Fgi Industries Ltd. · NASDAQ:FGI
Fgi Industries — Sidoti Micro Cap Conference (May 2022)
33 slides from Fgi Industries's conference presentation, May 12, 2022
Slide 1: Slide 1
Slide 2: Disclaimer
DISCLAIMER Certain matters discussed in this presentation contains forward-looking statements concerning our business, operations and financial performance and conditions, as well as our plans, objectives and expectations for our business operations and financial performance and condi tion. These st
Slide 3: FGI Industries at a Glance
FGI INDUSTRIES AT A GLANCE FGI is a leading “B-to-B” global supplier of Kitchen & Bath products with a reputation for Innovation, Quality & Service developed over 30 years in conjunction with our parent company, Foremost Groups Ltd. | TICKER: FGI | $180MM+ REVENUE BUSINESS IPO in January 2022 35% re
Slide 4: Company Overview
COMPANY OVERVIEW SANITARYWARE - 61% REPAI R/REMODEL - ~80% (T O IL E T S & S E A T S, S IN KS & P E DE S T A L S ) NEW C O NST RUCT ION - ~20% BATH FURNI TURE - 30% (V A N IT IE S , MIR R O R S , C A BIN E T S ) OTHER - 9% (C U S T O M KIT C H E N C A BIN E T R Y, S H O WE R DO O R S /WA L L S ) USA
Slide 5: Well-Positioned in the $100B+ Global Kitchen & Bath Market
WELL-POSITIONED IN THE $ 100B+ GLOBAL KITCHEN & BATH MARKET HIGH HIGHER QUALITY MI D -TO-HIGHER PRICE POINTS BETTER SUPPLY CHAIN BETTER OPERATIONS FRAGMENTED SUPPLIERS 60%+ OF INDUSTRY LOW HIGH MORE P O TENTIA L PRODUCT-CATEGORY O FFERI NGS HIGHER GROWTH P O TENTIA L 5
Slide 6: Executive Management Team
EXECUTIVE MANAGEMENT TEAM JOHN S. CHEN John Chen is the Executive Chairman of FGI Industries. Prior to his election, Mr. Chen spent the past 2 years serving as Executive Vice President of Corporate Development for Foremost Groups, Ltd. Prior to that he spent 11 years in the investment management ind
Slide 7: Key Investment Highlights
BPP OOK KEY INVESTMENT HIGHLIGHTS
Slide 8: Durable Competitive Advantages
DURABLE COMPETITIVE ADVANTAGES | A DIVERSIFIED MIX OF PRODUCTS, MARKET SEGMENTS AND SALES CHANNELS • Wide range of price points with a focus on “mid plus” segment • Numerous selling channels, 000’s of different SKU sets | TRADITION OF STRONG INNOVATION • Leading ‘on-trend’ products developed through
Slide 9: Diversified Product and Market Segments
DIVERSIFIED PRODUCT AND MARKET SEGMENTS FGI BR AN DS C O MP E TITO R S BEST BE TTE R By By By GOOD By 9
Slide 10: Global Business Footprint
GLOBAL BUSINESS FOOTPRINT U N I T E D STATES & C A N A D A | EAST HANO V ER, NEW JERSEY US Operations & Warehouse | HOBART, I ND I ANA Showerdoor Production Center Warehouse & Distribution | W O O D LAND , CALI FO RNI A Warehouse | TORONTO, CANADA Canada Operations & Warehouse EUROPE | D USSELD O RF
Slide 11: Large & Global Customer Base
LARGE & GLOBAL CUSTOMER BASE USA & C A NA DA EU E-COMMERCE 11
Slide 12: Key Drivers of Long-Term Shareholder Value
KEY DRIVERS OF LONG-TERM SHAREHOLDER VALUE • Re-invest in core businesses with evergreen expansion • Grow Brands, Product opportunities categories and sales Channels • Selective bolt-on acquisitions • Focus on higher incremental margin • Excess free cashflow for sales opportunities LONG-TERM VALUE d
Slide 13: BPC Strategy: Brands
BPC STRATEGY: BRANDS BATH KITCHEN O W NED B RAND S HAV E GO NE FRO M 0 % TO O V ER 3 9% O F SALES I N 1 1 Y EARS | Brands have higher gross margins (better pricing) B ETTER GRO SS MARGI N | Improving the quality, not just volume of brands | Multi-year brand development plan across multiple product s
Slide 14: BPC Strategy: New Product Categories
BPC STRATEGY: NEW PRODUCT CATEGORIES 2021 REVENUE CONTRAC: CALI TOUCHLESS THERMOSTATIC SHOWER VALVES AVENUE: MADISON E X I S T I N G P R O D U C T S - ~ 75% N E W P R O D U C T S - ~ 25 % JETCOAT: SHOWER WALL CRAFT & MAIN: BRANTLEY CONTRAC: HYGIENIC SINK 14
Slide 15: BPC Strategy: E-Commerce Sales & Analytics Strategy
BPC STRATEGY: E-COMMERCE SALES & ANALYTICS STRATEGY | 21% of current Group sales. Double-digit organic growth rates for years to come | Establishing “key vendor” reputation with leading HOM E P R O D U C T CATEGORY ONLINE - P E N E T R A TIO N RATES new-age customers including Wayfair.com, Build.com
Slide 16: BPC Strategy: Commercial & Geographic Sales Channels
BPC STRATEGY: COMMERCIAL & GEOGRAPHIC SALES CHANNELS CO M M E R CIAL GE O GR APHY | Traditionally a mass-retail B-to-B business, FGI started to invest in growing | Look for trusted international partners local commercial channel partners in 2005 (catering to hospitality, | Combine core competencies
Slide 17: Enhanced Financial Performance: Margin Accretion, Capital Efficient
ENHANCED FINANCIAL PERFORMANCE: MARGIN ACCRETION, CAPITAL EFFICIENT | MARGIN IMPROVEMENT Our growth and e f f i c i en c y plans expect to generate continuous improvement in operating margins (ERP implementation shortly after IPO) | LOW-CAPEX NEEDS FGI operates as a relatively capital-lite business
Slide 18: Efficient Capital Deployment "Bolt-On" Strategy
EFFICIENT CAPITAL DEPLOYMENT “BOLT-ON” STRATEGY 1 . MARKET EXAMPLE: SHOWER B US INESSES | Thousands of small suppliers | Hired shower-door team from competitor | Evergreen product lines, categories and geographies | Grew the business to a $3.4mm Gross Profit business in short time | Look for good te
Slide 19: Favorable End Market Trends
FAVORABLE END MARKET TRENDS 19
Slide 20: Large Addressable Market with GDP+ Growth
LARGE ADDRESSABLE MARKET WITH GDP+ GROWTH SUMMARY EST. 2021 RETAIL MARKET VALUE FOR THE KITCHEN AND BATH MARKETS | The addressable market of FGI’s current product portfolio represents less than 50% of the global Kitchen & Bath product market TOTAL KITCHEN (with over $150 billion of TAM) & BATH $158.
Slide 21: Repair and Remodel Markets Provide Stable Growth
REPAIR AND REMODEL MARKETS PROVIDE STABLE GROWTH CONSISTENT YEAR-OVER-YEAR GROWTH IN EXPENDITURES FOR IMPROVEMENTS AND REPAIRS ARE EXPECTED TO GROW R&R OUTSIDE OF EXTREME RECESSIONS YEARS THROUGHOUT 2022 AND INTO EARLY NEXT YEAR Leading Indicator of Remodeling Activity HISTORICAL R&R GROWTH First Qu
Slide 22: Financial Overview and First Quarter Highlights
FINANCIAL OVERVIEW AND FIRST QUARTER HIGHLIGHTS 22
Slide 23: Business Highlights – 1Q22
BUSINESS HIGHLIGHTS – 1Q22 Strong Revenue • First quarter revenues increased 20% to $43.6 million, primarily driven by growth in both Sanitaryware and Growth Other product categories, partially offset by declines in Bath Furniture Operating • Operating income for the first quarter was $0.7 million,
Slide 24: Current Global Supply Chain Pressures
CURRENT GLOBAL SUPPLY CHAIN PRESSURES | Global transit times and container shipping prices have faced unprecedented pressures in 2021 and 2022 (COVID-19 in factories, shipping delays, etc) | Discussions with freight forwarders and logistics firms indicate these pressures will continue throughout 202
Slide 25: 1Q22 Consolidated Financial Results
1Q22 CONSOLIDATED FINANCIAL RESULTS Total Revenue Gross Profit $MM $MM • Total revenue increased 19.8% during the $189.1 $32.4 first quarter driven by 3% volume growth $29.7 and 17% benefit from price/mix. $143.5 • Gross profit increased 2.8% to $7.5 million, primarily driven by sales growth, which
Slide 26: 1Q22 Business Line Results
1Q22 BUSINESS LINE RESULTS Sanitaryware Revenue Bath Furniture Revenue Other Revenue $MM $MM $MM $111.3 $55.1 $15.5 $88.4 $38.2 $8.2 $5.3 $28.2 $22.8 $11.5 $10.1 $2.1 1Q21 1Q22 2020 2021 1Q21 1Q22 2020 2021 1Q21 1Q22 2020 2021 • Sanitaryware revenue was $28.2 • Bath Furniture revenue was • Other rev
Slide 27: Financial Outlook
FINANCIAL OUTLOOK 2022 Financial Outlook Revenue Operating Income Net Income $182 – 189 million $6.5 – 7.5 million $5.0 – 6.0 million 27
Slide 28: Key Investment Characteristics
KEY INVESTMENT CHARACTERISTI CS TRUSTED GLOBAL STRONG ORGANIC ENHANCED “SPIN-OFF” VALUE-ACCRETIVE STRONG SUPPLIER GROWTH PROFITABILITY BOLT-ONS SHAREHOLDER ALIGNMENT We are global, diversified, and We pursue a “BPC” strategy: As a carve-out division from a We will engage in selective High insider ow
Slide 29: Appendix
BPP OOK 29 APPENDIX
Slide 30: Financial Summary
FINANCIAL SUMMARY (USD) 2019 2020 2021 1Q21 1Q22 REVENUES 126,282,212 134,827,701 181,943,027 36,375,689 43,575,239 GROSS PROFIT 25,439,069 28,404,640 32,202,408 7,317,031 7,524,586 GROSS MARGIN 20.14% 21.07% 17.70% 20.12% 17.27% SELLING AND DISTRIBUTION 14,917,601 15,487,306 17,636,820 3,940,470 4,
Slide 31: Financial Summary (continued)
FINANCIAL SUMMARY (continued) USE OF NON-GAAP FINANCIAL MEASURES In assessing the performance of our business, management utilizes a variety of financial and performance measures to assess our business performance, including to evaluate our ability to convert earnings from our operational performanc
Slide 32: Financial Summary (continued)
FINANCIAL SUMMARY (continued) The following tables reconcile these non-GAAP numbers to their most directly comparable GAAP measures: For the Quarter Ended 31-Mar-21 31-Mar-22 Income from operations 1,883,771 690,746 Non-recurring IPO-related compensation and -- 232,312 stock-based compensation expen
Slide 33: Slide 33
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