HF Foods Group Inc.HFFG
HF Foods Group Inc. Fair Value Disclosure
Note 5 - Fair Value Measurements
The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the dates indicated:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | $ | — | $ | 241 | $ | — | $ | 241 | $ | — | $ | 504 | $ | — | $ | 504 | |||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | $ | — | $ | 1,607 | $ | — | $ | 1,607 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
The Company follows the provisions of ASC Topic 820 Fair Value Measurement which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
•Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
•Level 2 - Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
•Level 3 - Inputs are unobservable inputs which reflect the reporting entity’s own assumptions about what assumptions market participants would use in pricing the asset or liability based on the best available information.
Any transfers of assets or liabilities between Level 1, Level 2, and Level 3 of the fair value hierarchy will be recognized at the end of the reporting period in which the transfer occurs. There were no transfers between fair value levels in any of the periods presented herein.
The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, other current assets, accounts payable, checks issued not presented for payment and accrued expenses and other liabilities approximate their fair value based on the short-term maturity of these instruments.
See Note 8 - Derivative Financial Instruments for additional information regarding the Company’s interest rate swaps.
Carrying Value and Estimated Fair Value of Outstanding Debt - The following table presents the carrying value and estimated fair value of the Company’s outstanding debt as described in Note 9 - Long-Term Debt, including the current portion, as of the dates indicated:
| Fair Value Measurements | ||||||||||||||||||||||||||
| (In thousands) | Level 1 | Level 2 | Level 3 | Carrying Value | ||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||
| Fixed rate debt: | ||||||||||||||||||||||||||
| Bank of America | $ | — | $ | — | $ | 48 | $ | 51 | ||||||||||||||||||
Other financial institutions | — | 2,474 | — | 2,784 | ||||||||||||||||||||||
| Variable rate debt: | ||||||||||||||||||||||||||
| JPMorgan Chase | $ | — | $ | 96,023 | $ | — | $ | 96,023 | ||||||||||||||||||
| Bank of America | $ | — | $ | 1,930 | $ | — | $ | 1,930 | ||||||||||||||||||
| East West Bank | $ | — | $ | 5,331 | $ | — | $ | 5,331 | ||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Fixed rate debt: | ||||||||||||||||||||||||||
| Bank of America | $ | — | $ | — | $ | 104 | $ | 113 | ||||||||||||||||||
| Variable rate debt: | ||||||||||||||||||||||||||
| JPMorgan Chase | $ | — | $ | 101,040 | $ | — | $ | 101,040 | ||||||||||||||||||
| Bank of America | $ | — | $ | 2,063 | $ | — | $ | 2,063 | ||||||||||||||||||
| East West Bank | $ | — | $ | 5,518 | $ | — | $ | 5,518 | ||||||||||||||||||
The carrying value of the variable rate debt approximates its fair value because of the variability of interest rates associated with these instruments. For the Company’s fixed rate debt, the fair values were estimated using discounted cash flow analyses, based on the current incremental borrowing rates for similar types of borrowing arrangements.
See Note 9 - Long-Term Debt for additional information regarding the Company’s debt.
Nonrecurring Fair Values
The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.
As further disclosed in Note 7 - Goodwill and Intangible Assets, we performed a quantitative goodwill impairment analysis as of December 31, 2025 and 2024. The results of testing as of December 31, 2025 and 2024 concluded that the estimated fair value of our one reporting unit fell short of carrying value, and therefore impairment existed as of those dates. Goodwill impairment charges of $38.8 million and $46.3 million were recorded for the years ended December 31, 2025 and 2024, respectively. The calculation of the fair value of our reporting unit was determined using Level 3 fair value measurements due to its use of internal projections and unobservable measurement inputs.
There were no assets carried at nonrecurring fair value other than goodwill at December 31, 2025 or 2024.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 26, 2024 | |
| 2022 | Mar 31, 2023 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.