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FGI Industries Ltd. (FGI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 15.0% year over year to $35.6M; gross margin compressed 460 bps to 24.6% as customer marketing support and Bath Furniture new-business promotions weighed on margins .
  • Revenue was above Wall Street consensus, while EPS missed: consensus revenue $33.1M* vs actual $35.6M and consensus EPS -$0.15* vs actual diluted EPS -$0.04 . Values retrieved from S&P Global.
  • Management introduced FY 2025 guidance of $135–$145M revenue with adjusted operating income of -$2.0M to +$1.5M, reflecting tariff headwinds and conservative assumptions offset by new program wins and channel/market expansion .
  • Strategy execution continued across brands, products, and channels (BPC), with strong growth in Bath Furniture (+40.2% y/y), Shower Systems (+17.0% y/y), and “Other” (Kitchen Cabinets/covered bridge +68.3%) .
  • Key near-term catalysts: tariff clarity/mitigation actions, ramp of new customer programs, and geographic expansion (Europe, India); management emphasized prior tariff experience and sourcing diversification to navigate 2025 .

What Went Well and What Went Wrong

What Went Well

  • Strong topline growth above market driven by BPC strategy and new programs; Q4 revenue +15.0% y/y with segment strength in Bath Furniture (+40.2%), Shower Systems (+17.0%), and Other (+68.3%) .
  • Geographic momentum: Q4 revenue grew 14.7% (US), 9.9% (Canada), and 23.3% (Europe), highlighting broadened customer base and channels .
  • Management confidence and ongoing investments in brands, products, and channels; “Our strategic investments… are bearing fruit and driving revenue growth well above the overall market” — Dave Bruce .

What Went Wrong

  • Margin contraction: gross margin fell to 24.6% (-460 bps y/y) on customer marketing support and Bath Furniture promotional costs; operating income swung to a $1.3M loss from +$1.2M prior year .
  • Opex inflation: operating expenses rose 28.4% y/y to $10.0M as the company invested in BPC growth, pressuring profitability despite revenue gains .
  • Tariff headwinds and macro uncertainty temper FY25 profitability outlook; guidance embeds tariff pressure and assumes a relatively flat industry backdrop .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD)$29,370,949 $36,099,179 $35,594,426
Gross Profit ($USD)$8,963,302 $9,308,222 $8,742,333
Gross Margin %30.5% 25.8% 24.6%
Total Operating Expenses ($USD)$9,413,664 $9,374,048 $10,004,802
Adjusted Operating Income ($USD)$(328,873) $55,663 $(1,140,980)
Adjusted Operating Margin %(1.1)% 0.2% (3.2)%
Net Income (Loss) Attrib. to Shareholders ($USD)$163,564 $(550,137) $(402,328)
Diluted EPS ($USD)$0.02 $(0.06) $(0.04)

Segment Revenue ($USD)

SegmentQ2 2024Q3 2024Q4 2024
Sanitaryware$17.3M $21.5M $21.8M
Bath Furniture$4.0M $4.2M $3.5M
Shower Systems$5.9M $7.1M $6.7M
Other (Kitchen Cabinets)$2.1M $3.3M $3.6M

Liquidity KPIs

MetricQ2 2024Q3 2024Q4 2024
Cash and Cash Equivalents ($USD)$1.3M $3.0M $4.6M
Total Debt ($USD)$9.7M $12.5M $14.5M
Availability under Credit Facilities ($USD)$16.1M $13.3M $11.0M
Total Liquidity ($USD)$17.4M $16.3M $15.6M

Consensus vs Actual (Q4 2024)

MetricConsensusActual
Revenue ($USD)$33,090,500*$35,594,426
Primary EPS ($USD)-$0.15*-$0.04
Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2024$115–$128M $127–$131M Raised
Adjusted Operating IncomeFY 2024$2.8–$3.8M $(1.0)–$0.0M Lowered
Adjusted Net IncomeFY 2024$1.2–$2.0M $(1.0)–$0.0M Lowered
RevenueFY 2025N/A$135–$145M New
Adjusted Operating IncomeFY 2025N/A$(2.0)–$1.5M New
Adjusted Net IncomeFY 2025N/A$(1.9)–$1.0M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4)Trend
Tariffs/MacroTariffs not in Q2; freight/logistics challenges and SAP transition noted . Q3: freight costs pressure margins .Tariffs a central theme; mitigation via supplier/customer support, pricing adjustments, and sourcing diversification .Increasing headwind; mitigation in progress.
BPC Strategy & New ProgramsQ2: BPC investments; delayed shipments to be completed H2 . Q3: revenue growth driven by new programs across businesses/geographies .Continued strength; above-market organic growth expected from new customer programs and market/channel expansion .Positive momentum.
Product PerformanceQ2: Shower Systems +37%; Covered Bridge +66%; Sanitaryware/Bath down y/y . Q3: Record gross profit; Bath +64%; Shower +45%; Other +93% .Q4: Bath +40.2%; Shower +17.0%; Other +68.3%; Sanitaryware +5.8% .Broad-based growth sustained.
Regional TrendsQ3: US +21%, Canada +9%, Europe +39% .Q4: US +14.7%, Canada +9.9%, Europe +23.3% .Growth moderating but strong.
Supply Chain/SystemsQ2: SAP transition and overseas logistics challenges cited .SAP provides pricing flexibility amidst tariff volatility; supports customer/supplier adjustments .Operational tools improving.
Sourcing DiversificationNot emphasized in Q2/Q3.Active diversification to mitigate tariffs; potential positive impact in 2025 .Accelerating.
R&R Market OutlookQ2/Q3: Flat industry outlook with customers forecasting minimal growth .Still flat; buffer from new programs/market expansions .Stable but cautious.

Management Commentary

  • “FGI’s strategic investments in our brands, products and channels strategy is bearing fruit and driving revenue growth well above the overall market.” — Dave Bruce .
  • “The increasing tariff environment in 2025 remains fluid… We are confident that we can work through what comes given the close relationships we have cultivated over the years with our vendors and customers.” — Dave Bruce .
  • “Operating expenses increased 28.4% year-over-year to $10.0 million… due primarily to investing in initiatives related to our BPC growth strategy.” — Perry Lin .
  • “We are providing our initial 2025 guidance… revenue $135–$145 million… adjusted operating income -$2.0 to +$1.5 million… adjusted net income -$1.9 to +$1.0 million.” — Perry Lin .

Q&A Highlights

  • Tariff mitigation: Management plans supplier/customer cost sharing, timing/pricing adjustments, and sourcing diversification; prior experience navigating tariff cycles informs confidence .
  • Guidance bridge: FY25 outlook embeds tariff pressure, with upside from new programs and organic growth; conservative stance given timing/scale of tariff implementation .
  • Pricing mechanics: Preference for price adjustments (vs explicit surcharges) to manage volatility; SAP system enhances flexibility for customer/supplier pricing changes .
  • Market view: R&R end markets expected to be roughly flat; new program implementations and market/channel expansion to outpace industry .

Estimates Context

  • Revenue beat and EPS miss versus Wall Street consensus: consensus revenue $33.1M* vs actual $35.6M; consensus EPS -$0.15* vs actual -$0.04. Values retrieved from S&P Global. Actuals per company filings .
  • Coverage depth is limited (# of estimates: revenue 2; EPS 1)*, which can increase realized volatility around results. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue momentum is broad-based across segments and regions, validating BPC strategy, but margin pressure from promotional activity and marketing support is the near-term trade-off .
  • FY25 guidance embeds tariff headwinds; watch for updates on tariff trajectories, pricing pass-through, and sourcing diversification to assess margin normalization potential .
  • Liquidity remains adequate ($15.6M) to fund growth initiatives despite increased debt; monitor working capital and availability trends as programs ramp .
  • Bath Furniture and Shower Systems continue to scale across new customers/programs, supporting above-market growth even in flat R&R conditions .
  • SAP-enabled pricing agility is a tactical advantage amid tariff volatility; execution on price/timing adjustments will be key to defending margins .
  • Narrative catalysts: tariff clarity, faster-than-expected ramp of new programs, and evidence of gross margin recovery as promotional impacts fade .
  • Risk lens: sustained tariff pressure, elevated opex tied to growth investments, and freight/logistics costs could keep adjusted profitability near breakeven without pricing/sourcing offsets .