EAST
HANOVER, N.J., Nov. 9, 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 third quarter of 2022.
THIRD QUARTER 2022 HIGHLIGHTS
(As compared to the
Third Quarter of 2021)
- Total Revenues of $38.5 million,
(24.3%) y/y
- Operating Income of $1.7 million,
(7.7%) y/y
- Net Income of $1.3 million,
(8.9%) y/y
- Continued progress on core "BPC" organic growth drivers
- Significant gross margin improvement of 490 bps y/y
- Lowered full-year 2022 financial guidance
Total revenue decreased 24% on a year-over-year basis in the
third quarter of 2022, driven primarily by declines in Sanitaryware
and Bath Furniture, partially offset by continued growth in Other
categories (including shower systems and custom kitchen
cabinetry). Third quarter revenue increased modestly in
Europe, while the United States and Canada decreased.
The Company reported significant progress in its gross margin
initiatives, with sequential improvement in gross margin of 325
basis points versus the second quarter of 2022 and a year-over-year
improvement of 490 basis points compared to the prior-year
period. As a result, while revenue decreased 24% on a
year-over-year basis, gross profits decreased only 1.1%.
The Company reported operating income of $1.7 million in the third quarter of 2022, a
decline of $0.1 million versus the
prior-year period, as lower revenues and incremental public company
costs were partially offset by a more favorable mix and lower
freight costs.
For the three months ended September 30,
2022, the Company reported GAAP net income of $1.3 million, or $0.11 per diluted share, versus net income of
$1.4 million, or $0.20 per diluted share, in the third quarter of
2021.
MANAGEMENT COMMENTARY
"We made significant progress on our margin recovery initiatives
during the third quarter; however, customer de-stocking negatively
impacted our top-line results during the quarter," stated
David Bruce, President and Chief
Executive Officer of FGI. "End customer demand has declined
modestly during 2022 owing to macroeconomic headwinds and has
remained mostly in-line with our expectations entering the year;
however, the decision by key customers to aggressively reduce
channel inventories caused third quarter revenues to decline by 24%
versus the prior-year period and fall short of expectations.
The shortfall was driven primarily by our Canadian
sanitaryware business and our Bath Furniture end markets. We
remain encouraged by our key organic growth programs, as evidenced
by the 61% growth in our Other product categories during the
quarter, which includes our Jetcoat shower systems and Covered
Bridge custom kitchen cabinetry businesses. Based on customer
order planning, we expect our sales momentum to return once channel
inventory levels normalize into 2023, as our growth initiatives
remain on track despite the near-term market headwinds."
"I am excited to announce that FGI expanded its geographic
footprint into the United Kingdom
and Australia," noted Bruce. "This
is an important step in further growing our international presence,
which we started several years ago first in Canada and followed by Germany. We see tremendous opportunities
to leverage our existing product and operational base and to
successfully grow into these new geographic regions. Both the
UK and Australia have highly
complementary products and channel-strategies with our existing
Canadian and German businesses. We were recently awarded an
order program with Bunnings, the largest home-improvement retailer
in Australia, and we look forward
to many years of growth with that customer, among many others.
We are actively building our local talent base in both these
countries and look forward to meaningful long-term growth
opportunities in the years ahead."
"I am extremely proud of the significant progress we made on our
margin recovery initiatives despite the macro headwinds during the
third quarter, with gross margin improving by 325 basis points on a
sequential basis," continued Bruce. "Strong growth in our
newer, higher margin product lines, continued pricing momentum, and
a reduction in freight costs combined to drive the strong margin
performance, with gross margins quickly returning to levels
witnessed prior to the supply-chain disruptions just over a year
ago. We are confident in our ability to at least maintain
these levels of gross margins and expect operating margins to move
higher over time owing to growth in our higher margin product
categories, a rebound in Bath Furniture, and operating
leverage."
"In addition to the progress we made on our margin initiatives,
we also saw significant improvements to our liquidity and cash flow
conversion during the third quarter following the recent
supply-chain disruptions," stated Perry
Lin, Chief Financial Officer of FGI. "We were able to
reduce working capital usage during the quarter, driving improved
free cash flow conversion resulting in a third quarter of 2022
ending cash balance of $6 million,
which keeps us in a strong financial position and provides us with
ample liquidity to support our organic growth initiatives and any
potential strategic M&A."
"While our strong margin performance was able to offset a
portion of the headwinds faced during the third quarter, we are
adjusting our fiscal 2022 guidance to reflect the significant
channel inventory correction we experienced in the quarter,"
continued Bruce. "However, we think it is important to note
that our net income guidance is being reduced by less than
$1 million at the mid-point of the
revised range on a roughly $20
million reduction in our revenue expectation. We are
disappointed by our third quarter revenue performance, but we
remain confident in our strategy to drive organic growth and expect
improved results as customer inventory levels adjust."
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 third quarter were as follows:
- FGI continues to grow its custom kitchen cabinetry business
under its Covered Bridge brand, generating strong growth in its
dealer network, which increased to 126 at September 30, 2022, up from 71 at the start of
the year with significant growth in the dealer channel expected to
continue into 2023. The Company has also reached preliminary
agreements with certain large national customers to act as their
key custom kitchen suppliers, which should generate incremental
growth in 2023 and beyond. As stated last quarter, FGI has invested
in new manufacturing capacity to support the anticipated business
development opportunities both in the dealer network and with large
national customers.
- Beginning in the fourth quarter of 2022, the Company's Jetcoat
shower-wall program at Lowe's will be co-branded with their
private-label brand and will be called "Allen & Roth Shower
Wall System by Jetcoat". The new in-store point-of-purchase
marketing material will make the purchase of Jetcoat walls together
with FGI shower bases a much easier process while the strength of
the Jetcoat brand in the market is expected to drive incremental
sales into 2023.
- FGI will be launching several new product lines and brand
initiatives in the fourth quarter of 2022 and first quarter of 2023
across the Company's entire geographic footprint. FGI's flagship
Craft & Main brand will be launching new products including new
electronic bidet toilets that will give the Company a more complete
program of bidet toilets at various price points and features. In
Canada, FGI will officially launch
the Jetcoat shower wall line to the Canadian wholesale market in
November, and in Germany, FGI has
announced a major sanitaryware product launch that should help
drive a new cycle of innovation and product development. The
Company is confident that the coordinated launch of these new
products will further efforts to capitalize on the "BPC" strategy
as FGI continues to upgrade product offerings with features,
benefits, and styles that should drive incremental sales and profit
growth. FGI will be displaying many of its new products at the 2023
National Kitchen & Bath Show in Las
Vegas, NV in January 2023. FGI
will have over 2,000 square feet of exhibit space, the largest
exhibit in company history, and the exhibit will include all the
Company's brands including Covered Bridge Kitchens, Contrac, Craft
& Main bathroom products, and the Jetcoat Shower wall
systems.
- Management continues to evaluate possible bolt-on acquisition
opportunities to supplement its core organic growth strategy.
THIRD QUARTER 2022 RESULTS
Revenue totaled $38.5 million
during the third quarter of 2022, a decrease of 24.3% compared to
the prior-year period, driven by softer volume trends in
Sanitaryware and Bath Furniture due largely to customer's inventory
de-stocking, partially offset by continued pricing gains and a more
favorable mix. Revenue was negatively impacted by a slowdown
in the Pro channel in the U.S. and Canada.
- Sanitaryware revenue was $25.5
million during the third quarter of 2022, a decrease of 18%
compared to the prior-year period, primarily driven by volume
weakness in the pro channel in Canada and the U.S. The revenue weakness was
due in large part to inventory de-stocking, with end customer
demand remaining relatively stable.
- Bath Furniture revenue was $5.6
million during the third quarter of 2022, a decrease of 63%
compared to the prior-year period. While order patterns were
expected to begin to normalize in the back half of 2022, customers
continue to de-stock to reduce channel inventory levels. The
Company continues to expect a normalization in order pattens in the
coming quarters as inventory levels adjust.
- Other revenue was $7.4 million
during the third quarter of 2022, an increase of 61% compared to
the prior-year period, primarily driven by continued volume growth
in the shower systems and Covered Bridge custom-kitchen cabinetry
businesses.
Gross profit was $8.0 million
during the third quarter of 2022, a decrease of 1.1% compared to
the prior-year period, as volume weakness was offset by pricing
gains, a more favorable mix, and lower freight costs. Gross
profit margin improved to 20.9% during the third quarter of 2022,
up 490 basis points from the prior-year period, as measures put in
place to mitigate the recent margin headwinds benefitted
results. The improvement in the Company's gross margin
percentage is primarily attributable to solid growth in higher
margin products, such as shower systems and kitchen cabinetry,
continued pricing gains, and a reduction in freight costs versus
the elevated levels experienced last year. The Company expects the
positive factors that drove the strong margin performance in the
third quarter to continue.
Operating income was $1.7 million
during the third quarter of 2022, down from $1.8 million in the prior-year period. The
decrease in operating income was driven by the revenue decline,
partially offset by a significant improvement in gross
margin. As a result, operating margin was 4.3% during the
third quarter, up from 3.6% in the same period last year.
FINANCIAL RESOURCES AND LIQUIDITY
As of September 30, 2022, the
Company had $6 million of cash and
cash equivalents, total debt of $13
million and $5 million of
availability under its credit facility, net of letters of credit.
Combined with cash and cash equivalents, total liquidity was
$11 million at September 30, 2022.
FINANCIAL GUIDANCE
The outlook for FGI's business and the long-term trends in the
repair and remodel markets remain attractive; however, the
inventory de-stocking and near-term macro pressures are weighing on
results. As a result, the Company revised its fiscal 2022 guidance
as follows:
- Total Revenue of between $164
million and $168 million
- Total Operating Income of between $6.0
million and $6.5 million
- Total Net Income of $4.5 million
to $5.0 million
THIRD QUARTER CONFERENCE CALL
FGI will conduct a conference call on Thursday, November 10 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:
|
|
1-844-826-3035
|
International
Live:
|
|
1-412-317-5195
|
To listen to a replay of the teleconference, which will be
available through November 24,
2022:
Domestic
Replay:
|
|
1-844-512-2921
|
International
Replay:
|
|
1-412-317-6671
13727517
|
Conference
ID:
|
|
10172085
|
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 Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
USD
|
|
|
USD
|
|
|
USD
|
|
|
USD
|
|
REVENUES
|
|
$
|
38,544,062
|
|
$
|
50,886,390
|
|
$
|
129,928,316
|
|
$
|
129,752,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF
REVENUES
|
|
|
30,503,452
|
|
|
42,757,388
|
|
|
105,942,167
|
|
|
105,117,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
8,040,610
|
|
|
8,129,002
|
|
|
23,986,149
|
|
|
24,634,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
|
|
4,268,355
|
|
|
4,606,648
|
|
|
13,308,414
|
|
|
12,635,857
|
|
General and
administrative
|
|
|
1,865,325
|
|
|
1,517,753
|
|
|
5,801,294
|
|
|
4,500,692
|
|
Research and
development
|
|
|
238,638
|
|
|
197,032
|
|
|
788,054
|
|
|
486,156
|
|
Total operating
expenses
|
|
|
6,372,318
|
|
|
6,321,433
|
|
|
19,897,762
|
|
|
17,622,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
|
1,668,292
|
|
|
1,807,569
|
|
|
4,088,387
|
|
|
7,012,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
306
|
|
|
(68)
|
|
|
439
|
|
|
10,710
|
|
Interest
expense
|
|
|
(159,033)
|
|
|
(120,560)
|
|
|
(398,225)
|
|
|
(287,855)
|
|
Other income (loss),
net
|
|
|
71,750
|
|
|
(59,393)
|
|
|
104,521
|
|
|
1,445,554
|
|
Total other (expenses)
income, net
|
|
|
(86,977)
|
|
|
(180,021)
|
|
|
(293,265)
|
|
|
1,168,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
|
1,581,315
|
|
|
1,627,548
|
|
|
3,795,122
|
|
|
8,180,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
254,917
|
|
|
256,077
|
|
|
724,716
|
|
|
1,089,607
|
|
Deferred
|
|
|
54,256
|
|
|
(24,343)
|
|
|
97,541
|
|
|
225,938
|
|
Total provision for
income taxes
|
|
|
309,173
|
|
|
231,734
|
|
|
822,257
|
|
|
1,315,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
1,272,142
|
|
|
1,395,814
|
|
|
2,972,865
|
|
|
6,865,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
(879,727)
|
|
|
(354,891)
|
|
|
(1,006,323)
|
|
|
(29,655)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
|
$
|
392,415
|
|
$
|
1,040,923
|
|
$
|
1,966,542
|
|
$
|
6,835,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER
OF ORDINARY SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic*
|
|
|
9,280,220
|
|
|
7,000,000
|
|
|
9,280,220
|
|
|
7,000,000
|
|
Diluted*
|
|
|
11,902,473
|
|
|
7,000,000
|
|
|
11,902,473
|
|
|
7,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic*
|
|
|
0.14
|
|
|
0.20
|
|
$
|
0.32
|
|
$
|
0.98
|
|
Diluted*
|
|
$
|
0.11
|
|
$
|
0.20
|
|
$
|
0.25
|
|
$
|
0.98
|
|
|
*
|
Shares and per share
data are presented on a retroactive basis to reflect the
reorganization on January 27, 2022.
|
|
|
The accompanying notes
are an integral part of these unaudited condensed consolidated
financial statements.
|
FGI
INDUSTRIES LTD.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
As of
|
|
As of
|
|
|
September 30, 2022
|
|
December 31, 2021
|
|
|
USD
|
|
USD
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
|
5,981,019
|
|
$
|
3,883,896
|
Accounts receivable,
net
|
|
|
18,182,819
|
|
|
26,350,650
|
Inventories,
net
|
|
|
15,987,667
|
|
|
21,263,961
|
Prepayments and other
current assets
|
|
|
2,647,841
|
|
|
1,546,623
|
Prepayments and other
receivables – related parties
|
|
|
5,715,890
|
|
|
3,119,822
|
Total current
assets
|
|
|
48,515,236
|
|
|
56,164,952
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT,
NET
|
|
|
1,592,582
|
|
|
387,655
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
Intangible
assets
|
|
|
—
|
|
|
42,683
|
Operating lease
right-of-use assets, net
|
|
|
9,631,504
|
|
|
8,087,969
|
Deferred tax assets,
net
|
|
|
1,369,937
|
|
|
1,478,589
|
Other noncurrent
assets
|
|
|
2,333,399
|
|
|
2,989,012
|
Total other
assets
|
|
|
13,334,840
|
|
|
12,598,253
|
Total
assets
|
|
$
|
63,442,658
|
|
$
|
69,150,860
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
Short-term
loans
|
|
$
|
13,007,649
|
|
$
|
14,657,280
|
Accounts
payable
|
|
|
13,752,256
|
|
|
32,009,851
|
Accounts payable –
related parties
|
|
|
614,633
|
|
|
—
|
Income tax
payable
|
|
|
172,790
|
|
|
1,220,939
|
Operating lease
liabilities – current
|
|
|
1,238,857
|
|
|
1,315,848
|
Accrued expenses and
other current liabilities
|
|
|
4,017,469
|
|
|
5,512,438
|
Total current
liabilities
|
|
|
32,803,654
|
|
|
54,716,356
|
|
|
|
|
|
|
|
OTHER
LIABILITIES
|
|
|
|
|
|
|
Operating lease
liabilities – noncurrent
|
|
|
8,491,300
|
|
|
6,884,794
|
Total
liabilities
|
|
|
41,294,954
|
|
|
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 September 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 September 30, 2022 and
December 31, 2021*)
|
|
|
950
|
|
|
700
|
Parent's net
investment
|
|
|
—
|
|
|
7,549,010
|
Additional paid-in
capital
|
|
|
20,834,944
|
|
|
—
|
Retained
earnings
|
|
|
2,972,865
|
|
|
—
|
Accumulated other
comprehensive loss
|
|
|
(1,661,055)
|
|
|
—
|
Total shareholders'
equity
|
|
|
22,147,704
|
|
|
7,549,710
|
Total liabilities and
shareholders' equity
|
|
$
|
63,442,658
|
|
$
|
69,150,860
|
*
|
Shares and per
share data are presented on a retroactive basis to reflect the
reorganization on January 27, 2022.
|
|
The accompanying notes
are an integral part of these unaudited condensed consolidated
financial statements.
|
FGI
INDUSTRIES LTD.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine
Months Ended September 30,
|
|
|
|
2022
|
|
2021
|
|
|
|
USD
|
|
USD
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net income
|
|
$
|
2,972,865
|
|
$
|
6,865,129
|
|
Adjustments to
reconcile net income to net cash provided by (used) in operating
activities
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
182,404
|
|
|
213,281
|
|
Share-based
compensation
|
|
|
260,652
|
|
|
—
|
|
Provision for doubtful
accounts
|
|
|
102,842
|
|
|
35,200
|
|
(Reversal of)
provision of defective return
|
|
|
(1,456,022)
|
|
|
2,133,028
|
|
Foreign exchange
transaction loss
|
|
|
(58,901)
|
|
|
289,406
|
|
Interest
expenses
|
|
|
398,225
|
|
|
287,855
|
|
Gain on Forgiveness of
PPP loan
|
|
|
—
|
|
|
(1,680,900)
|
|
Deferred income
taxes
|
|
|
108,653
|
|
|
226,356
|
|
Loss on disposal of
property and equipment
|
|
|
—
|
|
|
(3,000)
|
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
9,521,011
|
|
|
(10,444,328)
|
|
Inventories
|
|
|
5,276,294
|
|
|
(10,695,034)
|
|
Prepayments and other
current assets
|
|
|
146,324
|
|
|
(500,787)
|
|
Prepayments and other
receivables – related parties
|
|
|
(3,895,562)
|
|
|
(13,736)
|
|
Other noncurrent
assets
|
|
|
655,614
|
|
|
(3,316,292)
|
|
Income
taxes
|
|
|
(1,048,150)
|
|
|
621,442
|
|
Right-of-use
assets
|
|
|
(1,543,534)
|
|
|
910,468
|
|
Accounts
payable
|
|
|
(18,257,595)
|
|
|
14,070,256
|
|
Accounts
payable-related parties
|
|
|
614,633
|
|
|
140,208
|
|
Operating lease
liabilities
|
|
|
1,529,515
|
|
|
(934,063)
|
|
Accrued expenses and
other current liabilities
|
|
|
(1,841,239)
|
|
|
2,656,952
|
|
Net cash provided by
(used in) operating activities
|
|
|
(6,331,971)
|
|
|
861,442
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Proceeds from disposal
of property and equipment
|
|
|
400
|
|
|
3,000
|
|
Purchase of property
and equipment
|
|
|
(55,450)
|
|
|
(13,261)
|
|
Prepayment for
purchase of building and sub-lease of land
|
|
|
(1,295,924)
|
|
|
—
|
|
Net cash used in
investing activities
|
|
|
(1,350,974)
|
|
|
(10,261)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net proceeds from
(repayments of) revolving credit facility
|
|
|
(1,649,631)
|
|
|
4,198,817
|
|
Net proceeds from
issuance of ordinary shares in IPO
|
|
|
12,370,800
|
|
|
—
|
|
Net changes in parent
company investment
|
|
|
—
|
|
|
(5,550,149)
|
|
Net cash provided by
(used in) financing activities
|
|
|
10,721,169
|
|
|
(1,351,332)
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE
FLUCTUATION ON CASH
|
|
|
(941,101)
|
|
|
(318,011)
|
|
|
|
|
|
|
|
|
|
NET CHANGES IN
CASH
|
|
|
2,097,123
|
|
|
(818,162)
|
|
CASH, BEGINNING OF
PERIOD
|
|
|
3,883,896
|
|
|
4,018,558
|
|
CASH, END OF
PERIOD
|
|
$
|
5,981,019
|
|
$
|
3,200,396
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW
INFORMATION
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
|
(395,987)
|
|
|
(285,344)
|
|
Cash paid during the
period for income taxes
|
|
|
(1,755,531)
|
|
|
(470,111)
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Net changes in parent
company investment
|
|
|
—
|
|
|
(5,550,149)
|
|
The accompanying notes
are an integral part of these unaudited condensed consolidated
financial statements.
|
Non-GAAP 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 Operating Margins and Adjusted Net
Income. 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 Operating Margins as adjusted income from
operations divided by revenue.
We use these non-GAAP measures, along with 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 GAAP
financial measures, and not in isolation or as substitutes for
analysis of our results of operations under 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 and Adjusted Operating Margins, as
well as Net income to Adjusted Net Income for the periods
presented.
|
|
For the three
months ended
|
|
|
For the nine
months ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
2022
|
|
2021
|
|
|
2022
|
|
2021
|
|
|
Income from
operations
|
|
1,668,292
|
|
1,807,569
|
|
|
4,088,387
|
|
7,012,265
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring
IPO-related compensation
|
|
—
|
|
—
|
|
|
255,871
|
|
—
|
|
|
COVID one-time
expenses
|
|
—
|
|
—
|
|
|
—
|
|
115,900
|
|
|
Adjusted income from
operations
|
|
1,668,292
|
|
1,807,569
|
|
|
4,344,258
|
|
7,128,165
|
|
|
Revenue
|
|
38,554,062
|
|
50,886,390
|
|
|
129,928,316
|
|
129,752,437
|
|
|
Adjusted operating
margins
|
|
4.3
|
%
|
3.6
|
%
|
|
3.3
|
%
|
5.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
For the nine
months ended
|
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Net
Income
|
|
1,272,142
|
|
1,395,814
|
|
2,972,865
|
|
6,865,129
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Non-recurring
IPO-related compensation
|
|
—
|
|
—
|
|
255,871
|
|
—
|
|
Other income (PPP
Loan)
|
|
—
|
|
—
|
|
—
|
|
(1,680,900)
|
|
COVID one-time
expenses
|
|
—
|
|
—
|
|
—
|
|
115,900
|
|
Total
|
|
1,272,142
|
|
1,395,814
|
|
3,228,736
|
|
5,300,129
|
|
Tax impact of
adjustment at 18% effective rate
|
|
—
|
|
—
|
|
(46,057)
|
|
281,700
|
|
Adjusted net
income
|
|
1,272,142
|
|
1,395,814
|
|
3,182,679
|
|
5,581,829
|
|
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SOURCE FGI Industries Ltd.