Company: HFFG
Filing Date: 2025-08-11
Form Type: 10-Q
Source: 0001628280-25-039583
Chunk: 98

Company: HF Foods Group Inc.
Filing Date: 2025-08-11
Form: 10-Q
Item: Item 8
Chunk 98
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 lease guarantee income offset by an SEC settlement, which did not recur in the current year, thereby partially offsetting the year-over-year improvement.

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EBITDA and Adjusted EBITDA

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

Six Months Ended June 30, ($ in thousands)20252024ChangeNet loss$(1,020)$(324)$(696)Interest expense, net5,3845,953(569)Income tax expense (benefit)(411)1,418(1,829)Depreciation and amortization14,01913,266753EBITDA17,97220,313(2,341)Lease guarantee income—(5,548)5,548Change in fair value of interest rate swap contracts1,869(2,331)4,200Stock-based compensation expense 9991,260(261)SEC settlement—3,900(3,900)Business transformation costs (1)8661,103(237)Other non-routine expense (2)110566(456)Executive transition and organizational redesign (3)1,802—1,802Adjusted EBITDA$23,618$19,263$4,355

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

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

(3)    Includes severance and related expenses for the Company’s transition of executive officers and organizational redesign.

Liquidity and Capital Resources

As of June 30, 2025, we had cash of approximately $15.7 million, checks issued not presented for payment of $7.0 million and access to approximately $57.8 million in additional funds through our $125.0 million line of credit, subject to a borrowing base calculation. We have funded working capital and other capital requirements primarily by cash flow from operations and bank loans. Cash is required to pay purchase costs for inventory, salaries, fuel and trucking expenses, selling expenses, rental expenses, income taxes, other operating expenses and to service debts.

We believe that our cash flow generated from operations is sufficient to meet our normal working capital needs for at least the next twelve months. However, our ability to repay our current obligations will depend on the future realization of our current assets. Management has considered the historical experience, the