EAST
HANOVER, N.J., March 27,
2023 /PRNewswire/ -- FGI Industries Ltd.
(Nasdaq: FGI) ("FGI" or the "Company"), a leading global supplier
of kitchen and bath products, today announced results for the
fourth quarter and full-year 2022.
FOURTH QUARTER 2022 HIGHLIGHTS
(As compared to the
fourth quarter of 2021)
- Total revenues of $31.8 million,
(39.1%) y/y
- Gross profit of $7.5 million,
gross margin of 23.7%, +920 bps y/y
- Net income of $0.7 million,
(32.1%) y/y
- Adjusted net income of $1.0
million, +41.0% y/y
- Adjusted operating income of $1.3
million, +89.4% y/y
FULL YEAR 2022 HIGHLIGHTS
(As compared to full year
2021)
- Total revenues of $161.7 million,
(11.1%) y/y
- Gross profit of $31.5 million,
gross margin of 19.5%, +180 bps y/y
- Net income of $3.7 million,
(53.5%) y/y
- Adjusted net income of $4.2
million, (33.6)% y/y
- Adjusted operating income of $5.7
million, (27.4)% y/y
MANAGEMENT COMMENTARY
"In our first year as a public company we made important
progress on our strategic initiatives and executed extremely well
operationally despite the challenges we faced in 2022, which
included continued inflation, ongoing supply chain disruption,
persistent global unrest and widespread customer de-stocking. As a
result, we are in an attractive position as we enter 2023," stated
David Bruce, President and Chief
Executive Officer of FGI. "I am extremely proud of our team's
strong operational performance during the fourth quarter, as we
were able to generate significant year-over-year gross margin
improvement and operating income growth despite customer
de-stocking, which continued to pressure top-line results.
The customer de-stocking during the fourth quarter was more
significant than expected, which caused our fourth quarter revenues
to fall short of our expectations. While we expect
de-stocking to continue to be a headwind into the early part of
2023, we have started to see customers' inventory levels begin to
normalize while order cadence slowly improved during the first two
months of 2023. This recovery is more evident within
the DIY channel as we expect de-stocking with our pro customers to
extend further into the second quarter. We believe end
customer demand has remained relatively stable, and with the
ongoing momentum in our internal growth initiatives, we are well
positioned for a return to revenue growth once channel inventory
levels normalize in the second half of 2023."
"I am very excited by the continued execution against our
strategic initiatives during 2022, driven in large part by our
focus on our Brands, Products, and Channels Strategy, or what we
refer to as BPC," noted Bruce. "During 2022, we continued to expand
our Covered Bridge kitchen cabinetry business with significant
growth in our dealer network and we also made further progress on
our shower systems business. In addition, we launched several
new product lines and brand initiatives during the year, and we
were very excited by the reception many of these products received
at the recent Kitchen and Bath show in Las Vegas, which is the premier kitchen and
bath design event for our industry. These are just some of
the exciting opportunities we are pursuing, and as we continue to
execute on our BPC strategy, we believe we are well positioned to
execute on our organic growth initiatives."
"We were able to generate year-over-year fourth quarter and full
year 2022 gross margin improvements of 920 basis points and 180
basis points, respectively, and we expect continued margin
improvements in 2023 as we execute on our financial performance
improvement initiatives," stated Perry
Lin, Chief Financial Officer of FGI. "In addition to
our focus on margin improvement, an important part of our financial
enhancement strategy is a focus on working capital management and
free cash flow generation. Following the supply-chain and
inflationary headwinds we faced in the first half of 2022, we made
further progress reducing our working capital usage during the
fourth quarter, driving improved free cash flow conversion.
As a result, we reported a 2022 ending cash balance of $10.1 million, which, combined with our borrowing
capacity, provides us with ample liquidity to support our organic
growth initiatives and the flexibility to pursue potential
strategic M&A."
"I am extremely proud of our team's dedication, tireless effort,
and relentless pursuit of our strategic objectives during 2022, a
year that saw the company execute its IPO, face unprecedented
supply-chain disruptions, and operate in an extremely volatile
market environment," continued Bruce. "As a result of all our
hard work, we enter 2023 in a favorable position to continue to
execute on our strategic initiatives and pursue our financial
goals. Repair and remodel spending tends to remain relatively
resilient through market cycles and we expect this to continue
during 2023. We believe the overall R&R market could
decline modestly during 2023, but there have been some signs of
improving trends and we remain cautiously optimistic regarding the
full year outlook. Based on our assumption for the market and
an expectation that de-stocking will continue to be a headwind in
the near-term, we are forecasting full-year 2023 revenues of
$145 million to $163 million, with improving growth trends as the
year progresses. We expect continued progress on our margin
improvement initiatives, resulting in projected 2023 adjusted
operating income of $6.0 million to
$6.8 million and adjusted net income
of $4.2 million to $4.7 million."
STRATEGIC UPDATE
FGI intends to drive long-term shareholder value through
execution of its Brands, Products and Channels ("BPC") strategy to
drive organic growth, enhanced financial performance, and efficient
capital deployment. FGI made important progress against these
strategic initiatives during 2022, positioning the Company to
pursue profitable growth during 2023. Some of the key
accomplishments during 2022 were as follows:
- BPC Strategy: FGI meaningfully expanded its custom
kitchen cabinetry business under its Covered Bridge brand,
generating strong growth in its dealer network, which increased to
135 dealers as of December 31, 2022,
up from 71 at the start of the year, with significant growth in the
dealer channel expected to continue into 2023 as evidenced by 14
additional dealers added in January. FGI has invested in new
manufacturing capacity to support the anticipated business
development opportunities for its kitchen cabinetry business both
in the dealer network and with large national customers. FGI
continued to grow its shower systems business, including a new
co-branded program at Lowe's that began in the fourth quarter of
2022. FGI launched several new product lines and brand
initiatives in 2022 across the Company's entire geographic
footprint, including new products under FGI's flagship Craft &
Main brand, the launch of the Jetcoat shower wall line to the
Canadian wholesale market, and in Germany, FGI has announced a major
sanitaryware product launch that should help drive a new cycle of
innovation and product development.
- Enhanced Financial Performance: Despite supply
chain challenges, inflationary pressures, and revenue pressures,
FGI was able to expand full year 2022 gross profit margin by 180
basis points. Gross margin was 23.7% during the fourth
quarter of 2022, up from 14.5% in the same period last year, and
the Company is positioned for continued gross margin improvement in
2023, as compared to the full year 2022, owing to lower freight
costs, pricing benefits, and more favorable revenue mix.
- Efficient Capital Deployment: Given a broad set of
attractive internal growth programs, FGI will continue to
prioritize capital deployment in support of its core organic growth
opportunities. Additionally, with total liquidity of
$23.8 million at December 31, 2022, the Company is positioned to
pursue possible opportunistic bolt-on acquisition opportunities to
supplement its organic growth strategy.
FOURTH QUARTER 2022 RESULTS
Revenue totaled $31.8 million
during the fourth quarter of 2022, a decrease of 39.1% compared to
the prior-year period, driven by continued inventory de-stocking
across all segments and geographies, partially offset by continued
pricing gains and a more favorable mix.
- Sanitaryware revenue was $20.2
million during the fourth quarter of 2022, a decrease of
$13.9 million compared to the
prior-year period. The revenue weakness was due in large part
to inventory de-stocking driven primarily by the pro segment, with
end customer demand remaining relatively stable.
- Bath Furniture revenue was $6.1
million during the fourth quarter of 2022, a decrease of
$6.4 million compared to the
prior-year period. While order patterns were expected to
begin to normalize in the back half of 2022, customers continued to
de-stock to reduce channel inventory levels during the fourth
quarter. While the Company is slowly seeing some improvement
in orders during the first quarter of 2023, it continues to expect
the normalization in order pattens to run through the next few
quarters as inventory levels adjust.
- Other revenue was $5.4 million
during the fourth quarter of 2022, essentially flat from the
prior-year period, as order timing in the shower business was
offset by continued growth in kitchen cabinetry.
Gross profit was $7.5 million
during the fourth quarter of 2022, a decrease of only 0.6% compared
to the prior-year period despite the significant inventory
de-stocking headwinds. Gross profit margin improved to 23.7%
during the fourth quarter of 2022, up 920 basis points from the
prior-year period, as measures put in place to mitigate the recent
margin headwinds benefited results. The improvement in the
Company's gross margin percentage is primarily attributable to
solid growth in higher margin products, continued pricing gains,
and a reduction in freight costs versus the elevated levels
experienced last year.
Operating income was $1.0 million
during the fourth quarter of 2022, up from $0.7 million in the prior-year period.
Operating income during the fourth quarter of 2022 included
non-recurring expenses of $0.3
million related to the Huida arbitration and anti-dumping
cases. Excluding these one-time expenses, adjusted operating
income was $1.3 million during the
fourth quarter of 2022, up $0.6
million or 89% from the prior-year period. The
increase in operating income was driven by the improved gross
margin performance and lower selling and distribution expense,
partially offset by the lower revenue. As a result, operating
margin was 3.2% during the fourth quarter, up from 1.4% in the same
period last year. Adjusted operating margin was 4.3%, up from 1.4%
in the same period last year.
For the three months ended December 31,
2022, the Company reported GAAP net income of $0.7 million, or $0.07 per diluted share, versus net income of
$1.0 million, or $0.15 per diluted share, in the fourth quarter of
2021. Net income for the fourth quarter of 2022 included an
after-tax charge of $0.3 million
related to the non-recurring Huida arbitration and anti-dumping
expenses, while the fourth quarter of 2021 included a tax benefit
of $0.3 million. Excluding
these items, adjusted net income for the fourth quarter of 2022 was
$1.0 million, or $0.11 per diluted share, versus adjusted net
income of $0.7 million, or
$0.10 per diluted share, for the same
period last year.
FULL YEAR 2022 RESULTS
During the twelve months ended December
31, 2022, revenue was $161.7
million, a decrease of $20.2
million or 11.1% compared to the prior-year period, driven
by inventory de-stocking and declines in the Bath Furniture
segment, partially offset by pricing gains and growth in Other
products.
- Sanitaryware revenue was $104.8
million during the full year 2022, unchanged compared to the
prior-year period, as growth in the
United States was offset by pressure in
Canada.
- Bath Furniture revenue was $29.5
million during the full year 2022, a decrease of 47%
compared to the prior-year period. The revenue pressure was a
result of a more significant inventory correction in the channel
combined with some more pronounced end market softness.
- Other revenue was $27.4 million
during the full year 2022, an increase of 23% compared to the
prior-year period, primarily driven by strength in the Company's
shower systems and kitchen cabinetry businesses.
During the twelve months ended December
31, 2022, gross profit was $31.5
million, a decrease of 2.2% compared to the prior-year
period, as the decline in volumes was offset by pricing gains, more
favorable mix, and lower freight costs. Gross profit margin
improved to 19.5% during the full year 2022, up 180 basis points
from the prior-year period, owing to an improved product mix,
pricing gains, and a reduction in freight costs versus the elevated
levels experienced last year.
Operating income was $5.1 million
during 2022, down from $7.7 million
in the prior-year period. Operating income during the full year
2022 included non-recuring charges of $0.6
million related to a one-time bonus expense related to our
IPO, arbitration costs and anti-dumping expenses, while full year
2021 results included non-recurring gain of $1.9 million related to PPP loan and tax
benefits. Excluding these items, adjusted operating income
was $5.7 million during the full year
2022, down $2.1 million or 27.4% from
the prior-year period. The decline in operating income was
driven by the reduction in revenue and higher general and
administrative costs following the Company's IPO, partially offset
by the gross margin recovery. As a result, operating margin
was 3.2% during 2022, down from 4.3% in the prior year. Adjusted
operating margin was 3.5% during 2022, down from 4.3% last
year.
For the twelve months ended December 31,
2022, the Company reported GAAP net income of $3.7 million, or $0.39 per diluted share, versus net income of
$7.9 million, or $1.13 per diluted share, in the prior-year
period. Net income for the full year 2022 included after-tax
expense of $0.5 million related to a
non-recurring IPO bonus expense, arbitration costs and anti-dumping
expenses, while the full year 2021 included after-tax benefit of
$1.6 million related to PPP loan and
tax benefits. Excluding these items, adjusted net income for
the full year 2022 was $4.2 million,
or $0.45 per diluted share, versus
adjusted net income of $6.3 million,
or $0.90 per diluted share, for the
same period last year.
FINANCIAL RESOURCES AND LIQUIDITY
As of December 31, 2022, the
Company had $10.1 million of cash and
cash equivalents, total debt of $9.8
million and $13.7 million of
availability under its credit facilities net of letters of credit.
Combined with cash and cash equivalents, total liquidity was
$23.8 million at December 31, 2022.
FINANCIAL GUIDANCE
We believe the long-term outlook for FGI's business and trends
in the repair and remodel markets remain attractive; however, the
inventory de-stocking and near-term macro pressures are likely to
continue weighing on results in the short-term. As a result, the
Company provides its fiscal 2023 guidance as follows:
- Total Revenue of $145 million and
$163 million
- Total Adjusted Operating Income of $6.0
million and $6.8 million
- Total Adjusted Net Income of $4.2
million to $4.7 million
The Company's 2023 guidance includes roughly $0.5 million of costs related to investments in a
new kitchen program. Guidance for adjusted operating income
and adjusted net income is presented on an adjusted basis and
excludes non-recurring items. All guidance is current as of
the time provided and is subject to change.
FOURTH QUARTER CONFERENCE CALL
FGI will conduct a conference call on Tuesday, March 28 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 April 11, 2023:
Domestic
Replay:
|
|
1-844-512-2921
|
International
Replay:
|
|
1-412-317-6671
|
Conference
ID:
|
|
10176084
|
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 and estimates of
customer de-stock and timing of market recoveries. 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, 2022, 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. CONSOLIDATED BALANCE
SHEETS
|
|
|
|
As of
|
|
As of
|
|
|
December 31, 2022
|
|
December 31, 2021
|
|
|
USD
|
|
USD
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
|
10,067,428
|
|
$
|
3,883,896
|
Accounts receivable,
net
|
|
|
14,423,800
|
|
|
26,350,650
|
Inventories,
net
|
|
|
13,292,591
|
|
|
21,263,961
|
Prepayments and other
current assets
|
|
|
2,588,081
|
|
|
1,546,623
|
Prepayments and other
receivables – related parties
|
|
|
5,515,708
|
|
|
3,119,822
|
Total current
assets
|
|
|
45,887,608
|
|
|
56,164,952
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT,
NET
|
|
|
1,269,971
|
|
|
387,655
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
Intangible
assets
|
|
|
—
|
|
|
42,683
|
Operating lease
right-of-use assets, net
|
|
|
9,815,572
|
|
|
8,087,969
|
Deferred tax assets,
net
|
|
|
1,265,539
|
|
|
1,478,589
|
Other noncurrent
assets
|
|
|
2,128,240
|
|
|
2,989,012
|
Total other
assets
|
|
|
13,209,351
|
|
|
12,598,253
|
Total
assets
|
|
$
|
60,366,930
|
|
$
|
69,150,860
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
Short-term
loans
|
|
$
|
9,795,052
|
|
$
|
14,657,280
|
Accounts
payable
|
|
|
14,718,969
|
|
|
32,009,851
|
Accounts payable –
related parties
|
|
|
104,442
|
|
|
—
|
Income tax
payable
|
|
|
33,350
|
|
|
1,220,939
|
Operating lease
liabilities – current
|
|
|
1,543,031
|
|
|
1,315,848
|
Accrued expenses and
other current liabilities
|
|
|
3,580,359
|
|
|
5,512,438
|
Total current
liabilities
|
|
|
29,775,203
|
|
|
54,716,356
|
|
|
|
|
|
|
|
OTHER
LIABILITIES
|
|
|
|
|
|
|
Operating lease
liabilities – noncurrent
|
|
|
7,847,317
|
|
|
6,884,794
|
Total
liabilities
|
|
|
37,622,520
|
|
|
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 December 31, 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 December 31, 2022 and
December 31, 2021*)
|
|
|
950
|
|
|
700
|
Parent's net
investment
|
|
|
—
|
|
|
7,549,010
|
Additional paid-in
capital
|
|
|
20,459,859
|
|
|
—
|
Retained
earnings
|
|
|
3,679,920
|
|
|
—
|
Accumulated other
comprehensive loss
|
|
|
(1,396,319)
|
|
|
—
|
Total shareholders'
equity
|
|
|
22,744,410
|
|
|
7,549,710
|
Total liabilities and
shareholders' equity
|
|
$
|
60,366,930
|
|
$
|
69,150,860
|
_______________________
|
*
|
Shares and per share
data are presented on a retroactive basis to reflect the
reorganization including the initial public offering on January 27,
2022.
|
|
|
The accompanying notes
are an integral part of these consolidated financial
statements.
|
FGI
INDUSTRIES LTD. CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
For the Years Ended
|
|
|
|
December 31, (Unaudited)
|
|
December 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
USD
|
|
|
USD
|
|
|
USD
|
|
|
USD
|
|
REVENUES
|
|
$
|
31,790,227
|
|
$
|
52,190,590
|
|
$
|
161,718,543
|
|
$
|
181,743,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF
REVENUES
|
|
|
24,267,371
|
|
|
44,623,152
|
|
|
130,209,538
|
|
|
149,740,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
7,522,856
|
|
|
7,567,438
|
|
|
31,509,005
|
|
|
32,202,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
|
|
4,224,614
|
|
|
5,000,963
|
|
|
17,533,028
|
|
|
17,636,820
|
|
General and
administrative
|
|
|
2,028,729
|
|
|
1,694,097
|
|
|
7,830,023
|
|
|
6,194,789
|
|
Research and
development
|
|
|
265,922
|
|
|
159,913
|
|
|
1,053,976
|
|
|
646,069
|
|
Total operating
expenses
|
|
|
6,519,265
|
|
|
6,854,973
|
|
|
26,417,027
|
|
|
24,477,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
|
1,003,591
|
|
|
712,465
|
|
|
5,091,978
|
|
|
7,724,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
2,720
|
|
|
26,433
|
|
|
3,159
|
|
|
37,143
|
|
Interest
expense
|
|
|
(202,573)
|
|
|
(123,330)
|
|
|
(600,798)
|
|
|
(411,185)
|
|
Other income,
net
|
|
|
(58,310)
|
|
|
71,308
|
|
|
46,211
|
|
|
1,516,862
|
|
Total other (expenses)
income, net
|
|
|
(258,163)
|
|
|
(25,589)
|
|
|
(551,428)
|
|
|
1,142,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
|
745,428
|
|
|
686,876
|
|
|
4,540,550
|
|
|
8,867,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
(66,021)
|
|
|
93,675
|
|
|
658,694
|
|
|
1,183,282
|
|
Deferred
|
|
|
104,394
|
|
|
(447,586)
|
|
|
201,936
|
|
|
(221,648)
|
|
Total provision for
income taxes
|
|
|
38,373
|
|
|
(353,911)
|
|
|
860,630
|
|
|
961,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
707,055
|
|
|
1,040,787
|
|
|
3,679,920
|
|
|
7,905,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
264,734
|
|
|
88,726
|
|
|
(741,587)
|
|
|
59,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
|
$
|
971,789
|
|
$
|
1,129,513
|
|
$
|
2,938,331
|
|
$
|
7,964,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER
OF ORDINARY SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic*
|
|
|
9,500,000
|
|
|
7,000,000
|
|
|
9,335,616
|
|
|
7,000,000
|
|
Diluted*
|
|
|
9,508,750
|
|
|
7,000,000
|
|
|
9,341,921
|
|
|
7,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic*
|
|
|
0.07
|
|
|
0.15
|
|
$
|
0.39
|
|
$
|
1.13
|
|
Diluted*
|
|
$
|
0.07
|
|
$
|
0.15
|
|
$
|
0.39
|
|
$
|
1.13
|
|
______________________
|
*
|
Shares and per share
data are presented on a retroactive basis to reflect the
reorganization finalized immediately prior to the initial public
offering on January 27, 2022.
|
FGI
INDUSTRIES LTD. CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
|
|
|
|
|
|
|
For the Years Ended
December 31,
|
|
|
2022
|
|
2021
|
|
|
USD
|
|
USD
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net income
|
|
$
|
3,679,920
|
|
$
|
7,905,916
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
218,662
|
|
|
287,078
|
Share-based
compensation
|
|
|
383,572
|
|
|
—
|
Provision for doubtful
accounts
|
|
|
261,381
|
|
|
30,825
|
(Reversal of)
provision of defective return
|
|
|
(1,696,263)
|
|
|
2,073,991
|
Foreign exchange
transaction loss
|
|
|
7,417
|
|
|
234,742
|
Adjustment for
Right-of-use assets
|
|
|
(2,552,649)
|
|
|
—
|
Gain on Forgiveness of
PPP loan
|
|
|
—
|
|
|
(1,680,900)
|
Deferred income
taxes
|
|
|
213,050
|
|
|
(215,194)
|
Loss on disposal of
property and equipment
|
|
|
—
|
|
|
14,825
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
13,361,732
|
|
|
(11,117,186)
|
Inventories
|
|
|
7,971,370
|
|
|
(12,955,619)
|
Prepayments and other
current assets
|
|
|
(2,886,225)
|
|
|
(741,286)
|
Prepayments and other
receivables – related parties
|
|
|
(593,591)
|
|
|
137,700
|
Other noncurrent
assets
|
|
|
860,770
|
|
|
(2,818,008)
|
Income
taxes
|
|
|
(1,187,589)
|
|
|
640,903
|
Right-of-use
assets
|
|
|
825,047
|
|
|
1,223,307
|
Accounts
payable
|
|
|
(17,290,882)
|
|
|
12,499,578
|
Accounts
payable-related parties
|
|
|
104,442
|
|
|
—
|
Operating lease
liabilities
|
|
|
1,189,706
|
|
|
(1,241,473)
|
Accrued expenses and
other current liabilities
|
|
|
(1,889,605)
|
|
|
2,503,480
|
Net cash provided by
(used in) operating activities
|
|
|
980,265
|
|
|
(3,217,321)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
|
Proceeds from disposal
of property and equipment
|
|
|
400
|
|
|
5,949
|
Purchase of property
and equipment
|
|
|
(1,064,223)
|
|
|
(57,839)
|
Net cash used in
investing activities
|
|
|
(1,063,823)
|
|
|
(51,890)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Net (repayments of)
proceeds from revolving credit facility
|
|
|
(4,862,228)
|
|
|
5,263,799
|
Net proceeds from
issuance of ordinary shares in IPO
|
|
|
11,872,796
|
|
|
—
|
Net changes in parent
company investment
|
|
|
—
|
|
|
(1,946,973)
|
Net cash provided by
financing activities
|
|
|
7,010,568
|
|
|
3,316,826
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE
FLUCTUATION ON CASH
|
|
|
(743,478)
|
|
|
(182,277)
|
|
|
|
|
|
|
|
NET CHANGES IN
CASH
|
|
|
6,183,532
|
|
|
(134,662)
|
CASH, BEGINNING OF
PERIOD
|
|
|
3,883,896
|
|
|
4,018,558
|
CASH, END OF
PERIOD
|
|
$
|
10,067,428
|
|
$
|
3,883,896
|
|
|
|
—
|
|
|
—
|
SUPPLEMENTAL CASH FLOW
INFORMATION
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
|
(755)
|
|
|
(406,859)
|
Cash paid during the
period for income taxes
|
|
|
(1,835,823)
|
|
|
(545,095)
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Net changes in parent
company investment
|
|
|
—
|
|
|
(1,946,973)
|
Non-GAAP Measures
In addition to the measures presented in our 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 Operating Income, Adjusted
Operating Margins and Adjusted Net Income. These non-GAAP financial
measures are not prepared in accordance with generally accepted
accounting principles in the United
States ("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 Operating Income as GAAP income from
operations excluding the impact of certain non-recurring expenses,
including expenses related to COVID–19 protocols, non-recurring
compensation expenses related to our IPO, and one-time anti-dumping
penalty expenses. We define Adjusted Net Income as GAAP net income
excluding the tax-effected impact of certain non-recurring expenses
and income such as expenses related to COVID–19 protocols, unusual
litigation fees and non-recurring compensation expenses related to
our IPO. We define Adjusted Operating Margins as adjusted income
from operations divided by revenue.
We use these non-GAAP measures, along with U.S. 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 U.S.
GAAP financial measures, and not in isolation or as substitutes for
analysis of our results of operations under U.S. 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 Operating Income and Adjusted Operating Margins, as well
as Net income to Adjusted Net Income for the periods presented.
|
|
For the three
months ended
|
|
|
For the year
ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2022
|
|
2021
|
|
|
2022
|
|
2021
|
|
Operating
income
|
|
1,003,590
|
|
712,465
|
|
|
5,091,978
|
|
7,724,730
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Non-recurring
IPO-related compensation
|
|
|
|
—
|
|
|
255,871
|
|
—
|
|
Arbitration legal
fee
|
|
221,258
|
|
—
|
|
|
221,258
|
|
—
|
|
Anti-dumping
penalty
|
|
124,865
|
|
—
|
|
|
124,865
|
|
—
|
|
COVID one-time
expenses
|
|
—
|
|
|
|
|
—
|
|
115,900
|
|
Adjusted operating
income
|
|
1,349,713
|
|
712,465
|
|
|
5,693,972
|
|
7,840,630
|
|
Revenue
|
|
31,790,227
|
|
52,190,590
|
|
|
161,718,543
|
|
181,943,027
|
|
Adjusted operating
margins
|
|
4.3
|
%
|
1.4
|
%
|
|
3.5
|
%
|
4.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three
months ended
|
|
|
For the year
ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2022
|
|
2021
|
|
|
2022
|
|
2021
|
|
Net
Income
|
|
707,054
|
|
1,040,787
|
|
|
3,679,920
|
|
7,905,915
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Non-recurring
IPO-related compensation
|
|
—
|
|
—
|
|
|
255,871
|
|
—
|
|
Arbitration legal
fee
|
|
221,258
|
|
—
|
|
|
221,258
|
|
—
|
|
Anti-dumping
penalty
|
|
124,865
|
|
—
|
|
|
124,865
|
|
—
|
|
COVID one-time
expenses
|
|
—
|
|
—
|
|
|
—
|
|
115,900
|
|
Other income (PPP
Loan)
|
|
—
|
|
—
|
|
|
—
|
|
-1,680,900
|
|
Total
|
|
1,053,177
|
|
1,040,787
|
|
|
4,281,914
|
|
6,340,916
|
|
Tax impact of
adjustment at 18% effective rate
|
|
-62,302
|
|
—
|
|
|
-108,359
|
|
281,700
|
|
GILTI high tax
re-selection
|
|
|
|
-338,044
|
|
|
|
|
-338,044
|
|
Adjusted net
income
|
|
990,875
|
|
702,743
|
|
|
4,173,555
|
|
6,284,572
|
|
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SOURCE FGI Industries Ltd.