Fgi Industries Ltd. (FGI) SEC Filing 10-Q Quarterly Report for the period ending Saturday, September 30, 2023

Exhibit 99.1

​

​

FGI INDUSTRIES ANNOUNCES THIRD QUARTER 2023 RESULTS

​

EAST HANOVER, N.J., November 8, 2023

​

THIRD QUARTER 2023 HIGHLIGHTS

(As compared to the third quarter of 2022)

​

​

* Adjusted net income and Adjusted operating income constitute non-GAAP financial measures. Please see the attached appendix for details.

​

MANAGEMENT COMMENTARY

​

“We are beginning to see some signs of normalization in inventory levels and order patterns in certain categories; however, inventory de-stocking continues to impact our results, with the recent macro headwinds impacting overall demand across our categories,” stated David Bruce, President and Chief Executive Officer of FGI.    “While our top-line results are facing challenges, we continue to see the benefits of our margin improvement initiatives, with gross margin improving 530 basis points from last year.  As a result, our gross profit declined only 3% during the third quarter despite the 22% drop in revenues.  We could see some short-term variability in our gross margins as we invest in our growth initiatives and see a rebound in our pro channel and bath furniture business, but we believe that our improved gross margin profile should be sustainable longer-term owing to our strategic focus on higher-margin categories and improved operating scale.”  

​

“While we are disappointed by our recent revenue results, we are encouraged by our Brands, Products, and Channel (BPC) growth initiatives, which will enable us to drive above-market growth in the coming years,” noted Bruce.  “We remain steadfast in our efforts to continue our strategic investments in this promising direction.  Despite the recent market dislocation, we once again made important progress on our strategic targets during the third quarter.  Last quarter we announced an important licensing agreement that gives us access to a new overflow toilet technology, which we think will be an important differentiator in the market, and we are excited to announce that we have expanded this agreement to include our Canadian market.  We look forward to launching this platform as well as many other new offerings at the Kitchen & Bath show in early 2024.  During the quarter, we also made a strategic investment with a major retail customer to lay the groundwork for future growth. We also continue to make key progress on our new digital custom kitchen cabinetry venture, which we have discussed in recent quarters and expect to be an important driver for our kitchen business.”  

​

“We maintained our strict financial discipline during the quarter, resulting in a cash balance of nearly $5.4 million at the end of the third quarter, which combined with our borrowing capacity, resulted in total liquidity of $20.9 million,” stated Perry Lin, Chief Financial Officer of FGI. “Given the successful implementation of our BPC strategy, we continue to believe the highest and best use of our capital is for internal investment and this will remain our priority in the near-term; however, we will also continue to evaluate opportunities for strategic M&A.”

​

“We continue to make progress on our strategic growth initiatives, and we have several exciting programs that should contribute to improved growth opportunities in the coming quarters,” continued Bruce.  “The demand environment remains uneven, which is prolonging the de-stocking headwinds that have impacted results over the last year, with several industry forecasters predicting mid-to-high single-digit declines in home improvement industry spending in 2024.  While this will impact our business, we believe our execution of the BPC strategy, coupled with our strategic investments, will allow us to outpace the negative market predictions and should enable FGI to drive organic growth in the coming year.  As we have previously mentioned, we continue to invest in our business for the long-term, regardless of the near-term market and business environment.”

​