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- **Revenue Resilience**: 5.5% YoY growth to $31 million, driven by international expansion and new product launches, despite U.S. market softness.
- **Margin Pressure**: Gross margin decline to 28.1% due to tariffs, but second-half recovery expected from diversification and new programs.
- **Strategic Diversification**: China Plus One strategy to reduce China reliance, with significant sourcing changes expected by Q2 2026.
- **Financial Discipline**: Tight cost control maintains liquidity at $16.4 million, supporting growth initiatives within guided ranges.

**【CEO Summary Section】**
- **Revenue Growth**: Q2 2025 revenue of $31 million, up 5.5% YoY, driven by Sanitaryware (+4.3%), Bath Furniture (+2.7%), and Covered Bridge (+67.7%). U.S. revenue declined 0.4%, while Canada (+2%) and Europe (+36.7%) showed strong growth.
- **Gross Margin Impact**: Gross margin fell to 28.1% (from 30.5% YoY) due to tariffs, causing a 2.9% decline in gross profit to $8.7 million. A China Plus One strategy is underway to diversify sourcing.
- **Strategic Initiatives**: Expansion in Europe and India, and the Isla Porter joint venture in India, are key growth drivers. New programs and introductions are expected to improve margins in the second half.
- **Tariff Management**: Customers paused orders due to tariff uncertainty, but the order pipeline has recovered. FGI is working closely with suppliers and customers to navigate the tariff environment.

**【CFO Financial Commentary】**
- **Financial Performance**: GAAP operating loss of $0.8 million (vs. -$0.5 million YoY) due to lower gross margin and higher operating expenses (+1.3% YoY) for growth initiatives.
- **Liquidity**: $16.4 million in total liquidity, sufficient for growth plans.
- **Guidance**: Full-year 2025 revenue of $135-$145 million, adjusted operating income of -$2 million to +$1.5 million, and adjusted net income of -$1.9 million to +$1 million.

**【Q&A Key Highlights】**
- **Tariff Impact**: Customers paused orders due to tariff uncertainty, but the order pipeline has recovered. FGI expects less severe impacts in the second half as diversification efforts progress.
- **Operating Expenses**: Cost control measures will continue, with a focus on strategic investments. Second-half gross margin improvement is expected from new programs.
- **Global Sourcing**: China Plus One strategy will significantly expand FGI's global sourcing footprint by Q2 2026, reducing reliance on China.
- **Gross Margin Outlook**: Upper 20s gross margin target for the second half, supported by new business wins and diversification efforts.

FGI Industries Ltd. (FGI) Q2 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

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Cost of Financing Services

Other Cost

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Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

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Net Interest Expense

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Net Income

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FGI

FGI fundamentals

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