管理層發言
Good day, and welcome to the FGI Industries, Inc. Second Quarter 2026 Results Conference Call. The operator provided instructions for the conference. Please note this event is being recorded. I would now like to turn the conference over to Jae Chung, Chief Financial Officer. Please go ahead.
Thank you. Welcome to FGI Industries 2026 Second Quarter Results Conference Call. Leading the call today are Chief Executive Officer, David Bruce; and Chief Financial Officer, Jae Chung. We issued a press release after the market closed yesterday detailing our recent operational and financial results. I would like to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the Risk Factors section of our latest filings with the SEC, including our Form 10-K for the year ended December 31, 2025. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in the press release issued yesterday and in the appendix of this presentation, which is available on the company's website. Today's call will begin with a performance review and strategic update from Dave Bruce, followed by a financial review from Jae Chung. At the conclusion of these prepared remarks, we will open the line for questions. With that, I'll turn the call over to Dave.
Thank you, Jae. Good morning, everyone, and thank you for joining our call today. I am pleased to report another quarter of revenue growth and improved operating expense performance for FGI. Revenue increased 2.9% year-over-year in the second quarter, and we remain disciplined in managing our cost structure, delivering lower operating expenses while continuing to invest in our brands, products and channels, or BPC, growth strategy. These efforts continue to strengthen our market position and create new opportunities for long-term growth. Our strongest performance came from our Sanitaryware and Shower Systems businesses, both of which delivered year-over-year revenue growth. Sanitaryware benefited from the normalization of customer purchasing activity following last year's tariff-related disruptions, along with contributions from recently launched customer programs. Our Shower Systems business also continued to gain traction as new products and expanded customer distribution contributed to growth. While market conditions remain mixed, particularly within our Bath Furniture and other product categories, we continue to manage the business with discipline and remain focused on opportunities where we see the strongest long-term potential. Looking ahead, we expect Covered Bridge cabinetry to resume growth in the second half of the year. We also expect continued momentum in our Shower Systems business as recently introduced products and customer programs continue to expand, providing additional opportunities for growth through the remainder of 2026. Although the external environment continues to evolve, including ongoing trade and tariff developments, I am proud of how our team has remained focused on execution. Their ability to adapt to changing market conditions while continuing to serve our customers has positioned FGI well for the remainder of the year. With that, I'll turn the call over to Jae for a more detailed review of our financial results.
Thank you, Dave, and good morning, everyone. I will begin by providing additional details on the quarter, followed by an update on our current liquidity and balance sheet. For the second quarter 2026, revenue totaled $31.9 million, an increase of 2.9% compared to the second quarter of 2025. Gross profit was $10.7 million in the quarter, an increase of 22.5% year-over-year. Our gross margin increased to 33.4% in the quarter compared to 28.1% in the prior year, driven by trade-related recoveries in the quarter. Our operating expenses decreased to $9.3 million compared to $9.5 million in the prior year due primarily to lower selling and distribution costs and optimizing our warehouse operations. These efforts are part of our broader initiative to diversify our supply chain and reduce freight costs. We expect to begin operations at a new warehouse in Texas to support distribution across the Southern United States. GAAP operating gain was $1.4 million, improving from an operating loss of $0.8 million in the prior-year period. The improvement in the operating loss was a result of trade-related recoveries, which were reflected in the cost of goods sold and a decrease in total operating expenses. GAAP net income attributable to shareholders was $1.3 million compared to a loss of $1.2 million in the same period last year. Adjusted net income was $1.2 million compared to a loss of $1.2 million in the same period last year. Moving to our balance sheet. At the end of the second quarter, FGI had $7.9 million in total liquidity. Our 2026 guidance remains unchanged and does not include trade-related recoveries. Our revenue guidance is $134 million to $141 million. The adjusted operating income guidance is $0.7 million to $2.5 million. The adjusted net income guidance is a loss of $0.3 million to a gain of $1.1 million. Please note that the guidance for adjusted operating income excludes certain nonrecurring items. Adjusted net income excludes certain nonrecurring items and includes an adjustment for minority interest. That concludes our prepared remarks. Operator, we are now ready for the question-and-answer portion of our call.
分析師問答
The operator provided instructions for the question-and-answer session. The first question comes from Reuben Garner with Benchmark Company.
You referenced tariffs a few times. I was wondering if you could offer some clarity on any refunds you may have received to date, what might be on the way? And then I guess, the net effect for you guys — I know this has been an issue over the last few years — but where is it all shaking out today?
Yes. Reuben, we're in the process of finalizing our 10-Q, and the specific information on the amount of the refund will be in the 10-Q to be released tomorrow. As far as further recoveries specifically related to IEEPA, we believe we've received all or the vast majority of it. So you can see the actual numbers tomorrow. And Dave, do you want to comment?
Yes. I think that we view any of these recoveries as really just a partial offset to the impact that we had to absorb going all the way back to last year. And we still continue to pay various trade-related expenses, not only tariffs but also other duties and VAT tax drawbacks that some of our suppliers are impacted by. And we expect, quite frankly, some additional tariff levies to be implemented at the beginning of next year. So this is an ongoing saga with the tariffs. It's not something that we anticipate is going to go away. And we continue to support our customers as we have recently and in the past. So we're looking at the recoveries as a one-time thing here, but the impact of tariffs is going to continue.
How about at your customers? What have you seen in terms of discounting relative to normal discounting this time of year? Has that increased at all with the changes in the tariffs or inventory levels or anything else at the retail level?
Yes. I think discounting is better described as promotional activity. We've worked closely with some of our customers on promotional opportunities. We drove some larger promotions with our sanitaryware in the quarter. The market overall, as we've discussed before, continues to be relatively flat in the R&R space. Promoting products is becoming a viable way for us to drive continued growth in market share. And I think that's what we see more than anything: opportunities to reach out to our customers and offer some discounting to try to drive incremental business.
Okay. And then last one for me. The FGI-branded products that you've been trying to grow over the last couple of years, what's next on that front? Any big opportunities coming in terms of expanding those higher-margin businesses for you?
Yes. I think that's a great question. We've become really successful and continue to be successful with our branded products, particularly in our Shower Systems business, including doors and related components. In the call, we mentioned our new distribution center that we are going to open by the end of this year in Houston. We're entering that quite shortly. That is going to be another avenue for us to expand territories on our wholesale business with our contract brand. So we're very excited about that. We've been working on that for a long time. Our BPC strategy, despite the fact that we also obviously are large supporters of our larger customers' proprietary and private label programs, continues to expand our own brand presence strategically throughout the market.
The next question comes from Greg Gibas with Northland Securities.
I wanted to maybe just ask more basically on your visibility on back half growth, given you reaffirmed guidance. What gives you confidence in how the back half will trend, whether it's your discussions with customers or overall demand you're seeing in the market? Has anything changed since you last provided guidance?
Yes. I think things have held where we have expected. The market, like I mentioned on the previous call, is relatively soft. There's still a cautionary tone in the market when it comes to building up inventory. Order placements have been relatively consistent and cadence on shipping. We didn't change guidance. Given the softer market, we are probably looking more toward the lower end of the guidance levels. But we're also optimistic because we still are implementing some new programs to customers that will launch. Some of those were delayed due to various market issues, not anything in particular to do with the sales. We have taken all that into account in deciding whether to change the guidance, and we want to keep the guidance where it is. That said, we would probably lean more to the lower side based on the cautionary tone in the marketplace and some of the pressures that exist.
Great. That's helpful. And then maybe similarly, if you could discuss the puts and takes of demand across your channels geographically and by customer type?
Sure. We've had a little more pressure in our Canadian sales. That's been the most pressured this year. Initially, in the first part of the year, it was across both our wholesale and retail channels. Wholesale is recovering slowly. Retail has been a bit of a struggle. There's been a lot of competitive and pricing pressures in that market, which we're addressing. In the U.S., it's been more of a cautionary, flat market other than where we're taking share on incremental gains from new programs. On our European business, it's been strong and consistent. Order cadence has been good. We've been expanding into the wholesale trade in the European market and have made good progress, particularly taking share on the wholesale side, which has been important in Europe.
This concludes our question-and-answer session. I would like to turn the conference back over to David Bruce for any closing remarks.
Thank you for your time and interest today. We really appreciate your continued support of FGI. Stay well. And if we don't connect during the quarter, we look forward to speaking with you on our next call.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.