Business

FGI Industries Reports Strong Financial Performance Amidst Challenging Operating Environment

EAST HANOVER, N.J., March 20, 2024 /PRNewswire/ -- FGI Industries Ltd. (Nasdaq: FGI), a globally acclaimed supplier of kitchen and bath products, announced their fourth quarter and full-year 2023 financial results, indicating determined growth amidst economic challenges.

Impressive Fourth Quarter and Full-Year Results Reported by FGI Industries

Fourth Quarter 2023: Elevated Margins Illustrate Strategic Success

The fourth quarter of the fiscal year painted a relatively optimistic picture for FGI Industries, marked by revenue totals reaching $31.0 million, a minor dip by 2.6% compared to the previous year. Despite the slight decrease, FGI Industries leveraged its portfolio of higher-margin products to rake in a gross profit of $9.0 million, representing a growth of 20.1%, while gross margin rocketed by 549 basis points to 29.2%. Net income held steady at $0.5 million with adjustments keeping it at par.

Full-Year 2023: Resilience in Revenue and Remarkable Margin Improvement

The fiscal year results reflected a more dramatic revenue contraction of 27.5% totaling $117.2 million, which FGI effectively counteracted with a rise in gross profit by 1.8% to $32.1 million. Substantial growth in gross margin by 788 basis points to 27.4% emphasized the company's strategic prowess in navigating revenue fluctuations. The net income for the year was reported at $0.6 million, with adjusted net income climbing to $1.0 million.

In the light of these financial outcomes, FGI's appendices clarify adjusted net income and adjusted operating income as non-GAAP financial measures aimed at providing investors with a more defined understanding of the company's performance.

Management's Strategy Amidst Uneven Market Conditions

Despite demand inconsistencies and ongoing inventory adjustments, FGI Industries' President and CEO, David Bruce, expressed a balance of caution and optimism. He acknowledged the present fiscal obstacles but emphasized the company's dedication to long-term strategy, which contributed to their substantial completion of the year. With marked improvements in order trends, especially in the fourth quarter, Bruce attributed this success to the company's investments in organic growth initiatives and their forward-looking BPC (Brands, Products, Channels) strategies.

Sustained Growth Despite Segment Variances

Bruce also highlighted that most of FGI’s business segments saw growth in the fourth quarter. This growth was tempered by a drop in revenue from the Bath Furniture segment due to prevailing market weaknesses and shifting consumer preferences towards lower-priced offerings.

Financial Discipline and Liquidity

Perry Lin, FGI’s CFO, further shed light on the resilient financial discipline maintained by the company, which resulted in a solid cash balance and total liquidity that fortifies FGI’s plans to sustain organic growth and evaluate strategic mergers and acquisitions. The company's ability to adapt and manage its financial resources in uncertain times stands as a testament to its robust governance.

Market Outlook and 2024 Forecast

Looking ahead, Bruce remains cautiously optimistic for 2024. While acknowledging the potential for continued volatility in home improvement spending, he remains confident in FGI Industries' ability to deliver above-market growth, buoyed by momentum from recent program launches and new product offerings.

Strategic Update: Driving Future Growth

FGI's commitment to its BPC growth strategy, despite market turbulence, sets the tone for its future direction. The past year was punctuated with strategic investments aiming to bolster organic growth. These strategic movements included entering into a 5-year licensing agreement for leading overflow toilet technology, expanding geographically, and focusing on strengthening its brand presence in both retail and commercial markets across North America, India, Eastern Europe, Australia, and the UK.

Enhancing Margins: A Focus on High-Margin Products

FGI Industries strategically intensified its focus on high-margin products, which paid off in the increased gross margin witnessed in the fourth quarter. The company projects gross margin to sustain within the 27-28% range for the forthcoming fiscal year, based on product mix and market dynamics.

Using Capital Efficiently to Further Growth

FGI Industries plans to deploy capital judiciously to support its organic growth trajectory while keeping an opportunistic eye on strategic merger and acquisition possibilities. With proven financial agility, FGI is well-prepared to navigate and capitalize on upcoming market opportunities.

Conference Call Announced to Discuss Results

FGI has scheduled a conference call on Thursday, March 21, at 9:00 am Eastern Time to discuss the quarterly results. Interested parties can access a live webcast of the call with accompanying presentation materials on FGI's corporate website at https://investor.fgi-industries.com. Participants are encouraged to register and download the necessary audio software well in advance of the start time.

About FGI Industries

For over three decades, FGI Industries Ltd. has built reputability for product innovation, quality, and exceptional customer service in the global market. Offering a diverse array of kitchen and bath products, FGI sells through a variety of retail channels catering to repair, remodel, new home, and commercial construction markets.

Recognizing Non-GAAP Measures

FGI's appendix provides insight into non-GAAP financial measures such as Adjusted Operating Income, Adjusted Operating Margins, and Adjusted Net Income. By excluding certain non-recurring expenses, these measures offer additional ways to evaluate the company's performance and financial management, aiding investors in making more informed decisions.

Forward-Looking Statements

The provided financial guidance contains forward-looking statements that pertain to FGI's expectations about the home improvement market, company growth strategies, and anticipated market recoveries. Inherently subject to uncertainties and risks, these forward-looking statements are based on currently available financial, economic, and competitive data.

FGI Industries' full financial statements—balance sheets, cash flow, and comprehensive income—are available for review, illuminating the company's economic positioning and decision-making transparency. As FGI looks to the future, its well-devised strategies and disciplined approach to financial stewardship represent a beacon of resilience ready to weather and capitalize on market trends in 2024 and beyond.

For more details and to gain insights into FGI's performance, strategic initiatives, and financial health, investors and interested parties are encouraged to explore the wealth of information provided in the attachments and documents accompanying this release.

Source: FGI Industries Ltd.