FGI Industries .(FGI) - 2025 Q2 - Quarterly Results

Executive Summary FGI Industries reported a 5.5% revenue increase in Q2 2025, driven by strategic investments and market expansion, despite tariff impacts leading to gross profit and net loss declines Q2 2025 Performance Highlights FGI Industries achieved a 5.5% revenue increase to $31.0 million in Q2 2025, yet gross profit and margin declined, resulting in an operating and net loss due to tariff impacts Second Quarter 2025 Key Financial Highlights (YoY Comparison) | Metric | Q2 2025 (USD) | Change vs. Q2 2024 | | :-------------------- | :-------------- | :----------------- | | Total Revenue | $31.0 million | +5.5% | | Gross Profit | $8.7 million | -2.9% | | Gross Margin | 28.1% | -240 bps | | Operating Loss | $0.8 million | (from $0.5M income) | | Net Loss Attributable to Shareholders | $1.2 million | (from $0.2M income) | | Adjusted Operating Loss | $0.8 million | | | Adjusted Net Loss | $1.2 million | | Management Commentary & Strategic Initiatives Management attributed revenue growth to strategic investments and market expansion in key product categories and international markets, while actively navigating tariffs and pursuing long-term growth initiatives - Revenue growth was driven by Sanitaryware (+4.3% YoY), Bath Furniture (+2.7% YoY), and Covered Bridge cabinetry (+67.7% YoY)[3] - International markets showed strong growth: Canada revenue grew 2.0% and Europe grew 36.7% YoY, while U.S. revenue declined 0.4%[3] - The company is evaluating a 'China+1' strategy to diversify geographic sourcing and mitigate tariff impacts[3] - Strategic investments include brands, products, channels, the digital custom kitchen joint venture Isla Porter (AI-backed platform), and expansion in India[3][4] - Operating expenses increased 1.3% YoY to $9.5 million due to investments in BPC growth strategy initiatives and one-time warehouse optimization costs[4] - The best use of capital is prioritized for internal investment to attract new customers, expand relationships, develop new products/manufacturing, and enter new jurisdictions[4] Second Quarter 2025 Financial Results FGI Industries' Q2 2025 financial results show revenue growth offset by declining gross profit and a net loss, primarily due to tariff impacts and increased operating expenses Revenue and Gross Profit Analysis FGI's Q2 2025 revenue grew 5.5% to $31.0 million, driven by product and international market expansion, though gross profit decreased 2.9% and margin declined 240 bps due to tariffs and freight costs Q2 2025 Revenue and Gross Profit (YoY Comparison) | Metric | Q2 2025 (USD) | Q2 2024 (USD) | YoY Change | | :---------------- | :-------------- | :-------------- | :--------- | | Total Revenue | $30,998,260 | $29,370,949 | +5.5% | | Cost of Revenue | $22,291,653 | $20,407,647 | +9.2% | | Gross Profit | $8,706,607 | $8,963,302 | -2.9% | | Gross Margin | 28.1% | 30.5% | -240 bps | - The decline in gross margin was primarily attributed to the ongoing tariff environment and higher freight costs[3][7] Operating and Net Income/Loss Analysis FGI reported an operating loss of $0.8 million and a GAAP net loss of $1.2 million in Q2 2025, a decline from prior-year income, driven by increased operating expenses for growth initiatives and personnel Q2 2025 Operating and Net Income/Loss (YoY Comparison) | Metric | Q2 2025 (USD) | Q2 2024 (USD) | YoY Change | | :------------------------------------ | :-------------- | :-------------- | :-------------------- | | Operating Loss | $(832,338) | $(450,362) | (from income of $0.5M) | | Adjusted Operating Loss | $(832,338) | $(328,873) | | | Operating Margin | (2.7%) | (1.5%) | -120 bps | | Adjusted Operating Margin | (2.7%) | (1.1%) | -160 bps | | GAAP Net Loss Attributable to Shareholders | $(1,231,524) | $163,565 | (from income of $0.2M) | | GAAP Diluted EPS | $(0.64) | $0.08 | | | Adjusted Net Loss | $(1,161,873) | $22,700 | | | Adjusted Diluted EPS | $(0.61) | $0.01 | | - The decline in operating income was a result of increased personnel costs, marketing and promotion expenses, warehouse expenses, and operating expenses tied to growth initiatives[8] - Net loss for Q2 2025 and 2024 included after-tax expenses related to business expansion and non-recurring IPO-related compensation[9] Financial Position and Outlook FGI Industries maintains $16.4 million in liquidity as of June 30, 2025, and reiterates its fiscal year 2025 revenue guidance of $135-145 million, with varied segment performance Liquidity and Capital Resources As of June 30, 2025, FGI Industries maintained $16.4 million in total available liquidity, comprising cash and credit facility availability, with total debt at $12.6 million Financial Resources and Liquidity (as of June 30, 2025) | Metric | Amount (USD) | | :-------------------------------- | :------------- | | Cash and Cash Equivalents | $2.5 million | | Total Debt | $12.6 million | | Availability under Credit Facilities (net of L/C) | $13.9 million | | Total Liquidity | $16.4 million | Fiscal Year 2025 Guidance The company reiterated its fiscal year 2025 guidance, projecting total net revenue between $135-145 million, with adjusted operating income ranging from a loss of $2.0 million to a gain of $1.5 million, and adjusted net income from a loss of $1.9 million to a gain of $1.0 million Fiscal Year 2025 Guidance | Metric | Range (USD) | | :-------------------------- | :-------------------- | | Total Net Revenue | $135 - $145 million | | Total Adjusted Operating Income | $(2.0) - $1.5 million | | Total Adjusted Net Income | $(1.9) - $1.0 million | Segment Revenue Performance Q2 2025 saw revenue growth in Sanitaryware, Bath Furniture, and Other (Kitchen Cabinets, including Covered Bridge), while Shower Systems revenue declined Q2 2025 Revenue by Product Category (YoY Comparison) | Product Category | Q2 2025 Revenue (USD) | Q2 2024 Revenue (USD) | YoY Change | | :----------------- | :-------------------- | :-------------------- | :--------- | | Sanitaryware | $18.1 million | $17.3 million | +4.6% | | Bath Furniture | $4.1 million | $4.0 million | +2.5% | | Shower Systems | $5.2 million | $5.9 million | -11.9% | | Other (Kitchen Cabinets) | $3.5 million | $2.1 million | +66.7% | - Bath Furniture revenue growth was driven by a shift to market-aligned program pricing and design, outpacing sales expectations due to new business wins[13] - Other revenue, primarily from Kitchen Cabinets (including Covered Bridge), showed strong growth due to continued order momentum, expanded geographies, and a higher dealer count[3][13] Company Information and Disclosures FGI Industries, a global kitchen and bath product supplier, outlines its use of non-GAAP financial measures, forward-looking statement disclaimers, and updated investor relations policies About FGI Industries FGI Industries Ltd. is a global supplier of innovative kitchen and bath products, serving the repair and remodel market through diverse channels with sanitaryware, bath furniture, shower systems, and custom cabinetry - FGI Industries Ltd. is a leading global supplier of kitchen and bath products with over 30 years of industry reputation for product innovation, quality, and customer service[16] - Key product categories include sanitaryware (toilets, sinks), bath furniture (vanities, mirrors, cabinets), shower systems, custom kitchen cabinetry, and other accessory items[16] - Products are primarily sold for repair and remodel activities, and to a lesser extent, new home or commercial construction, through mass retail centers, wholesale/commercial distributors, online retailers, and specialty stores[16] Non-GAAP Financial Measures FGI Industries uses non-GAAP measures like Adjusted Operating Income and Net Income to evaluate performance and aid strategic decisions, excluding non-recurring items for enhanced investor insight and comparability - Non-GAAP measures used include Adjusted Operating Income, Adjusted Operating Margins, and Adjusted Net Income[17] - Adjusted Operating Income excludes non-recurring income/expenses like IPO-related compensation, unusual litigation, and business expansion expense[17] - Adjusted Net Income further excludes income taxes at historical average effective rates and net income attributable to non-controlling shareholders[17] - These non-GAAP measures are used to evaluate business, measure financial performance, manage expenses, identify trends, and assist in strategic decisions, providing investors with additional insight and comparability[18] - Beginning in Q1 2025, the presentation of non-GAAP measures was revised to provide more meaningful insight, with historical comparative figures adjusted accordingly[29] Forward-Looking Statements This release contains forward-looking statements, based on current information and subject to risks and uncertainties, with actual results potentially differing materially, and no obligation to update unless legally required - Forward-looking statements are identified by words such as "anticipate," "expect," "could," "may," "intend," "plan," "see," and "believe"[19] - These statements are based on currently available operating, financial, economic, and other information and are subject to numerous risks and uncertainties[20] - Actual future events or results may differ materially from those projected, and readers are referred to FGI's SEC filings (Form 10-K, 10-Q) for a full description of risks[20] - FGI does not undertake any obligation to update forward-looking statements unless required by applicable securities laws[20] Investor Relations FGI Industries has updated its earnings call schedule to cover only Q2 and Q4, while continuing quarterly releases, with investor inquiries directed to the CFO and Q2 2025 conference call details provided - FGI will hold quarterly earnings calls only for the second and fourth quarters, continuing to release results via press releases and SEC filings quarterly[10] - Investor inquiries can be submitted via email to investorrelations@fgi-industries.com or by phone at 973-515-7190, with Jae Chung as the Chief Financial Officer and investor contact[10][21] - A conference call to discuss Q2 2025 results was scheduled for Tuesday, August 12 at 9:00 am Eastern Time, with webcast and teleconference details provided[13][15] Condensed Consolidated Financial Statements This section presents FGI Industries' unaudited condensed consolidated balance sheets, statements of operations, cash flows, and non-GAAP reconciliations for the specified periods Condensed Consolidated Balance Sheets The condensed consolidated balance sheets present FGI Industries' financial position as of June 30, 2025, compared to December 31, 2024, showing changes in assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheets (USD) | Metric | As of June 30, 2025 | As of December 31, 2024 | | :------------------------------------ | :------------------ | :-------------------- | | ASSETS | | | | Cash | $2,519,117 | $4,558,160 | | Accounts receivable, net | $15,704,382 | $20,293,555 | | Inventories, net | $12,680,481 | $13,957,867 | | Total current assets | $49,125,064 | $52,897,962 | | Total assets | $71,701,684 | $75,461,415 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Short-term loans | $12,558,500 | $14,502,367 | | Accounts payable | $21,447,290 | $19,349,529 | | Total current liabilities | $40,622,359 | $42,542,826 | | Total liabilities | $51,425,660 | $53,895,765 | | Total shareholders' equity | $20,276,024 | $21,565,650 | Condensed Consolidated Statements of Operations and Comprehensive Loss The unaudited condensed consolidated statements of operations and comprehensive loss detail the company's financial performance for the three and six months ended June 30, 2025, and 2024, highlighting revenue, gross profit, operating loss, and net loss trends Condensed Consolidated Statements of Operations and Comprehensive Loss (USD) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $30,998,260 | $29,370,949 | $64,210,808 | $60,124,468 | | Gross profit | $8,706,607 | $8,963,302 | $17,606,865 | $17,376,785 | | Total operating expenses | $9,538,945 | $9,413,664 | $19,720,062 | $18,148,081 | | Loss from operations | $(832,338) | $(450,362) | $(2,113,197) | $(771,296) | | Net loss | $(1,364,465) | $(23,415) | $(2,180,022) | $(561,274) | | Net (loss) income attributable to FGI Industries Ltd. shareholders | $(1,231,524) | $163,565 | $(1,860,616) | $(248,624) | | Diluted (Loss) earnings per share | $(0.64) | $0.08 | $(0.97) | $(0.13) | Condensed Consolidated Statements of Cash Flows The unaudited condensed consolidated statements of cash flows provide an overview of cash generated from or used in operating, investing, and financing activities for the six months ended June 30, 2025, and 2024, showing a shift from cash used in operations to cash provided by operations year-over-year Condensed Consolidated Statements of Cash Flows (USD) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $195,667 | $(7,127,778) | | Net cash used in investing activities | $(631,150) | $(1,859,419) | | Net cash (used in) provided by financing activities | $(1,943,867) | $2,733,024 | | Net changes in cash | $(2,039,043) | $(6,470,149) | | Cash, End of Period | $2,519,117 | $1,307,092 | Non-GAAP Reconciliations This section provides detailed reconciliations of GAAP income from operations to Adjusted Operating (Loss) Income and Adjusted Operating Margins, and GAAP net income to Adjusted Net Income, for the three and twelve months ended June 30, 2025, and 2024, adjusting for non-recurring items Reconciliation of GAAP to Adjusted Operating (Loss) Income (USD) | Metric | Q2 2025 | Q2 2024 | LTM June 30, 2025 | LTM June 30, 2024 | | :------------------------------------ | :------ | :------ | :---------------- | :---------------- | | Loss from operations | $(832,338) | $(450,362) | $(3,441,492) | $955,799 | | Adjustments: | | | | | | Non-recurring IPO-related share-based compensation | — | $59,719 | $139,344 | $238,876 | | Business expansion expense | — | $61,770 | $123,540 | $247,082 | | Adjusted Operating Loss | $(832,338) | $(328,873) | $(3,178,608) | $1,441,757 | | Adjusted Operating Margins (%) | (2.7) | (1.1) | (2.3) | 1.2 | Reconciliation of GAAP to Adjusted Net (Loss) Income (USD) | Metric | Q2 2025 | Q2 2024 | LTM June 30, 2025 | LTM June 30, 2024 | | :------------------------------------ | :------ | :------ | :---------------- | :---------------- | | Loss before income taxes | $(1,579,041) | $(321,830) | $(4,578,826) | $541,207 | | Adjustments: | | | | | | Non-recurring IPO-related share-based compensation | — | $59,719 | $139,344 | $238,876 | | Business expansion expense | — | $61,770 | $123,540 | $247,082 | | Adjusted loss before income taxes | $(1,579,041) | $(200,341) | $(4,315,942) | $1,027,165 | | Less: income taxes at 18% rate | $(284,227) | $(36,061) | $(776,870) | $184,890 | | Less: net loss attributable to non-controlling shareholders | $(132,941) | $(186,980) | $(539,944) | $(466,690) | | Adjusted Net (Loss) Income | $(1,161,873) | $22,700 | $(2,999,128) | $1,308,965 |