HF Foods: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Nov. 9, 2026, HF Foods (NASDAQ:HFFG) announced net revenue increased 4.1% year over year to $319.6 million. Higher distribution expenses from surging fuel prices squeezed quarterly profitability, showing how short-term cost inflation can temporarily obscure underlying operating gains. Expanding into higher-margin specialty seafood distribution provides the business with a clear path to widen its cost advantage over time. Three insights from management explain how the strategy is unfolding.

1. Canadian Acquisition Delivers Immediate High-Margin Revenue

Acquiring Sea Ray Foods, Inc., a Canadian seafood distributor, gives HF Foods its first operational footprint outside the United States and expands its specialty distribution network into retail and wholesale channels. The acquired business has profit margins well above the consolidated level, so integrating it effectively boosts overall earnings power.

In its first month under ownership, Sea Ray contributed $4.2 million on net revenue and $600 thousand of adjusted EBITDA. That is an adjusted EBITDA margin in the mid teens consistent with the profile we described in the announcement and well above our consolidated margin.
-- Felix Lin, President and Chief Executive Officer

2. Surcharges Help Mitigate Severe Fuel Cost Inflation

Surging diesel prices drove up auto and truck costs across the route network, squeezing quarterly profit margins. Management instituted a surcharge program across its customer base to pass along a portion of the expense, protecting operating cash flows without pricing out restaurant clients.

Like much of the industry, we have responded to higher fuel costs, with the surcharge across our customer base.
-- Paul Magari, Chief Financial Officer

3. Digital Infrastructure Investments Shift Focus Toward Network Optimization

HF Foods completed major capital expenditures, including the purchase of its key Chicago distribution facility and the upgrade of its sales software. With physical facilities largely in place, management isn't spending heavily on new builds and can focus on route discipline and warehouse efficiency to trim operational costs.

With investments made in our sales operations, digital infrastructure and facilities, Now our focus has shifted from implementation to optimization.
-- Felix Lin, President and Chief Executive Officer

Looking Ahead

Rising fuel expenses and nonrecurring transaction fees weighed on short-term profits, but management isn't letting temporary cost pressure mask operational progress across its network. The business maintains a distinct cost advantage as the largest Asian specialty distributor in the nation, backed by dedicated logistics infrastructure and deep ties to independent restaurants. Management is keeping a close eye on route efficiency, fuel surcharge recovery, and integration steps for its Canadian expansion.

We remain confident these investments are building a stronger foundation for sustainable profitable growth even as we continue to navigate some near term pressure from elevated fuel costs.
-- Felix Lin, President and Chief Executive Officer

Acquiring regional specialty distributors at reasonable valuations remains a key element of long-term expansion across North America. With credit facility maturities extended out to 2030, HF Foods has created adequate financial flexibility to execute its multiyear strategy.

No 1, whether larger or smaller competitors, is better positioned than HF Foods to capture this opportunity in the coming years.
-- Felix Lin, President and Chief Executive Officer

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