FGI Industries (FGI) 9 May 242024 Q1 Earnings call transcript

Good day, and welcome to the FGI Industries, Inc.

First Quarter 2024 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jae Chung, Vice President of FGI Industries. Please go ahead.

you. Thank Industries Results FGI Call. First XXXX to Conference Quarter Welcome CEO, are and Leading today and David Lin. the call Perry President Bruce; Officer, Chief Financial detailing control. conference you nature, outside that press market commentary by and financial a their after questions management's include would our on of forward-looking to yesterday which, today's results. I remind issued and and may recent the are to We like uncertain responses company's operational call release closed the statements,

management's on current and these forward-looking based Although materially. are results actual differ expectations may statements beliefs,

For that filings a Risk to refer the discussion Factors of some the the with could differ, of factors to latest results cause actual our SEC. section of please

issued a note reconciliations will appendix can find the that is financial of of this Perry we please presentation, conclusion measures the review followed on with turn you call from Dave update and press to website. Today's yesterday the Bruce, the company's by which in non-GAAP the Additionally, call open will these release from financial performance With available of for begin historical over line and in that, the review questions. I'll the At prepared strategic Dave. Lin. remarks,

everyone, brands, today. products morning, the and channels our our Good you Jae. BPC our we've thank made call investments strategic you, Thank first quarter joining growth organic I'm across initiatives for share to reflecting delighted and positive results, in strategy. our or

products R&R programs. declines the market modest outlook segment, remain innovative the While to anticipates our and in outpace confident we industry trends through in ability

levels. our growth. from normalization by demonstrated businesses growth primarily end Sanitaryware volume demand and across sustained first most Notably, witnessed shower inventory of fueled During gradual the markets of alongside businesses, quarter, and we year-over-year our

pricing our segment our market Bath a demand aligned upcoming design are faced Furniture about excited shift trends. towards While to to that new assortment lower-priced and more offerings, we is Furniture due Bath subdued

as business inventory Systems flow order levels the introductions improved. benefited pro new stabilized rebounded program from while Additionally, our customer and business Shower Sanitaryware

million particularly quarter, reporting a We XX.X% our $XX robust for the operational revenue of are performance, marking year-over-year. with pleased a total increase

also sustained products. Our improved margin gross XX.X%, on reflecting focus higher-margin to our

we growth geographic and momentum plans initiatives, about distribution by first our significant in positive quarter. encouraged we expansion Kingdom the witnessed India, establish presence invest our the our growth. holds optimistic market. the driving the new in are continue As we burgeoning Furthermore, promise United to in bath are partners to leveraging In in India for

about launch based trend-setting Isla our cutting-edge Isla With excited also cabinetry its platform. are redefine cabinetry design. imminent business emphasis digital on an of and on innovative personalization, to is the poised AI Porter, We custom premium Porter convenience software, kitchen high-end and products

are strategic for our I and objectives, With dedication our growth review. team financial initiatives a fuel long-term the XXXX beyond. detailed to to that, Our FGI well it expected and in hand commend for to for are future. Perry more the growth positioning over company I'll organic above-market in progressing their success

good the by I additional providing Thank begin morning, details you, on and Dave, quarter. everyone. will

and liquidity balance will sheet. you current update I our Next, on

will guidance I XXXX. our Finally, the with conclude year full for

XXXX, and by driven Systems revenue an continued Shower compared our first business. momentum quarter our totaled the of million, to of rebound the For of quarter business first XXXX, increase sanitary pro in in XX.X% $XX a

improvement. an weak, be to continued business Furniture but showing Bath is Our sign of

address demand the Demand impacted continues weaker down by current As trade and mentioned, to we in steady. the better mid-tier are the a In lower-priced offering. Bath to shower Furniture environment. launching product be demand Dave trends market category to response, remains

the million margin XXXX. Gross driven in to XX.X% an quarter was the in Gross prior by XX.X% higher-margin XX.X% driving $X.X continue compared We profit in continue to expect our year-over-year, growth in increase program year. products. new product our quarter, to the in and growth improved of to

operating Our was margin and ongoing Isla our growth $X.X year-over-year. to in and in due the expenses the in the $X.X operating down negative revenue the Higher initiatives, year our due million kitchen to quarter, higher and as accounted from breakeven cabinetry. GAAP million initiatives to investing inflation growth the operating Guard, $X.X for overall investment Porter loss Flush million prior income from including in expense for in increased were gross marketing spend quarter.

million liquidity an of sheet. to fund which believe from more Moving first which working end the highest we of seasonally in by FGI growth had largely At balance was the XXXX to year. the first our in year-end initiatives. decline is quarter increase driven in than total our requirements, total is quarter, sufficient of liquidity, $XX.X the The capital

nonrecurring are adjusted and certain adjusted net million leaving excludes income in prepared revenue operating range completes $XXX $XXX the that operating with the Operator, million for adjusted net of $X.X of guidance and of question are note ready to call. income million million income our in $X range remarks. adjusted million, the for $X.X million. We unchanged, to the XXXX now the to items. That question-and-answer we of our income $X.X range in guidance Please

Our question Securities. first with Greg Instructions] comes [Operator Northland from Gibas

unchanged. little of remaining your on in of relative maintained kind expectations Dave and to if Perry, if if bit quarterly guess, kind anything's results. expectations? maybe outlook your that cadence And QX? changing more upside in where drivers you congrats on of basis could I was on a Curious a range, changed implicit any the of there touch kind some

a Yes, yes, question. expected. Sure. as good it's QX And went

We some anymore, year, we've gotten the I word think we've we destocking think expect organic we past mention that. entered I and talked previously to the rebound. didn't want as did

seeing our in rollouts the nice on pro Sanitaryware business. mentioned some implementation rebound results program also had calls. So We're saw our we we that some shower a of previous of new new

And to rollouts the that made new expect continue as So in the of with in aligns we be adjustments. programs going executed second put look the we That's expected. that -- that half. any forward QX the we into why momentum additional we've It guidance will is primarily to place. haven't some

-- the cadence QX. are forward would cadence So and our of in pipeline say looking order as continuing we're to now, -- and I positive,

Got trends little discuss channel, you bit of kind out And changing to you're could key of pro you unfavorably? or that or high-level a in just anything your kind wondering but Okay. is seeing it. it alluded whether if in channels, your standing favorably

Yes.

I and -- we're think things. hearing seeing seeing what we're

our persistent. think there with for So moderated, in part, the still individual on Again, individual call, for which we're last part. And base year, mentioned a going to year some I our that or that not lot I that's pockets the see bright the and to that most spot. a will moderation faced material throughout be customers levels, has are about we of starting that, the the on be inventory most business. positions the of is heavy customers But lot inventory areas our talked last a market

And the the second there's so optimism organic a the are side. rebound well. The some there are business, as And more on half into builder pros what we're seeing seeing is especially looking as pro we of side positive. QX in going the a at

as discussed their Some some on as pro momentum of in reporting that business. our of builders some of feeling have far we're recovery. confidence that And the in building their

going and I that's lack the side, in -- rebound. is with on think we due of QX and was sort entered the QX. -- to destocking momentum expected So because And that of our we would I Sanitaryware now that's, say the have guide something just to the generally as again, it

we gross margin your maybe to continued shifts relates trend it about trend? to think to product expansion expect you expectations due QX, as should And to just Perfect. that how of those kind or line relative

margins, pretty see about based lot believe coming margins. of we've the a business We that those we'll able on Yes. our to but will new our And we maintain talked we that this way, before. maintain confident, be we're gross

overall will the as Isla the doing, we scale venture dollars Bridge Not but higher-margin businesses kitchens, Porter. Covered only digital gross accelerate a our of the which we're with like lot new particularly kitchens. We shower, also but margin

-- the business, continued dollars which healthy overall, dollar expect, see EBITDA goal, combine as our our on from the I percentage the from and our is EBIT is those we're as lower long-term grow So in to able midterm. growth gross going pro our our our would have our and dollars, think business a has with Sanitaryware growth. And you to rebounds right? So the gross the business percentages as think short kitchens, along we've margin business going we midterm while dollars, grow mentioned, also you're profit Sanitaryware margin scale, percentages to we as be to profit to we Sanitaryware gross higher

closing back remarks. like would to This David concludes our question-and-answer Bruce any turn over conference to session. for the I

Stay Thank and we with today. continued quarterly of our you support well, you for if call. speaking we next the appreciate to quarter, don't during time the connect We and on look interest your forward FGI.

The concluded. you conference presentation. today's has for now attending Thank

now may disconnect. You