HF Foods Group (HFFG) Q3 2025: Adjusted EBITDA Jumps 41% as ERP Unification and Facility Expansion Take Hold

November 10, 2025 | By EarningsIQ Research

HF Foods Group’s Q3 2025 results spotlight disciplined execution on digital transformation and facility investments, driving a sharp jump in adjusted EBITDA despite tariff and margin pressures. The company’s single-platform ERP rollout and salesforce restructuring are set to unlock further cost efficiencies, while facility expansions—especially in Atlanta and Chicago—signal a step-change in capacity and cross-selling potential. Management signals that Q4 will mirror Q3, but the groundwork laid in 2025 positions HFFG for multi-year organic growth and M&A-driven scale in Asian specialty food distribution.

Summary

• ERP Unification Drives Efficiency: Company-wide ERP rollout delivers operational control and sets stage for salesforce rationalization.
• Facility Expansion Doubles Atlanta Capacity: Major cold storage project and Chicago warehouse acquisition underpin future volume growth.
• 2026 Growth Platform Established: Investments in infrastructure and digital systems position HFFG for organic and M&A-driven expansion.

Performance Analysis

HF Foods Group delivered a resilient Q3, with net revenue rising and adjusted EBITDA surging 41% year-over-year, even as gross margin compressed due to a shift toward lower-margin seafood sales. The company’s top-line growth was driven by volume and improved pricing in core categories—meat, poultry, and seafood—offsetting industry-wide headwinds such as tariff pressures and softer foot traffic in select markets.

Gross profit margin held steady, though slightly down as seafood’s share increased. Distribution, selling, and administrative costs declined as a percentage of revenue, reflecting both scale benefits and cost discipline. Notably, while net loss narrowed substantially, adjusted net income and EPS both doubled, underscoring the effectiveness of transformation efforts. The company’s proactive pricing and inventory management, coupled with operational streamlining, allowed it to maintain momentum despite macro and regulatory challenges.

• Category Mix Shift: Higher seafood sales diluted gross margin, but volume and pricing gains offset the impact.
• Cost Discipline Visible: DS&A expenses fell as a percent of revenue, reflecting both insurance and personnel savings.
• Interest Expense Uptick: Modest rise in interest costs, but operational improvements more than compensated for this headwind.

Overall, the quarter validates management’s focus on operational transformation, with digital and physical infrastructure investments translating into measurable financial progress and setting up for further efficiency gains in the coming quarters.

Executive Commentary

Strategic Positioning

1. Digital Backbone: ERP Platform Unification

The full deployment of a unified ERP (Enterprise Resource Planning) system across all locations is a foundational shift. This digital backbone will enable centralized purchasing, real-time visibility, and process standardization, paving the way for further cost reductions and more responsive pricing strategies. The ERP rollout also sets up the next phase: salesforce restructuring to consolidate two teams into one, driving both cost savings and improved customer service.

2. Facility Expansion and Supply Chain Scale

Major investments in physical infrastructure—especially the new Atlanta cold storage facility and the acquisition of the Chicago warehouse—are designed to double capacity in key regions. The Atlanta project, once complete, will allow for significant growth in frozen seafood sales across the Southeast, while the Chicago acquisition gives HFFG greater control, lower costs, and a platform for Midwest expansion. These moves are central to the company’s cross-selling and organic growth ambitions.

3. M&A as a Core Growth Lever

Management continues to prioritize disciplined M&A (mergers and acquisitions) as a key pillar, leveraging HFFG’s unique position as the only scaled Asian specialty distributor in the US. The company is actively evaluating tuck-in opportunities, with a focus on operational synergies, expanded geographic reach, and enhanced product offerings. The ability to navigate tariff complexities and integrate acquisitions is a stated competitive advantage.

4. Cost Rationalization and Salesforce Restructuring

With the ERP system in place, HFFG is moving to consolidate its sales operations, aiming for better pricing control and lower SG&A (selling, general, and administrative) costs. The restructuring is expected to bring short-term disruption but should normalize by mid-2026, delivering ongoing efficiency gains without sacrificing the company’s customer-centric sales culture.

5. Market Diversification and Cross-Selling

HFFG’s strategy to broaden its customer base and product mix is underpinned by facility upgrades and digital tools. The company is targeting organic growth in high-potential markets, particularly in the Midwest and Southeast, with new capacity enabling incremental volume gains—especially in frozen seafood—and supporting broader cross-selling initiatives.

Key Considerations

This quarter marks an inflection point as HFFG transitions from foundational investment to operational leverage, with several initiatives converging to enhance both near-term performance and long-term scalability.

Key Considerations:

• ERP-Driven Integration: Single-platform operations unlock centralized purchasing and process efficiencies.
• Facility Upgrades Enable Growth: Atlanta and Chicago projects expand capacity and support regional expansion.
• Salesforce Restructuring: Consolidation aims to reduce costs while maintaining customer intimacy and service differentiation.
• M&A Pipeline Remains Active: Company signals ongoing evaluation of strategic tuck-ins for geographic and product expansion.
• CapEx Outlook: Maintenance capital expected at $10–15 million annually, with elevated spend in 2026 as new acquisitions and expansion projects ramp.

Risks

Tariff volatility and changing consumer patterns continue to pressure margins and demand, particularly in government-dependent markets like Virginia. The integration of new facilities and the salesforce restructuring carry execution risk, with potential for short-term disruption. Elevated CapEx could pressure cash flow if organic growth lags or if integration of acquisitions is slower than planned. Persistent macro headwinds, including regulatory shifts and inflationary cost pressures, remain a watchpoint for 2026.

Forward Outlook

For Q4 2025, HF Foods guided to:

• Results similar to Q3, with continued focus on operational efficiency and cost control.
• Ongoing ramp of Atlanta facility and completion of Chicago integration.

For full-year 2025, management maintained a cautious but confident stance:

• Capital investment and transformation initiatives to establish a platform for 2026 growth.

Management highlighted several factors that will shape the coming quarters:

• Normalization of salesforce restructuring by mid-2026.
• First incremental volume gains from Atlanta and Midwest capacity expansions in 2026, with full ramp over three to four years.

Takeaways

HFFG’s Q3 performance affirms the company’s ability to execute on digital and physical transformation, with clear evidence that investments are translating into financial improvement. The groundwork laid in 2025 is set to unlock organic and inorganic growth, even as near-term risks persist.

• Operational Leverage Emerging: Digital and facility investments are beginning to yield both cost and growth benefits, with further gains expected as integration completes.
• Strategic Flexibility Maintained: Active M&A pipeline and scalable infrastructure position HFFG to capture share in a fragmented market.
• 2026–2027 Watchpoint: Key for investors will be the pace of capacity utilization and cross-selling in new regions, as well as the company’s ability to maintain margin discipline amid ongoing macro and regulatory headwinds.

Conclusion

HF Foods Group’s Q3 2025 results reflect disciplined execution on transformation initiatives, with strong adjusted EBITDA growth and foundational investments in digital and physical infrastructure. The company is well-positioned for multi-year organic and acquisition-driven expansion, though execution and macro risks remain in focus heading into 2026.

Industry Read-Through

HFFG’s results and strategy underscore the critical role of digital integration and capacity expansion in foodservice distribution, especially in specialty and multicultural segments. The move to a unified ERP system and targeted facility investments are increasingly prerequisites for margin stability and growth in a low-margin, high-volume industry. Competitors lacking digital backbone or regional scale may struggle to keep pace. The company’s ability to navigate tariffs and shifting consumer demand offers a playbook for others facing similar regulatory and supply chain volatility. M&A remains a defining force, with scale and integration capabilities emerging as key differentiators in the evolving US food distribution landscape.

HFFG Consumer Staples Food Distribution Digital Transformation ERP Facility Expansion M&A Tariffs