Hf Foods Group Inc. · NASDAQ:HFFG
Hf Foods — Merger or Acquisition (June 2019)
29 slides from Hf Foods's merger presentation, Jun 25, 2019
Slide 1: Acquisition of B&R Global Holdings, Inc. Investor Presentation
HF Foods B&R Global Group Inc. Holdings, Inc. HF Foods Group Inc. Acquisition of B&R Global Holdings, Inc. Investor Presentation ot June 24, 2019
Slide 2: Disclaimer
Gd HF Foods Group Ine. (“HF”), B&R Global Holdings, Inc. (“B&R”), and their respective directors, executive officers and employees and other persons may be deemed to be participants in the solicitation of proxies from the holders of HF common stock in respect of the proposed transaction described he
Slide 3: Disclaimer (Continued)
DISCLAIMER (CONTINUED) LHF and B&R and the transactions contemplated thereby, and the partis’ perspectives and expectations, are forward looking statements. Such statements include, but are not limited to, statements regarding the proposed transaction, including the antiipated initial enterprise val
Slide 4: HF + B&R = "Sysco" in Asian Restaurants
HF + B&R = “SYSCO” IN ASIAN RESTAURANTS * Serves over 10,000 restaurants in 21 states +The largest distributor in Asian restaurant sector * Over $818 million in combined Sales *Total $38.7. million in combined adjusted EBITDA for 2018 Service A ene if os non + 14 distribution centers in 9 states wit
Slide 5: Restaurant Industry
RESTAURANT INDUSTRY » $863 $590 $379 _ Lal $120 $43 2000 “Proected Restaurantindusty sales are projected to total $963 ilion in 2019 andequal 4 percentof the US. gross domestic product Source: National Res jo Over 70,000 Asian Cuisine restaurants in the United States, according to the magazine Chine
Slide 6: Company Overview
COMPANY OVERVIEW Combined Company Overview History * Proposition: Leading foodservice distributor for Acian restaurants, primarily restaurants mainly serving Americans. HF Group a + Market: Growing consumption trend for food-away from home, or pdt fe semese | ie from 27% in 1950 to 52% in 2015E. 2 f
Slide 7: Investment Highlights
INVESTMENT HIGHLIGHTS Food distribution industry serving all Asian restaurants is highly fragmented with unsophisticated players Growing market with the increasing trend to consume food away from home and increasing consumption of Asian cuisines Niche market with natural cultural barriers to entry P
Slide 8: Transaction Summary
TRANSACTION SUMMARY
Slide 9: Transaction Overview
| TRANSACTION OVERVIEW B&R Global Holdings, Inc., a Delaware corporation, will merge with and into a subsidiary of HF Transaction Foods Group Inc., a Delaware corporation(““HF/B&R Group”) Transaction is expected to close in 3rd quarter of 2019 Valuation of HF/B&R Group : — $703.1M of equity value/32
Slide 10: Capitalization and Ownership (Pro Forma)
CAPITALIZATION AND OWNERSHIP (PRO FORMA) Capitalization and Ownership {S inmillons except share and per share data) HF/B&R Group Valuation Pro Forma Capitalization ‘hares Outstanding after M&A. 52,867,486 Common Stock tobe Outstanding $7031 Cash’? $18 Net Assets S$ S48 ‘Valuation Multiples on 2018 P
Slide 11: Management and Board After Merger
MANAGEMENT AND BOARD AFTER MERGER Management Ge Directors + Zhou Min Ni~ Chairman of Board, Co-CEO (East Coast) + Founded HF Group in 1997 + Over 20 years of experience in food distribution industry + Experienced in strategies development, financing, acquistions, business expansion, inventory procur
Slide 12: Target Market Analysis
TARGET MARKET ANALYSIS
Slide 13: Growing Potential from Ultimate Consumers
GROWING POTENTIAL FROM ULTIMATE CONSUMERS ™ Over 70,000 Asian Cuisine restaurants in the United States, according to the magazine Chinese Restaurant News and others. These restaurants have over $50 billion in annual sales and resultin $15 billion in annual sales to the Asian Food services industry.
Slide 14: Culture Is a Natural Entry Barrier
CULTURE IS A NATURAL ENTRY BARRIER Currently, we believe over 80% of the Asian | Unique Cooking Styles and ingre restaurants we serve are operated and owned by individual families, and continue to use Chinese as their daily language. + Special vegetables, such as Chinese Cabbage, Chinese Broccoli an
Slide 15: Current Market Landscape
CURRENT MARKET LANDSCAPE Significant Opportur nsolidationand Potential Improvement Highly Fragmente i Spacefor ValueAdded [J Infrastructure Barrier for Gonueh PGR he Market Services New Entrants + Noabsolutenation-wide + Takeoutrestaurantsare + Itrequiresalarge capital + Growingpreferencein US. for
Slide 16: Business and Operations
BUSINESS AND OPERATIONS
Slide 17: Business Model
BUSINESS MODEL Bs: Restaurants Suppliers Delner Variety of Products Purchase from Domestic and value adsed Serves ‘ond Foreign Suppliers HF/B&R has developed an integrated distribution infrastructure to provide one-stop service for restaurants y
Slide 18: Comparable Companies
* Asian Restaurants with demand for specialty products COMPARABLE COMPANIES —— Mainstream Playe! ih (sysco, US Foods and Performance) * Mainstream Customers restaurants, hotels, hospitals, Schools Large Distributors In Mainstream Market + Large, well + Wholesalers, developed, ; intensive Sysco US. b
Slide 19: Strengths and Market Position
STRENGTHS AND MARKET POSITION 1,071,000 ft? Outsourced call center service located in Ghina + Low operating costs + Providing customer service in Chinese * Effective sales and promotion + Over 1,500 products, + Specialty products for all Asian Restaurants * Well developed Infrastructure = Economies
Slide 20: Growth Strategy
GROWTH STRATEGY
Slide 21: Growth Strategy
GROWTH STRATEGY Long Term Vision Provide growth support and Enlarge customer base Enhance technology platform Integrate sales management Expand distribution network through acquisitions ACQUISITIONS area key strategy for HF/B&R Group to grow and generate value for shareholders a
Slide 22: Expansion Plan
EXPANSION PLAN Service Area CHF Group ear Group Cleepansion Area HF/B&R Group plans to expand its business nationwide in the next three years, mainly through acquisitions and with support from the capital markets. Ge 2
Slide 23: Appendix
APPENDIX
Slide 24: Key Financial Information (Pro Forma, in Millions)
KEY FINANCIAL INFORMATION (PRO FORMA, IN MILLIONS) Reconciliation of Adjusted EBITDA” 2018 Net income attributable to HF/B&R Group % a, $) Net income attributable to non-controlling interest 0.3 Interest expenses 27 Income tax provision 78 Depreciation & amortization Non-recurring expenses k Adjuste
Slide 25: Statement of Operation (Pro Forma, in Millions)
STATEMENT OF OPERATION (PRO FORMA, IN MILLIONS) For the Years Ended December 31, Se ET Net revenue - third parties s 7933 $ 7732 Net revenue - related parties 247 237 TOTAL NET REVENUE 4 818.07 7989 Cost of revenue - third parties 6593 6563 Cost of revenue - related parties 240 23.0 (COST OF REVENUE
Slide 26: Balance Sheet (Pro Forma, in Millions)
BALANCE SHEET (PRO FORMA, IN MILLIONS) As of December 31, 2018 2017 ASSETS ‘CURRENT ASSETS: Cash od BS Ss 43 Accounts receivable, net 28 ‘Accounts receivable - related parties, net 29 Inventories, net 19 Advances to suppliers, net 1s Advances to suppliers related parties, net 32 Notes receivable 00
Slide 27: Balance Sheet (Pro Forma, in Millions) (Continued)
@ BALANCE SHEET (PRO FORMA, IN MILLIONS) (CONTINUED) As of December 31, 2018 2017 (CURRENT LIABILITIES: Lines of credit s s ng Bank overdraft 98 Accounts payable 410 Accounts payable - related parties 44 ‘Advance from customers 02 ‘Advance from customers - related parties 14 Current portion of long-
Slide 28: Balance Sheet (Pro Forma, in Millions) (Continued)
BALANCE SHEET (PRO FORMA, IN MILLIONS) (CONTINUED) As of December 31, 2018 2017 SHAREHOLDERS' EQUITY: Common Stock 0.0 Additional paid-in capital 4L7 Retained earnings 113 Total shareholders’ equity 53.0 Noncontrolling interest Ls TOTAL SHAREHOLDERS' EQUITY 348 TOTAL LIABILITIES AND SHAREHOLDERS' EQ
Slide 29: Thank You
Thank You