |||
Collateral amount | $ 200 | 300 | |
JP Morgan Chase | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 6.10% | ||
JP Morgan Chase | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 6.77% | ||
Other finance institutions | |||
Debt Instrument [Line Items] | |||
Total debt, principal amount | $ 117 | $ 160 | |
Other finance institutions | Minimum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 5.99% | ||
Other finance institutions | Maximum | |||
Debt Instrument [Line Items] | |||
Interest rate, stated percentage | 6.14% |
Earnings (Loss) Per Share - Nar
Earnings (Loss) Per Share - Narrative (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 14,381 | 14,381 |
PSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 60,558 | |
RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 50,256 |
Earnings (Loss) Per Share - Sch
Earnings (Loss) Per Share - Schedule of Computation of Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net (loss) income attributable to HF Foods Group Inc. | $ (5,933) | $ 3,114 |
Denominator: | ||
Weighted-average common shares outstanding (in shares) | 53,822,794 | 53,706,392 |
Effect of dilutive securities (in shares) | 0 | 178,118 |
Weighted-average dilutive shares outstanding (in shares) | 53,822,794 | 53,884,510 |
(Loss) earnings per common share: | ||
Basic (in dollars per share) | $ (0.11) | $ 0.06 |
Diluted (in dollars per share) | $ (0.11) | $ 0.06 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Income tax (benefit) provision | 27.70% | 26% |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) $ in Thousands | 3 Months Ended | ||||
May 18, 2022 USD ($) | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2022 | Feb. 28, 2021 | |
Related Party Transaction [Line Items] | |||||
Repayments of long-term debt | $ 1,642 | $ 1,475 | |||
First Horizon Bank | |||||
Related Party Transaction [Line Items] | |||||
Sale of properties | $ 7,200 | ||||
Gain from sale of properties | 1,500 | ||||
Repayments of long-term debt | $ 4,500 | 4,500 | |||
HG Realty | Buildings | |||||
Related Party Transaction [Line Items] | |||||
Rental income | 0 | 80 | |||
Kirnland | Buildings | |||||
Related Party Transaction [Line Items] | |||||
Rental income | $ 99 | 72 | |||
Operating lease, term of contract (in years) | 5 years | ||||
Enson Seafood GA, Inc. (formerly as GA-GW Seafood, Inc.) | |||||
Related Party Transaction [Line Items] | |||||
Accounts receivables reserved percentage | 0.80 | 0.80 | |||
B&R Group Realty | Mortgage-Secured Term Loans | |||||
Related Party Transaction [Line Items] | |||||
Due from related parties | $ 7,000 | ||||
Debt instrument, periodic payment, principal | $ 100 | ||||
HF Foods | Shareholder | |||||
Related Party Transaction [Line Items] | |||||
Ownership of noncontrolling interest at March 31, 2023 | 10% | ||||
Mr. Zhou Min Ni ("Mr. Ni") | |||||
Related Party Transaction [Line Items] | |||||
Common stock, shares outstanding, ownership percent | 0.25 |
Related Party Transactions - Su
Related Party Transactions - Summary of Purchases with Related Parties (Details) $ in Thousands | 3 Months Ended | ||||
Jan. 01, 2023 | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Nov. 01, 2020 trust | Oct. 31, 2020 trust | |
Related Party Transaction [Line Items] | |||||
Purchases - related parties | $ 2,341 | $ 6,345 | |||
CEO resignation period | 3 years | ||||
Best Food Services, LLC | |||||
Related Party Transaction [Line Items] | |||||
Purchases - related parties | 2,084 | 2,945 | |||
Number of irrecoverable trusts | trust | 3 | 3 | |||
Eastern Fresh NJ, LLC | |||||
Related Party Transaction [Line Items] | |||||
Purchases - related parties | 0 | 1,093 | |||
Enson Seafood GA, Inc. (formerly “GA-GW Seafood, Inc.”) | |||||
Related Party Transaction [Line Items] | |||||
Purchases - related parties | 37 | 0 | |||
First Choice Seafood, Inc. | |||||
Related Party Transaction [Line Items] | |||||
Purchases - related parties | 0 | 83 | |||
Fujian RongFeng Plastic Co., Ltd | |||||
Related Party Transaction [Line Items] | |||||
Purchases - related parties | 0 | 398 | |||
North Carolina Good Taste Noodle, Inc. | |||||
Related Party Transaction [Line Items] | |||||
Purchases - related parties | 0 | 1,658 | |||
Ocean Pacific Seafood Group, Inc. | |||||
Related Party Transaction [Line Items] | |||||
Purchases - related parties | 168 | 136 | |||
Other | |||||
Related Party Transaction [Line Items] | |||||
Purchases - related parties | $ 52 | $ 32 |
Related Party Transactions - _2
Related Party Transactions - Summary of Sales to Related Parties (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | Nov. 01, 2020 trust | Oct. 31, 2020 trust | |
Related Party Transaction [Line Items] | ||||
Sales - related parties | $ 2,293 | $ 2,064 | ||
ABC Food Trading, LLC | ||||
Related Party Transaction [Line Items] | ||||
Sales - related parties | 593 | 1,192 | ||
Number of irrecoverable trusts | trust | 3 | 3 | ||
Asahi Food, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Sales - related parties | 195 | 181 | ||
Best Food Services, LLC | ||||
Related Party Transaction [Line Items] | ||||
Sales - related parties | 433 | 645 | ||
Number of irrecoverable trusts | trust | 3 | 3 | ||
Eagle Food Services, LLC | ||||
Related Party Transaction [Line Items] | ||||
Sales - related parties | 1,020 | 0 | ||
First Choice Seafood, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Sales - related parties | 8 | 10 | ||
Fortune One Foods, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Sales - related parties | 19 | 0 | ||
N&F Logistics, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Sales - related parties | 6 | 36 | ||
Union Food LLC | ||||
Related Party Transaction [Line Items] | ||||
Sales - related parties | $ 19 | $ 0 |
Related Party Transactions - _3
Related Party Transactions - Summary of Accounts Receivable With Related Parties (Details) $ in Thousands | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Nov. 01, 2020 trust | Oct. 31, 2020 trust |
Related Party Transaction [Line Items] | ||||
Accounts receivable - related parties | $ 629 | $ 213 | ||
ABC Trading, LLC | ||||
Related Party Transaction [Line Items] | ||||
Accounts receivable - related parties | 291 | 0 | ||
Number of irrecoverable trusts | trust | 3 | 3 | ||
Asahi Food, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Accounts receivable - related parties | 47 | 81 | ||
Best Food Services, LLC | ||||
Related Party Transaction [Line Items] | ||||
Accounts receivable - related parties | 147 | 0 | ||
Number of irrecoverable trusts | trust | 3 | 3 | ||
Eagle Food Services, LLC | ||||
Related Party Transaction [Line Items] | ||||
Accounts receivable - related parties | 83 | 69 | ||
Enson Seafood GA, Inc. (formerly as GA-GW Seafood, Inc.) | ||||
Related Party Transaction [Line Items] | ||||
Accounts receivable - related parties | 59 | 59 | ||
Fortune One Foods, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Accounts receivable - related parties | 0 | 4 | ||
Union Food LLC | ||||
Related Party Transaction [Line Items] | ||||
Accounts receivable - related parties | $ 2 | $ 0 |
Related Party Transactions - _4
Related Party Transactions - Summary of Accounts Payable with Related Parties (Details) $ in Thousands | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Nov. 01, 2020 trust | Oct. 31, 2020 trust |
Related Party Transaction [Line Items] | ||||
Accounts payable - related parties | $ 753 | $ 1,529 | ||
Best Food Services, LLC | ||||
Related Party Transaction [Line Items] | ||||
Accounts payable - related parties | 707 | 729 | ||
Number of irrecoverable trusts | trust | 3 | 3 | ||
North Carolina Good Taste Noodle, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Accounts payable - related parties | 0 | 731 | ||
Others | ||||
Related Party Transaction [Line Items] | ||||
Accounts payable - related parties | $ 46 | $ 69 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Number of shares authorized under plan (in shares) | 3,000,000 | |
Shares remaining available for future unvested awards (in shares) | 180,506 | |
Shares remaining available for future awards (in shares) | 1,904,333 | |
Total stock-based compensation expense | $ 1.1 | $ 0.3 |
Unrecognized compensation cost | $ 3 | |
Unrecognized compensation cost, period for recognition | 1 year 9 months 29 days | |
RSUs | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Equity instruments outstanding (in shares) | 575,906 | |
PSUs | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Equity instruments outstanding (in shares) | 339,255 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||||||
Apr. 20, 2023 USD ($) | Mar. 15, 2023 | Dec. 20, 2022 | Sep. 22, 2022 | Feb. 10, 2021 USD ($) | Mar. 31, 2020 lawsuit | Mar. 31, 2023 USD ($) property lease | Mar. 31, 2022 USD ($) | |
Loss Contingencies [Line Items] | ||||||||
Number of Delaware action days | 60 days | 60 days | 90 days | |||||
Subsequent Event | ||||||||
Loss Contingencies [Line Items] | ||||||||
Proceeds from legal settlements | $ 9,250 | |||||||
Property Lease Guarantee | ||||||||
Loss Contingencies [Line Items] | ||||||||
Guarantor lease obligation term (in years) | 11 years | |||||||
Loss contingencies payments term | 18 months | |||||||
Operating lease right-of-use liabilities | $ 5,700 | $ 5,900 | ||||||
Lessee guarantee, lease discount rate | 4.55% | |||||||
Guarantor lease obligation, maximum exposure | $ 300 | |||||||
Minimum | ||||||||
Loss Contingencies [Line Items] | ||||||||
Payment to construct building | $ 2,500 | |||||||
Minimum | Property Lease Guarantee | ||||||||
Loss Contingencies [Line Items] | ||||||||
Operating lease, rent expense | 42 | |||||||
Maximum | Property Lease Guarantee | ||||||||
Loss Contingencies [Line Items] | ||||||||
Operating lease, rent expense | $ 63 | |||||||
Buildings | ||||||||
Loss Contingencies [Line Items] | ||||||||
Number of leases | lease | 2 | |||||||
Number of properties | property | 2 | |||||||
Buildings | Lease for 273 Fifth Avenue, Manhattan,New York | ||||||||
Loss Contingencies [Line Items] | ||||||||
Operating lease, term of contract (in years) | 30 years | |||||||
Buildings | Lease for 275 Fifth Avenue, Manhattan,New York | ||||||||
Loss Contingencies [Line Items] | ||||||||
Operating lease, term of contract (in years) | 15 years | |||||||
Putative Class Action | ||||||||
Loss Contingencies [Line Items] | ||||||||
New claims filed, number | lawsuit | 2 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Operating Lease Maturities (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2023 (remaining nine months) | $ 416 |
2024 | 582 |
2025 | 604 |
2026 | 621 |
2027 | 638 |
Thereafter | 4,478 |
Total | 7,339 |
Less: imputed interest | (1,642) |
Total minimum lease payments | $ 5,697 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event | Apr. 11, 2023 $ / shares shares |
Subsequent Event [Line Items] | |
Number of rights issued per common stock | 1 |
Common stock acquired percentage | 15% |
Number of shares purchased by registered holder (in shares) | 0.001 |
Series A Preferred Stock | |
Subsequent Event [Line Items] | |
Exercise price (in dollar per share) | $ / shares | $ 19.50 |