FGI Industries .(FGI) - 2024 Q2 - Quarterly Results

FGI Industries Q2 2024 Earnings Release Second Quarter 2024 Performance Highlights The company reported a slight revenue increase with improved gross margin but swung to an operating loss due to investments and segment-specific challenges Q2 2024 Key Financial Metrics (vs. Q2 2023) | Metric | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | | Total Revenue | $29.4 million | +0.6% | | Gross Profit | $9.0 million | +11.9% | | Gross Margin | 30.5% | +310 bps | | Operating Loss | ($0.5) million | vs. $0.6M income | | Net Loss | ($0.0) million | vs. $0.1M income | | Adjusted Net Income | $0.1 million | vs. $0.2M income | - Revenue performance was mixed across segments: Shower Systems grew 37% and the Covered Bridge custom cabinet segment grew 66%, while Sanitaryware and Bath Furniture declined 8% and 16% respectively due to software and logistics issues[1][2] - The company is pursuing geographic expansion, opening a new office in India during the quarter[1] - Operating expenses increased due to investments, inflation, and freight rates, but are expected to decline sequentially in the second half of 2024[1] Detailed Financial Results Q2 revenue grew marginally to $29.4 million, driven by Shower Systems and Cabinets, while profitability declined due to higher operating expenses Revenue Analysis Q2 2024 Revenue by Segment (vs. Q2 2023) | Segment | Q2 2024 Revenue | Q2 2023 Revenue | Change (YoY) | | :--- | :--- | :--- | :--- | | Sanitaryware | $17.3 million | $18.8 million | -8.0% | | Bath Furniture | $4.0 million | $4.8 million | -16.7% | | Shower Systems | $5.9 million | $4.3 million | +37.2% | | Other (Kitchen Cabinets) | $2.1 million | $1.3 million | +61.5% | | Total Revenue | $29.4 million | $29.2 million | +0.6% | - The decline in Sanitaryware revenue was attributed to delayed shipments[2] - The Bath Furniture market faces macro headwinds and a consumer trend towards lower-priced products[2] - Growth in Shower Systems was driven by newly launched programs and a broader customer base[2] Profitability Analysis - Gross profit increased 11.9% to $9.0 million, and gross margin improved by 310 basis points to 30.5%, driven by growth in higher-margin products[4] - The company reported an operating loss of ($0.5) million, a decline from a $0.6 million income in Q2 2023, due to increased expenses for growth initiatives[6] - GAAP net loss was ($0.0) million, or ($0.00) per diluted share, down from a net income of $0.1 million, or $0.01 per diluted share, in the prior-year period[7] Adjusted Profitability (Non-GAAP) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Adjusted Operating Loss/(Income) | ($0.3) million | $0.7 million | | Adjusted Operating Margin | (1.1)% | 2.4% | | Adjusted Net Income | $0.1 million | $0.2 million | | Adjusted EPS | $0.01 | $0.02 | Financial Position and Liquidity The company maintained total liquidity of $17.4 million as of June 30, 2024, with total debt at $9.7 million Liquidity Position as of June 30, 2024 | Component | Amount | | :--- | :--- | | Cash and Cash Equivalents | $1.3 million | | Availability under Credit Facilities | $16.1 million | | Total Liquidity | $17.4 million | | Total Debt | $9.7 million | Fiscal 2024 Financial Guidance The company reiterated its full-year 2024 guidance, projecting revenues of $115-$128 million and adjusted operating income of $2.8-$3.8 million Reiterated Fiscal 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | Total Revenue | $115 million - $128 million | | Total Adjusted Operating Income | $2.8 million - $3.8 million | | Total Adjusted Net Income | $1.2 million - $2.0 million | Appendix: Financial Statements The appendix provides condensed consolidated financial statements and non-GAAP reconciliations for the period ending June 30, 2024 Condensed Consolidated Balance Sheets Balance Sheet Summary | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash | $1.3 million | $7.8 million | | Total Current Assets | $47.5 million | $46.1 million | | Total Assets | $69.9 million | $65.7 million | | Total Current Liabilities | $34.0 million | $28.0 million | | Total Liabilities | $46.5 million | $41.7 million | | Total Shareholders' Equity | $23.3 million | $24.0 million | Unaudited Condensed Consolidated Statements of Operations Statement of Operations Summary (Three Months Ended June 30) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $29.4 million | $29.2 million | | Gross Profit | $9.0 million | $8.0 million | | (Loss) Income from Operations | ($0.5) million | $0.6 million | | Net (Loss) Income | ($23,415) | $88,481 | | Diluted EPS | $0.02 | $0.01 | Unaudited Condensed Consolidated Statements of Cash Flows Cash Flow Summary (Six Months Ended June 30) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($7.1) million | ($0.5) million | | Net Cash Used in Investing Activities | ($1.9) million | ($0.7) million | | Net Cash Provided by (Used in) Financing Activities | $2.7 million | ($1.9) million | | Net Change in Cash | ($6.5) million | ($3.2) million | | Cash, End of Period | $1.3 million | $6.9 million | Reconciliation of Non-GAAP Measures - For Q2 2024, the company adjusted its GAAP operating loss of ($450,362) for non-recurring items, including IPO-related stock-based compensation ($59,719) and business expansion expenses ($61,770), resulting in an adjusted operating loss of ($328,873)[18] - GAAP net loss of ($23,415) for Q2 2024 was adjusted for the same non-recurring items, resulting in an adjusted net income of $75,113[19]