Hf Foods Group Inc (HFFG) 2023 Q4 法說會逐字稿

Hello, everyone. Welcome to HF Foods Group's fourth quarter and full-year 2023 earnings conference call. Joining me on today's call are Peter Zhang, HF Foods' Chief Executive Officer; and Felix Lin, the company's President, Chief Operating Officer, and Interim Chief Financial Officer. In a moment, we'll hear their prepared remarks. By now, everyone should have access to the earnings release for the period ended December 31, 2023 that went out Thursday, March 14 at approximately 8:00 AM Eastern time. The press release is accessible on the company's website at investors.hffoodsgroup.com.

大家好。歡迎參加 HF Foods Group 第四季和 2023 年全年財報電話會議。參加今天電話會議的還有 HF Foods 執行長 Peter 張；以及公司總裁、營運長兼臨時財務長 Felix Lin。稍後我們將聽到他們準備好的發言。到目前為止，每個人都應該可以訪問截至 2023 年 12 月 31 日的財報，該財報於東部時間 3 月 14 日星期四上午 8 點左右發布。新聞稿可在該公司網站 Investors.hffoodsgroup.com 上取得。

Before we begin, let me remind everyone that today's discussion contains forward-looking statements based on the environment as the company currently sees it and, as such, does include risks and uncertainties. If you refer to HF Foods' earnings release, as well as the company's most recent SEC filings, you will see a discussion of factors that could cause the company's actual results to differ materially as a result of these forward-looking statements. Please remember the company undertakes no obligation to update or revise these forward-looking statements in the future.

在開始之前，請允許我提醒大家，今天的討論包含基於公司目前所處環境的前瞻性陳述，因此確實包含風險和不確定性。如果您參考 HF Foods 的收益發布以及該公司最近向 SEC 提交的文件，您將看到可能導致該公司實際結果因這些前瞻性陳述而產生重大差異的因素的討論。請記住，本公司不承擔將來更新或修改這些前瞻性聲明的義務。

In these remarks, the company will make a number of references to non-GAAP financial measures. We believe that these measures provide investors with useful perspective on the underlying growth trends of the business and have included in the earnings release a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures.

在這些言論中，該公司將多次提及非公認會計準則財務指標。我們相信，這些指標為投資者提供了有關業務潛在成長趨勢的有用視角，並在收益發布中納入了非公認會計原則財務指標與最具可比性的公認會計原則指標的全面調節。

Now, I will turn the call over to Peter.

現在，我將把電話轉給彼得。

Hello, everyone. I am excited to be speaking to you today. I will start with a quick introduction. Felix will talk to you about our financial results as well as some of the exciting progress we have made with our transformational plan.

大家好。我很高興今天能和你說話。我將首先進行快速介紹。菲利克斯將與您討論我們的財務表現以及我們的轉型計劃所取得的一些令人興奮的進展。

For those of you who are new to our story, HF Foods is a leading Asian food service distributor for Asian restaurants in the United States. We partner with domestic and international suppliers to offer a wide range of high-quality Asian ingredients for our customers, and our widespread distribution network covers 95% of the United States. I would like to note that Felix Lin has taken on the role of President of HF Foods, in addition to being our Chief Operating Officer and Interim CFO.

對於那些不熟悉我們故事的人來說，HF Foods 是一家領先的亞洲食品服務分銷商，為美國的亞洲餐廳提供服務。我們與國內外供應商合作，為客戶提供各種優質亞洲原料，我們廣泛的分銷網絡覆蓋美國 95% 的地區。我想指出的是，除了擔任我們的營運長和臨時財務長之外，Felix Lin 還擔任了 HF Foods 的總裁。

Now over to you, Felix.

現在輪到你了，菲利克斯。

Thanks, Peter. I am excited to be speaking with you after our fourth-quarter 2023 in which our gross profit, gross margin, net income, and adjusted EBITDA all increased compared to the prior year period. We have already begun to see signs of success from our operational transformation plan that we laid out during our third quarter earnings call in November, and I will speak about our progress on these key financial metrics.

謝謝，彼得。我很高興在 2023 年第四季之後與您交談，我們的毛利、毛利率、淨利潤和調整後 EBITDA 均較上年同期有所增長。我們已經開始看到我們在 11 月第三季財報電話會議上製定的營運轉型計劃取得成功的跡象，我將談論我們在這些關鍵財務指標方面的進展。

I'll start with our results for our fourth quarter ended December 31, 2023, versus the same period in 2022. Net revenue for the fourth quarter decreased 3.8% to $280.9 million from $291.9 million in the prior-year quarter. The decrease in net revenue was primarily attributable to deflationary pressure in key commodities as well as exit of our chicken processing businesses. Gross profit increased by 3.1% to $52.3 million for the quarter compared to $50.7 million in the prior-year quarter, and gross profit margins increased 120 basis points to 18.6%. The increase was attributable to improvement in the seafood category due to successful execution of a centralized purchasing plan.

我將從截至 2023 年 12 月 31 日的第四季的業績與 2022 年同期的業績開始。第四季淨收入從去年同期的 2.919 億美元下降 3.8% 至 2.809 億美元。淨收入下降的主要原因是主要商品的通貨緊縮壓力以及雞肉加工業務的退出。本季毛利成長 3.1%，達到 5,230 萬美元，而去年同期為 5,070 萬美元，毛利率成長 120 個基點，達到 18.6%。這一增長歸因於集中採購計劃的成功執行，海鮮類別的改善。

Distribution, selling, and administrative expenses decreased approximately 24.3% to $41 million for the fourth quarter of 2023 from $54.1 million for the fourth quarter of 2022. The reduced expenses were due primarily to lower professional fees and were partially offset by higher payroll and related labor cost. During the fourth-quarter 2023, we received net settlement amounts totaling $10 million which reduced our professional fees. Distribution, selling, and administrative expenses as a percentage of net revenue decreased to 14.6% from 18.5% in the prior-year period primarily due to lower professional fees and partially offset by increased headcount.

分銷、銷售和管理費用從 2022 年第四季的 5,410 萬美元下降約 24.3%，至 2023 年第四季的 4,100 萬美元。費用減少主要是由於專業費用降低，但部分被工資和相關勞動成本增加所抵銷。2023 年第四季度，我們收到總計 1,000 萬美元的淨和解金額，這減少了我們的專業費用。分銷、銷售和管理費用佔淨收入的比例從去年同期的 18.5% 下降至 14.6%，這主要是由於專業費用下降，但部分被員工數量增加所抵消。

Operating income for the fourth quarter of 2023 was $11.2 million compared to a loss of $3.4 million for the fourth quarter of 2022. The increase was driven by lower distribution, selling, and administrative expenses. Total interest expense increased to $3 million for the fourth quarter compared to $2.4 million in the prior-year quarter.

2023 年第四季的營業收入為 1,120 萬美元，而 2022 年第四季則虧損 340 萬美元。這一增長是由分銷、銷售和管理費用減少所推動的。第四季總利息支出增加至 300 萬美元，去年同期為 240 萬美元。

Net income increased to $2.7 million for the fourth quarter, compared to net loss of $3.5 million for the prior-year quarter. Improved net income was driven by lower distribution, selling, and administrative cost, and higher gross profit. The increase in net income was partially offset by the $3.6 million change in fair value of interest rate swaps, higher interest expense, and decreased tax benefits. Adjusted EBITDA increased approximately 376% to $20.5 million for the fourth quarter, compared to $4.3 million for the prior-year quarter. The increase in adjusted EBITDA was primarily due to the net settlement.

第四季淨收入增至 270 萬美元，去年同期淨虧損為 350 萬美元。淨利潤的成長得益於較低的分銷、銷售和管理成本以及較高的毛利。淨利潤的成長被利率互換公允價值 360 萬美元的變動、利息支出增加和稅收優惠減少部分抵銷。第四季調整後 EBITDA 成長約 376%，達到 2,050 萬美元，而去年同期為 430 萬美元。調整後 EBITDA 的增加主要是由於淨額結算。

I'll now turn to our results for the full year ended December 31, 2023 versus the same period in 2022. Net revenue for the full year decreased 1.9% to $1.15 billion from $1.17 billion in the prior-year period. The decrease in net revenue was primarily attributable to declines in the meat and poultry and packaging and other categories. The revenue decrease was partially offset by higher volume and the seafood revenue generated due to the Sealand Acquisition that closed in April 2022.

現在我將討論截至 2023 年 12 月 31 日的全年業績與 2022 年同期的比較。全年淨收入從去年同期的 11.7 億美元下降 1.9% 至 11.5 億美元。淨收入的下降主要是由於肉類和家禽以及包裝和其他類別的下降。收入下降被 2022 年 4 月完成的 Sealand 收購帶來的銷售增加和海鮮收入部分抵消。

Gross profit decreased 0.7% to $204 million for the full year compared to $205.5 million in the prior-year period. The slight decline was primarily driven by decreases in meat and poultry and, to a lesser extent, packaging and other, partially offset by the increased Asian specialty revenue and the additional seafood revenue generated due to the Sealand Acquisition and the successful execution of the Seafood centralized purchasing program. Gross profit margin increased 20 basis points to 17.8% from 17.6% in the prior year.

全年毛利下降 0.7%，至 2.04 億美元，去年同期為 2.055 億美元。略有下降主要是由於肉類和家禽的減少，以及較小程度上包裝和其他方面的減少，部分被亞洲特色產品收入的增加以及因收購Sealand 和成功執行海鮮集中化而產生的額外海鮮收入所抵消。採購計劃。毛利率由上年的 17.6% 成長 20 個基點至 17.8%。

Distribution, selling, and administrative expenses were flat at approximately $195 million for the year. Operating income was $9.1 million for the full year in 2023 compared to $10.6 million in 2022. The decrease was driven by lower gross profit. Total interest expense increased to $11.5 million for the full year compared to $7.5 million in the prior year.

全年分銷、銷售和管理費用持平，約 1.95 億美元。2023 年全年營業收入為 910 萬美元，而 2022 年為 1,060 萬美元。此下降是由於毛利下降所致。全年利息支出總額增加至 1,150 萬美元，而前一年為 750 萬美元。

Net income decreased to a net loss of $2.7 million compared to net income of $0.2 million for the prior-year period. The decrease in net income was primarily attributable to increased interest expense, as well as a change in fair value of interest rate swap contracts of $2.4 million, partially offset by a change in lease guarantee expense of $6.1 million. Adjusted EBITDA increased 11.1% to $44.6 million for the full year, compared to $40.1 million for the prior year. The increase was primarily due to $10 million of total net settlement amounts realized in the fourth quarter of 2023.

淨收入下降至淨虧損 270 萬美元，而上年同期淨收入為 20 萬美元。淨利潤下降的主要原因是利息費用增加以及利率掉期合約公允價值變動 240 萬美元，部分被租賃擔保費用變動 610 萬美元所抵銷。全年調整後 EBITDA 成長 11.1%，達到 4,460 萬美元，而上一年為 4,010 萬美元。這一增長主要是由於 2023 年第四季實現的總淨結算金額為 1000 萬美元。

Turning to the balance sheet and an update on our liquidity. At the end of the fourth quarter and full year, we had available capacity of $37.6 million in additional funds through our line of credit. We feel very comfortable with our current liquidity.

轉向資產負債表和我們流動性的最新情況。截至第四季末和全年，我們透過信貸額度獲得了 3,760 萬美元的額外資金。我們對目前的流動性感到非常滿意。

As a reminder, we've implemented a comprehensive operational transformation plan to achieve our growth targets. I am excited to share with you some of the recent progress we have made. On centralized purchasing, we have begun to make meaningful progress with centralized purchasing, specifically in certain seafood categories. We have also partnered with a new vendor that specializes in chicken processing for the eastern United States market and consolidated our chicken purchases in the region. This has resulted in better quality and pricing for our products. We are now working on expanding this model to the Western US, and we expect to expand our centralized purchasing initiatives into both our commodities and produce categories in 2024.

提醒一下，我們已經實施了全面的營運轉型計劃以實現我們的成長目標。我很高興與大家分享我們最近的一些進展。在集中採購方面，我們已經開始在集中採購方面取得有意義的進展，特別是在某些海鮮類別上。我們還與一家專門為美國東部市場進行雞肉加工的新供應商合作，並整合了我們在該地區的雞肉採購。這為我們的產品帶來了更好的品質和價格。我們現在正在努力將這種模式擴展到美國西部，我們預計在 2024 年將集中採購計畫擴展到我們的商品和農產品類別。

On fleet and transportation, we are excited to announce that in February, we entered into a partnership with a large and reputable national 3PL provider. This is a long-term strategic agreement that will enhance our operational efficiency and help us establish a unified and improved transportation system. We have also implemented a national fuel savings program to improve efficiency and reduce fuel costs. Furthermore, we have finalized our initial truck purchase order, which will enable us to initiate the replacement program for 50% of our aging fleet with the goal to increase efficiency and lower operating costs. We expect to complete the replacement program over the next several years.

在車隊和運輸方面，我們很高興地宣布，2 月份，我們與一家大型且信譽良好的全國 3PL 供應商建立了合作夥伴關係。這是一項長期戰略協議，將提高我們的營運效率，幫助我們建立統一和完善的運輸系統。我們還實施了國家燃油節約計劃，以提高效率並降低燃油成本。此外，我們已經完成了最初的卡車採購訂單，這將使我們能夠啟動 50% 老化車隊的更換計劃，目標是提高效率並降低營運成本。我們預計在未來幾年內完成更換計畫。

On digital transformation. As for digital transformation, we discussed previously that we are piloting and implementing a modern ERP solution across all of our sites to complement our recent go-live with financial systems to drive efficiencies and provide for greater data driven decision making. The pilot is going very well, and we expect to complete implementation within the next 12 months.

關於數位轉型。至於數位轉型，我們之前討論過，我們正在所有站點試點和實施現代 ERP 解決方案，以補充我們最近上線的財務系統，以提高效率並提供更好的數據驅動決策。該試點進展順利，我們預計在未來 12 個月內完成實施。

On facility upgrades. as you may recall, we have been conducting a network and facility study to optimize our distribution network and align it with our strategic goals. The study is now complete, and we are in the process of making decisions based on its findings. With the upcoming changes, we will be converting certain distribution centers to full broadline facilities that can supply a wide range of products that are in high demand in their respective regions. This will allow us to capitalize on cross-selling opportunities and improve the usage and efficiency of our facilities and distribution centers. We're also currently working to open a new broadline facility and convert an existing space into broadline functionality in key markets, which we look forward to sharing further updates on in the coming quarters.

關於設施升級。您可能還記得，我們​​一直在進行網路和設施研究，以優化我們的分銷網絡並使其與我們的策略目標保持一致。研究現已完成，我們正在根據研究結果做出決策。隨著即將到來的變化，我們將把某些配送中心轉變為全面的設施，可以供應各自地區需求量很大的各種產品。這將使我們能夠利用交叉銷售機會並提高我們的設施和配送中心的使用率和效率。我們目前也致力於在主要市場開設一個新的寬線設施，並將現有空間轉變為寬線功能，我們期待在未來幾季分享進一步的更新。

One of the ways that we are improving our distribution network is by utilizing cross docks which are facilities that allow us to transfer products from one truck to another without storing them. We have cross docks in strategic locations such as Las Vegas, Ohio, Texas, and California, which enable us to reduce transportation costs, inventory levels, and delivery times. We are adding cross docks where it makes sense, as we continue to streamline and make our operations more efficient.

我們改善分銷網絡的方法之一是利用交叉碼頭，這些設施使我們能夠將產品從一輛卡車轉移到另一輛卡車而不需要儲存。我們在拉斯維加斯、俄亥俄州、德克薩斯州和加利福尼亞州等戰略地點設有交叉碼頭，這使我們能夠降低運輸成本、庫存水準和交貨時間。隨著我們不斷精簡業務並提高營運效率，我們將在有意義的地方增加交叉轉運。

As a reminder, in 2023, we divested our two poultry processing businesses on the east and west coast, as part of our commitment to refocusing on our core business and exiting low-margin businesses. I am pleased with what we have accomplished so far with our transformation plan, as we now have the corporate infrastructure in place to set the stage for efficiencies and success. In 2024, we are fully committed to executing our plan diligently in order to achieve sustainable long-term growth and deliver value to shareholders.

提醒一下，2023 年，我們剝離了東海岸和西海岸的兩家家禽加工業務，作為我們重新專注於核心業務並退出低利潤業務的承諾的一部分。我對我們迄今為止在轉型計劃中所取得的成就感到滿意，因為我們現在擁有適當的企業基礎設施，可以為效率和成功奠定基礎。2024年，我們將全力以赴、勤奮執行我們的計劃，以實現可持續的長期成長，為股東創造價值。

To briefly touch on our M&A growth strategy. We believe we have established ourselves as the preferred acquirer for many Asian food distributors, and we regularly have potential targets approach us first to explore opportunities. We are exploring using M&A as an opportunity to expand into new markets and regions. We believe our M&A strategy will enable us to realize significant synergies and expand our presence geographically.

簡要談談我們的併購成長策略。我們相信，我們已經成為許多亞洲食品分銷商的首選收購方，並且經常有潛在目標首先與我們聯繫以探索機會。我們正在探索利用併購作為拓展新市場和地區的機會。我們相信，我們的併購策略將使我們能夠實現顯著的協同效應並擴大我們的商業版圖。

To sum it up, we are a trusted partner for thousands of restaurants across the United States, offering them high-quality specialty products that deliver authentic experiences. We provide restaurant owners with a one-stop shop that combines a friendly cultural connection and national scale, enabling them to serve their customers with quality products at affordable prices. We are well positioned to capitalize on the growing demand for Asian food, driven by favorable market trends and demographics. We have the infrastructure, industry knowledge, and experience to support our growth.

總而言之，我們是美國數千家餐廳值得信賴的合作夥伴，為他們提供高品質的特色產品，帶來真實的體驗。我們為餐廳業主提供一站式服務，將友好的文化聯繫和全國規模相結合，使他們能夠以實惠的價格為顧客提供優質的產品。在有利的市場趨勢和人口統計的推動下，我們處於有利地位，可以利用對亞洲食品日益增長的需求。我們擁有支持我們發展的基礎設施、行業知識和經驗。

Thanks to our deep understanding of our customers' needs, their loyalty and satisfaction have helped us to build HF Foods into an enterprise that generates over $1.1 billion of net revenue annually. Our long-term financial profile is attractive, with a clear strategy to expand margins and grow revenue. We are laser focused on executing our transformation plan to improve operations as we continue to pursue growth. We are proud of our progress so far and believe that our financial metrics will reflect our success in the upcoming quarters.

由於我們對客戶需求的深入了解，他們的忠誠度和滿意度幫助我們將 HF Foods 打造成年淨收入超過 11 億美元的企業。我們的長期財務狀況具有吸引力，並擁有擴大利潤和增加收入的明確策略。在我們繼續追求成長的同時，我們專注於執行轉型計劃以改善營運。我們對迄今為止的進展感到自豪，並相信我們的財務指標將反映我們在未來幾季的成功。

We look forward to speaking with you again on our first-quarter earnings call and updating you on the progress of our operational transformation plan. Thank you everyone and have a great day.

我們期待在第一季財報電話會議上再次與您交談，並向您介紹我們營運轉型計畫的最新進展。謝謝大家，祝您有美好的一天。