Financial Data and Key Metrics Changes - FGI reported total revenue of $31 million in Q2 2025, representing a year-over-year increase of 5.5% [6][13] - Gross profit was $8.7 million, a decrease of 2.9% compared to the prior year [6][13] - Gross margin declined to 28.1% from 30.5% in 2024, primarily due to the ongoing tariff environment [7][14] - Operating expenses increased by 1.3% to $9.5 million from $9.4 million in the prior year [14] - GAAP operating loss was $800,000, compared to a loss of $500,000 in the prior year [14] Business Line Data and Key Metrics Changes - Revenue from sanitary ware increased by 4.3% year-over-year [9] - Bath furniture revenue increased by 2.7% year-over-year due to market-aligned pricing and design [8] - Shower systems revenue declined by 11.2%, despite positive demand trends [9] - Other revenue, primarily from covered bridge cabinetry, increased by 67.7% driven by order momentum and expanded geographies [9] Market Data and Key Metrics Changes - Revenue in the U.S. declined by 0.4%, while revenue grew by 236.7% in Canada and Europe [8] - The company is focusing on a "China plus one" strategy to diversify sourcing [7][24] Company Strategy and Development Direction - FGI is investing in organic growth initiatives across brands, products, and channels, referred to as the BPC strategy [6] - The company is actively diversifying its global sourcing base, with significant changes expected in the sourcing footprint by next year [24] - Strategic investments are aimed at driving above-market organic growth in the future [9] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in navigating the tariff environment, citing strong relationships with suppliers and customers [11][34] - The order pipeline is recovering, although some customers remain cautious due to tariff uncertainties [12][22] - Management anticipates that new business programs will contribute positively to margins in the second half of the year [27][40] Other Important Information - FGI maintains its 2025 revenue guidance of $135 million to $145 million, with adjusted operating income guidance ranging from negative $2 million to positive $1.5 million [15] - Total liquidity at the end of Q2 was $16.4 million, deemed sufficient to fund growth initiatives [15] Q&A Session Summary Question: Concerns about demand degradation due to tariffs - Management indicated that the pause in orders was primarily due to uncertainty surrounding tariffs, which led customers to hesitate in purchasing inventory [20][21] Question: Impact of the "China plus one" strategy on all business segments - Management confirmed that the strategy will impact all business segments, including sanitary ware, and significant changes in the global sourcing footprint are expected [23][24] Question: Trends in operating expenses and gross margins for the second half - Management noted that they are closely monitoring expenses and expect gross margins to remain in the upper 20s, driven by new business programs [25][27] Question: Improvement in the order pipeline since the beginning of Q2 - Management reported a positive trajectory in the order pipeline, recovering momentum prior to the tariff impact [36][39] Question: Clarification on gross margins and guidance for the back half of the year - Management indicated that they expect to rebound in gross margins based on original plans, despite delays caused by tariffs [40]