Le Lézard
Classified in: Business, Covid-19 virus
Subjects: ERN, ERP

FGI INDUSTRIES ANNOUNCES SECOND QUARTER 2022 RESULTS


EAST HANOVER, N.J., Aug. 10, 2022 /PRNewswire/ -- FGI Industries Ltd. (Nasdaq: FGI) ("FGI" or the "Company"), a leading global supplier of kitchen and bath products, today announced results for the second quarter of 2022.

SECOND QUARTER 2022 HIGHLIGHTS
(As compared to the Second Quarter of 2021)

Total revenue increased by 13% on a year-over-year basis in the second quarter of 2022, driven primarily by continued strength in the Sanitaryware and Other categories (including shower systems and custom kitchen cabinetry), while partially offset by a decline in Bath Furniture.  Second quarter revenue trends remained strong in Canada, while the United States and Europe increased modestly. 

The Company reported operating income of $1.7 million in the second quarter of 2022, a decline of $1.6 million versus the prior-year period, primarily driven by supply chain disruptions, investments in organic growth initiatives, and incremental public company costs, partially offset by strong revenue growth.  Excluding non-recurring IPO-related compensation expense of $0.02 million, adjusted operating income was $1.8 million during the second quarter of 2022, as compared to $3.3 million for the prior-year period. 

For the three months ended June 30, 2022, the Company reported GAAP net income of $1.2 million, or $0.10 per diluted share, versus net income of $2.5 million, or $0.36 per diluted share, in the second quarter of 2021.  Excluding non-recurring items and the related tax impact, the Company reported second quarter 2022 adjusted net income of $1.2 million, or $0.10 per diluted share.

MANAGEMENT COMMENTARY

"Demand trends remained strong across our key product categories during the second quarter, with total revenue increasing by 13% on a year-over-year basis, driven by strong demand in both the wholesale and retail channels for sanitaryware and continued growth in our newer product categories," stated David Bruce, President and Chief Executive Officer of FGI.  "As we had expected coming into the year, we have seen some moderation in the broader R&R market growth owing to the ongoing macroeconomic headwinds, with our Bath Furniture segment seeing the biggest impact within our product portfolio; however, overall demand for our products has remained more resilient.  We remain encouraged by the organic growth outlook for our business as we enter the second half of the year, as our portfolio of innovative, high-quality products continues to be received favorably by consumers.  We continue to see the strong order momentum from the first half continuing into second half of 2022." 

"I am extremely pleased by our solid execution in the quarter, as we made additional progress on our margin recovery initiatives, with pricing actions and other measures to offset the supply chain challenges driving roughly 200 basis points of sequential improvement in operating margin during the second quarter," continued Bruce.  "A less favorable business mix masked some of the progress we made during the quarter, but we continue to successfully implement strategic pricing actions that will benefit second half results and as a result we expect to see additional sequential margin improvement in the back half of the year."

"The supply chain headwinds have resulted in a period of elevated working capital usage in recent quarters, but these issues are beginning to normalize, and we expect strong cash flow conversion in the back half of the year as balance sheet metrics return to historical levels," stated Perry Lin, Chief Financial Officer of FGI.  "We exited the second quarter of 2022 in a strong financial position with cash of $3.1 million and we have ample liquidity with which to support our organic growth initiatives and any potential strategic M&A."

"We were able to post another quarter of solid financial performance despite the challenging business environment, which is a direct result of the hard work and dedication of our highly motivated team members across the organization," continued Bruce.  "We continue to pursue a number of programs that have the potential to drive strong incremental organic growth over the long-term, including investments in manufacturing capacity to support potentially meaningful growth in our Covered Bridge custom kitchen cabinetry brand in the coming quarters and years.  We are excited by the strong growth potential for FGI and remain encouraged by our ability to drive improving profitability despite the ongoing supply chain challenges. Based on these factors, we remain confident in our financial outlook for the year and are reiterating our full-year 2022 financial guidance."

STRATEGIC UPDATE

Consistent with its long-term strategic plan, FGI intends to drive value creation for its shareholders through a focus on product innovation, execution of its Brands, Products and Channels ("BPC") strategy to drive organic growth, margin expansion, and efficient capital deployment.  Notable progress against these initiatives achieved during the second quarter were as follows:

SECOND QUARTER 2022 RESULTS

Revenue totaled $47.8 million during the second quarter of 2022, an increase of 12.5% compared to the prior-year period, driven by strong volume growth and continued pricing gains, partially offset by negative product mix.  Revenue benefitted from volume and pricing growth in Sanitaryware, as well as contribution from new products such as shower wall systems and kitchen cabinetry.  However, supply chain challenges continue to result in order delays that negatively impacted Bath Furniture revenues, causing revenue to decline in the quarter. 

Gross profit was $8.4 million during the second quarter of 2022, a decrease of 8.4% compared to the prior-year period, as strong revenue growth was offset by ongoing supply chain disruptions.  As a result of these factors, gross profit margin was 17.6% during the second quarter of 2022, down from 21.6% in the prior-year period.  The reduction in the Company's gross margin percentage is primarily attributable to the impact of higher ocean freight charges associated with recent global supply chain issues and a less favorable product mix given the revenue decline in Bath Furniture. The Company will benefit from additional price increases that have recently been implemented, declines in ocean freight costs, and an expected rebound in the Bath Furniture segment, which should drive continued sequential gross margin improvement in the second half of 2022.        

Operating income was $1.7 million during the second quarter of 2022, down from $3.3 million in the prior-year period.  The decrease in operating income was primarily driven by gross margin pressure, investments in organic growth initiatives, and public company costs, partially offset by solid revenue growth.  As a result, operating margin was 3.6% during the second quarter, down from 7.8% in the same period last year.  Excluding non-recurring IPO-related compensation expense of $0.02 million, adjusted income from operations was $1.8 million during the second quarter of 2022, compared to adjusted income from operations of $3.3 million in the prior-year period.    

FINANCIAL RESOURCES AND LIQUIDITY

As of June 30, 2022, the Company had $3.1 million of cash and cash equivalents, total debt of $14.7 million and $3.3 million of availability under its credit facility, net of letters of credit. Combined with cash and cash equivalents, total liquidity was $6.4 million at June 30, 2022.

FINANCIAL GUIDANCE

The outlook for FGI's business and the long-term trends in the repair and remodel markets remains strong. The Company reiterates its fiscal 2022 guidance as follows:

SECOND QUARTER CONFERENCE CALL

FGI will conduct a conference call on Thursday, August 11 at 8:00 am Eastern Time to discuss the quarterly results.

A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the Company's corporate website at https://investor.fgi-industries.com.  To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register and download and install any necessary audio software.

To participate in the live teleconference:

Toll Free:  


1-855-327-6837

International Live:


1-631-891-4304

To listen to a replay of the teleconference, which will be available through August 25, 2022:

Domestic Replay:   


1-844-512-2921

International Replay:  


1-412-317-6671 13727517

Conference ID:


10019643

ABOUT FGI INDUSTRIES

FGI Industries Ltd. (Nasdaq: FGI) is a leading global supplier of kitchen and bath products. For over 30 years, we have built an industry-wide reputation for product innovation, quality, and excellent customer service. We are currently focused on the following product categories: sanitaryware (primarily toilets, sinks, pedestals and toilet seats), bath furniture (vanities, mirrors and cabinets), shower systems, customer kitchen cabinetry and other accessory items. These products are sold primarily for repair and remodel activity and, to a lesser extent, new home or commercial construction. We sell our products through numerous partners, including mass retail centers, wholesale and commercial distributors, online retailers and specialty stores.

FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as "anticipate," "expect," "could," "may," "intend," "plan", "see" and "believe," among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements regarding FGI's guidance, the Company's growth strategies, outlook and potential acquisition activity, the effect of the COVID-19 pandemic and the associated impact on the national and global economy, the effect of supply chain disruptions and freight costs.  These forward-looking statements are based on currently available operating, financial, economic and other information, and are subject to a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. A variety of factors, many of which are beyond our control, could cause actual future results or events to differ materially from those projected in the forward-looking statements in this release. For a full description of the risks and uncertainties which could cause actual results to differ from our forward-looking statements, please refer to FGI's periodic filings with the Securities & Exchange Commission including those described as "Risk Factors" in FGI's annual report on Form 10-K for the year ended December 31, 2021, and in quarterly reports on Form 10-Q filed thereafter. FGI does not undertake any obligation to update forward-looking statements whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

FGI INDUSTRIES LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME


For the Three Months Ended


For the Six Months Ended



 June 30

                  June 30,                 


2022

2021

2022

2021


 USD

USD

USD

USD

REVENUES

$

47,809,014

$

42,490,357


91,384,254

$

78,866,047










COST OF REVENUES


39,388,061


33,301,420


75,438,715

62,360,079









GROSS PROFIT


8,420,953


9,188,937


15,945,539

16,505,968









OPERATING EXPENSES









Selling and distribution


4,362,707


4,088,739


9,040,059


8,029,209

General and administrative


2,093,162


1,623,917


3,935,969


2,982,939

Research and development

235,735

155,356

549,416

289,124

Total operating expenses

6,691,604

5,868,012

13,525,444

11,301,272






INCOME FROM OPERATIONS


1,729,349


3,320,925


2,420,095

5,204,696









OTHER INCOME (EXPENSES)









Interest income


102


2,578


133


10,778

Interest expense


(107,440)


(85,983)


(239,192)


(167,295)

Other income, net

(66,074)

(101,295)

32,771

1,504,947

Total other (expenses) income, net

(173,412)

(184,700)

(206,288)

1,348,430






INCOME BEFORE INCOME TAXES


1,555,937


3,136,225


2,213,807


6,553,126










PROVISION FOR (BENEFIT OF) INCOME TAXES









Current


298,300


528,571


469,799


833,530

Deferred


87,107


99,753


43,285

250,281

Total provision for income taxes

385,407

628,324

513,084

1,083,811






NET INCOME


1,170,530


2,507,901


1,700,723


5,469,315










OTHER COMPREHENSIVE INCOME









Foreign currency translation adjustment


(69,416)


325,637


(126,596)

325,236









COMPREHENSIVE INCOME

$

1,101,114

$

2,833,538


$ 1,574,127

$

5,794,551










WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES

Basic*


9,168,508


7,000,000


9,168,508


7,000,000

Diluted*


11,662,293


7,000,000


11,662,293


7,000,000










EARNINGS PER SHARE









Basic*

$

0.13

$

0.36

$

0.19

$

0.78

Diluted*

$

0.10

$

0.36

$

0.15

$

0.78












* Shares and per share data are presented on a retroactive basis to reflect the reorganization on January 27, 2022.

 

FGI INDUSTRIES LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS



As of
June 30, 2022

As of
December 31, 2021


USD

USD

ASSETS










CURRENT ASSETS





Cash

$

3,126,305

$

3,883,896

Accounts receivable, net


25,068,641


26,350,650

Inventories, net


18,681,768


21,263,961

Prepayments and other current assets


2,630,749


1,546,623

Prepayments and other receivables ? related parties

8,638,531

3,119,822

Total current assets

58,145,994

56,164,952




PROPERTY AND EQUIPMENT, NET


333,503

387,655





OTHER ASSETS





Intangible assets


?


42,683

Operating lease right-of-use assets, net


7,455,006


8,087,969

Deferred tax assets, net


1,424,193


1,478,589

Other noncurrent assets


3,102,234

2,989,012

Total other assets

11,981,433

12,598,253

Total assets

$

70,460,930

$

69,150,860






LIABILITIES AND PARENT'S NET INVESTMENT










CURRENT LIABILITIES





Short-term loans

$

14,690,048

$

14,657,280

Accounts payable


21,203,868


32,009,851

Income tax payable


875,797


1,220,939

Operating lease liabilities ? current


1,155,559


1,315,848

Accrued expenses and other current liabilities

4,485,430

5,512,438

Total current liabilities

42,410,702

54,716,356




OTHER LIABILITIES





Operating lease liabilities ? noncurrent

6,410,859

6,884,794

Total liabilities

48,821,561

61,601,150




COMMITMENTS AND CONTINGENCIES










SHAREHOLDERS' EQUITY





Preference Shares ($0.0001 par value, 10,000,000 shares authorized, no shares issued and 
outstanding as of June 30, 2022 and December 31, 2021)


 

?


 

?

Ordinary shares ($0.0001 par value, 200,000,000 shares authorized, 9,500,000 and 7,000,000 
shares issued and outstanding as of June 30, 2022 and December 31, 2021*)


 

950


 

700

Parent's net investment


?


7,549,010

Additional paid-in capital


20,719,024


?

Retained earnings


1,700,723


?

Accumulated other comprehensive income

(781,328)

?

Total shareholders' equity

21,639,369

7,549,710

Total liabilities and shareholders' equity

$

70,460,930

$

69,150,860








* Shares and per share data are presented on a retroactive basis to reflect the reorganization on January 27, 2022.

 

FGI INDUSTRIES LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



For the Six Months Ended June 30, 


2022

2021


USD

USD

CASH FLOWS FROM OPERATING ACTIVITIES





Net income

$

1,700,723

$

5,469,315

Adjustments to reconcile net income to net cash used in operating activities

Depreciation and amortization


138,213


142,248

Share-based compensation


144,733


?

Provision for doubtful accounts


75,940


14,749

(Reversal of) provision of defective return


(637,879)


3,108,807

Foreign exchange transaction loss


2,850


94,316

Interest expenses


239,192


167,295

Gain on Forgiveness of PPP loan


?


(1,680,900)

Deferred income taxes


54,397


233,846

Loss on disposal of property and equipment


?


(3,000)

Changes in operating assets and liabilities





Accounts receivable


1,843,947


(1,852,844)

Inventories


2,582,193


(4,366,126)

Prepayments and other current assets


(1,470,609)


(175,021)

Prepayments and other receivables ? related parties


(5,348,158)


(23,294)

Other noncurrent assets


(113,223)


(3,841,292)

Right-of-use assets


632,963


565,630

Income taxes


(345,143)


598,290

Accounts payable


(10,805,982)


360,438

Accounts payable-related parties


?


807,902

Operating lease liabilities


(634,224)


(581,649)

Accrued expenses and other current liabilities

(1,050,269)

1,591,062

Net cash used in operating activities

(12,990,336)

629,772




CASH FLOWS FROM INVESTING ACTIVITIES





Proceeds from disposal of property and equipment


?


3,000

Purchase of property and equipment


(42,752)


(4,751)

Net cash used in investing activities

(42,752)

(1,751)




CASH FLOWS FROM FINANCING ACTIVITIES





Net proceeds from (repayments of) revolving credit facility


32,768


6,358,188

Net proceeds from issuance of ordinary shares in IPO


12,370,800


?

Net changes in parent company investment


?


(7,430,516)

Net cash provided by (used in) financing activities

12,403,568

(1,072,328)




EFFECT OF EXCHANGE RATE FLUCTUATION ON CASH

(128,071)

226,359




NET CHANGES IN CASH


(757,591)


(217,948)

CASH, BEGINNING OF PERIOD


3,883,896


4,018,558

CASH, END OF PERIOD

$

3,126,305

$

3,800,610






SUPPLEMENTAL CASH FLOW INFORMATION





Cash paid during the period for interest


(240,183)


(163,956)

Cash paid during the period for income taxes


(808,048)


(251,354)






NON-CASH INVESTING AND FINANCING ACTIVITIES





Net changes in parent company investment


?


(7,430,516)

 

NON-GAAP FINANCIAL MEASURES

In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following non-GAAP measures to evaluate our business, measure our performance, identify trends affecting our business and assist us in making strategic decisions. Our non-GAAP measures are: Adjusted Income from Operations, Adjusted Net Income and Adjusted Net Income Per Share. These non-GAAP financial measures are not prepared in accordance with GAAP. They are supplemental financial measures of our performance only, and should not be considered substitutes for net income, income from operations or any other measure derived in accordance with GAAP and may not be comparable to similarly titled measures reported by other entities.

We define Adjusted Income from Operations as GAAP income from operations excluding the impact of certain non-recurring expenses, including IPO-related compensation and stock-based compensation expense and expenses related to COVID-19 protocols. We define Adjusted Net Income as GAAP net income excluding the tax-effected impact of certain non-recurring expenses and income, such as IPO-related compensation and stock-based compensation expense, expenses related to COVID-19 protocols and the impact of our PPP loan. We define Adjusted Net Income Per Share as GAAP net income per share excluding one-time expenses and income, including IPO-related compensation and stock-based compensation expense, expenses related to COVID-19 protocols and the impact of our PPP loan.

We use these non-GAAP measures, along with U.S. GAAP measures, to evaluate our business, measure our financial performance and profitability and our ability to manage expenses, after adjusting for certain one-time expenses, identify trends affecting our business and assist us in making strategic decisions. We believe these non-GAAP measures, when reviewed in conjunction with U.S. GAAP financial measures, and not in isolation or as substitutes for analysis of our results of operations under U.S. GAAP, are useful to investors as they are widely used measures of performance, and the adjustments we make to these non-GAAP measures provide investors further insight into our profitability and additional perspectives in comparing our performance over time on a consistent basis.

The following table reconciles Income from Operations to Adjusted Income from Operations, as well as net income to Adjusted Net Income and net income per share to Adjusted Net Income Per Share for the periods presented.


For the quarter ended June 30,


2022

2021

Income from operations .

1,729,349

3,320,925

Adjustments:



Non-recurring IPO-related compensation and stock-
based compensation expense

23,559

?

Adjusted income from operations

1,752,907

3,320,925











For the quarter ended June 30,


2022

2021

Net Income

1,170,530

2,507,901

Adjustments:



Non-recurring IPO-related compensation and stock-
based compensation expense

23,559

?

Total

1,194,089

2,507,901

Tax impact of adjustment at 18% effective rate

4,241

?

Adjusted net income

1,189,848

2,507,901




Net income per share

0.10

0.36

Adjustments:



Non-recurring IPO-related compensation and stock-
based compensation expense

0.00

?

Adjusted net income per share

0.10

0.36




 

SOURCE FGI Industries Ltd.


These press releases may also interest you

at 06:15
The "Biosimilar Therapeutic Peptides Global Market Report 2022: By Route, By Application, By Type" report has been added to  ResearchAndMarkets.com's offering. The global biosimilar therapeutic peptides market is expected to grow from $0.93 billion...

at 06:05
The "Lab Consumables: Global Strategic Business Report" report has been added to ResearchAndMarkets.com's offering. The global market for Lab Consumables estimated at US$12.6 Billion in the year 2020, is projected to reach a revised size of US$17.6...

at 06:05
Matador Resources Company ("Matador" or the "Company") today announced that its Board of Directors amended the Company's dividend policy pursuant to which the Company intends to pay cash dividends on its common stock of $0.15 per share per quarter...

at 06:05
NRG Energy, Inc. and Vivint Smart Home, Inc. today announced they have entered into a definitive agreement under which NRG will acquire Vivint for $12 per share or $2.8 billion in an all-cash transaction with an implied multiple of 6.3x run-rate...

at 06:05
The "Antivenoms: Global Strategic Business Report" report has been added to ResearchAndMarkets.com's offering. The global market for Antivenoms estimated at US$1.1 Billion in the year 2020, is projected to reach a revised size of US$1.8 Billion by...

at 06:05
The Global Chemical Sensor Market was worth USD 25.46 Billion in 2021. Due to the emergence of various growth inducing factors, the industry is poised to amass a valuation of USD 42.23 Billion by 2028, registering a CAGR of 7.5% over 2022-2028....



News published on 10 august 2022 at 16:05 and distributed by: