• Revenue: $35.6 million, a 15% year-over-year increase.
• Gross Profit: $8.7 million, a decrease of 3.2% compared to the prior year.
• Gross Margin: 24.6%, down from 29.2% in the prior year.
• Operating Expenses: Increased 28.4% to $10 million from $7.8 million in the prior year.
• GAAP Operating Income: Negative $1.3 million, down from a positive $1.2 million in the prior year.
• Total Liquidity: $15.6 million at the end of the fourth quarter.
• Sanitaryware Revenue: Increased 5.8% year-over-year in the fourth quarter.
• Bath Furniture Revenue: Increased 40.2% year-over-year.
• Shower Systems Revenue: Increased 17% due to positive demand trends.
• Covered Bridge Revenue: Increased 68.3% driven by order momentum and expanded geographies.
• 2025 Revenue Guidance: $135 million to $145 million.
• 2025 Adjusted Operating Income Guidance: Negative $2 million to positive $1.5 million.
• 2025 Adjusted Net Income Guidance: Negative $1.9 million to positive $1 million.

• Warning! GuruFocus has detected 3 Warning Sign with FGI.

Release Date: March 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• FGI Industries Ltd (NASDAQ:FGI) reported a 15% year-over-year increase in total revenue for the fourth quarter, reaching $35.6 million.
• Revenue growth was observed across all markets, with the US, Canada, and Europe experiencing increases of 14.7%, 9.9%, and 23.3%, respectively.
• The Bath Furniture segment saw a significant revenue increase of 40.2% year-over-year, driven by new business wins and market-aligned program pricing.
• The Shower Systems business reported a 17% increase in revenue, supported by new customer programs and a broader customer base.
• FGI's geographic expansion in Europe and India is expected to drive future growth, with strategic initiatives progressing well to fuel above-market organic growth.

Negative Points

• Gross profit decreased by 3.2% year-over-year to $8.7 million, with gross margin declining to 24.6% from 29.2% in the prior year.
• Operating expenses increased by 28.4% to $10 million, primarily due to investments in growth initiatives, resulting in a negative GAAP operating income of $1.3 million.
• The company faces a challenging tariff environment in 2025, which could impact costs and pricing strategies.
• FGI's guidance for 2025 includes a potential negative adjusted operating income of up to $2 million, indicating ongoing financial pressures.
• The industry outlook remains relatively flat, with minimal growth expected in 2025, posing a challenge for FGI to maintain its growth momentum.

Q & A Highlights

Q: Can you elaborate on the expected impact of tariffs on your business and how you plan to mitigate these effects? A: David Bruce, CEO, explained that FGI has previously navigated similar tariff challenges and is working closely with suppliers and customers to mitigate costs. They are also diversifying sourcing to manage the impact and feel comfortable with their current planning for the year.

Q: What assumptions are behind your outlook, given the flat industry growth projections for 2025? A: David Bruce, CEO, stated that despite a flat industry outlook, FGI expects growth through new programs and market expansions. The BPC strategy is designed to outpace the market, and many new programs are already in the implementation stage, contributing to their growth projections.

Q: Can you explain the components of your operating income outlook, which appears to be breakeven at the midpoint? A: David Bruce, CEO, noted that tariff pressures are a significant factor in the outlook. They have adjusted for these pressures, which are expected to impact the business throughout the year. However, new growth from markets and programs provides potential upside.

Q: How do you manage pricing in a volatile tariff environment? A: David Bruce, CEO, explained that FGI works closely with customers and suppliers to adjust pricing as necessary. They use their SAP system to maintain flexibility and adjust prices based on tariff changes, ensuring they can respond quickly to market conditions.

Q: Are you considering sourcing products from outside China due to tariffs? A: David Bruce, CEO, confirmed that FGI is actively diversifying its sourcing, which will positively impact their situation. This diversification is part of their strategy to manage tariff impacts and is an ongoing process.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.