HF Foods Group Inc.

Greetings and welcome to the HF Foods Group second quarter 2026 earnings call. At this time, our participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to your moderator today, John D. Domenico of ICR. Please proceed.

Hello, everyone. Welcome to HF Foods Group's second quarter 2026 earnings conference call. Joining me on today's call are Felix Lin, the company's president and chief executive officer, and Paul McGarry, the company's chief financial officer. Before we begin, let me remind everyone that today's discussion contains forward-looking statements based on management's current beliefs and expectations about future events. which are subject to a number of known and unknown risks and uncertainties including statements regarding our previously announced agreement to acquire Sea Ray Foods and the timing, terms, and anticipated benefits of that transaction. If you refer to HF Foods earnings release, the Sea Ray acquisition press 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 from those expressed or implied by these forward-looking statements. The company undertakes no obligation to update or revise these forward-looking statements in the future. In these remarks, the company will make several references to non-GAAP financial measures, including adjusted EBITDA and non-GAAP diluted earnings per share. We believe that these measures provide investors with a useful perspective on the underlying growth trends of the business, and I've included in the earnings release a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures. Now, I will turn the call over to Felix.

Hello, everyone. Welcome to HF Foods' second quarter 2026 earnings call. I'll provide a business update, and Paul will speak to our second quarter financial results. Then we will open up the line for Q&A. We continue to build momentum in the second quarter even as tariff pressure, softer foot traffic, and rising fuel costs continue to weigh on the industry. Net revenue increased 2.8% year-over-year to $323.8 million, our highest ever quarterly revenue. Gross profit was essentially flat at $55 million for the quarter. adjusted EBITDA was 13.6 million, down 2% year-over-year, representing a 4.2% margin compared to 4.4% in the prior year quarter. These results are especially impressive on a year-over-year basis, given that last year's second quarter benefited from low-cost inventory positions and better pricing, which lifted margins in the second quarter of 2025. We continue to make progress on our long-term transformation plan this quarter. including our sales operations, digital infrastructure, and facilities upgrades. We remain confident these investments are building a stronger foundation for sustainable growth, even as we continue to navigate some near-term pressure from rising fuel costs, which we are actively managing. The clearest proof point of our strategy came on July 17, when we entered into a definitive agreement to acquire Sea Ray Foods a leading Canadian importer and distributor of ethnic and specialty frozen seafood based in Richmond, British Columbia. It's our first transaction outside the United States and extends our M&A playbook into a new geography. Sea Ray brings six proprietary brands, including Sea Ray Foods, Pie Best, Pinoy's Best, Smart Fish, Diamond Shrimp, and Gold Label into our seafood category, which already makes up about 36% of our net revenue. C-Ray has grown revenue at roughly 15% a year since 2019, with EBITDA margins in the mid-teens. In approximately 5x C-Ray's 2025 adjusted EBITDA, we expect the transaction to be accretive to both margins and EPS from close, supporting the consolidated adjusted EBITDA margin target of 4.5% to 5% plus we've laid out for the next three to five years. We expect to close in the third quarter, subject to customary conditions and regulatory approval. And Sea Ray's existing management team, led by incoming CEO Derek Na, will continue running the business day-to-day. Consideration is a mix of cash and HF Foods stock, and we'll disclose the final split at closing. Once closed, Sea Ray gives us a platform to grow in Canada. C-Ray's business carries a margin profile well above our current company, and it becomes a meaningful part of our growth story in the market for years to come. Beyond C-Ray, M&A remains a core pillar of our growth strategy. HF Foods is the only scale food service provider in the Asian specialty market in the United States, and we believe we are the strategic acquirer of choice within our space. We're focused on expanding our geographic footprint in high potential markets. capturing operational synergies, broadening our customer base, and enhancing our product and service capabilities. We remain disciplined but optimistic about additional M&A opportunities in 2026 and beyond, and are actively evaluating opportunities from potential sellers who understand our unique position. We believe our proven ability to successfully navigate the terror landscape positions us uniquely to identify and execute attractive tuck-in acquisitions that will benefit from our operational expertise and scale. I want to emphasize the significant runway ahead of us. The $50 billion adjustable market we've talked about historically reflects the U.S. alone and we'll see right now giving us a foothold in Canada. Our total opportunity is even larger. At just over $1 billion in net revenue, were the largest player in the Asian specialty space. No one, whether larger or smaller competitors, is better positioned than Asia Foods to capture this opportunity in the coming years. Now, Paul, our CFO, will walk you through more details of our financial performance for the quarter.