FGI Industries' Q2 2025 Earnings Call: Navigating Tariff Turbulence and Gross Margin Contradictions

Impact of tariffs on business operations, China Plus One strategy and tariff impact, gross margin outlook, gross margin expectations and impact of tariffs, tariff impact on order pipeline and customer behavior are the key contradictions discussed in FGI Industries Ltd.'s latest 2025Q2 earnings call.



Revenue and Gross Profit Trends:
- FGI Industries reported total revenue of $31 million for Q2 2025, representing a 5.5% year-over-year increase.
- Gross profit was $8.7 million, a decrease of 2.9% compared to the prior year, with a gross margin of 28.1%, a decline of 240 basis points due to ongoing tariff-related impacts.

Segment Performance Variability:
- Sanitaryware revenue increased by 4.3% year-over-year, while Shower Systems reported a decline of 11.2%.
- Other revenue, primarily from Covered Bridge cabinetry, increased by 67.7%, driven by order momentum and geographic expansion.

Geographic Revenue Distribution:
- FGI's revenue in the U.S. declined by 0.4%, while it grew by 2% in Canada and 36.7% in Europe.
- The company's geographic expansion in Europe and India is expected to drive growth in upcoming quarters.

Impact of Tariffs and Strategic Initiatives:
- The ongoing tariff environment significantly impacted FGI's gross margin, leading to a decline of 240 basis points.
- The company is implementing a China Plus One strategy to diversify its global sourcing and mitigate tariff-related risks.