Fgi Industries Ltd. · NASDAQ:FGI
Fgi Industries — Q1 2023 Earnings Presentation
28 slides from Fgi Industries's earnings presentation, May 2023
Slide 1: Investor Presentation
Investor Presentation May 2023
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 condition. These sta
Slide 3: FGI Industries at a Glance
FGI Industries at a Glance New Construction 20% Leading global supplier of Kitchen and Bath Products FGI is a leading global supplier of Kitchen and Bath products with a Repair/Remodel 80% reputation of Innovation, Quality and Service developed over 30 years in conjunction with our parent company, F
Slide 4: Company Overview: Diverse Business Mix
Company Overview Diverse Business Mix Provides Stability Sanitaryware Bath Furniture Shower Systems Other (Kitchen Cabinetry, etc.) $105MM in 2022 Sales (65% of sales) $30MM in 2022 Sales (18% of sales) $22MM in Sales (14% of sales) $6MM in Sales (4% of sales) $12.5Bn market opportunity
Slide 5: Global Operational Footprint and Customer Base
Company Overview United States & Canada Global Operational Footprint and Customer Base Europe United States & Canada Europe Asia-Pacific E-Commerce • EAST HANOVER, NEW JERSEY • DUSSELDORF, GERMANY • TANGSHAN, CHINA US Operations & Warehouse European Operations Product Purchasing & Development Center
Slide 6: Experienced Management Team
Company Overview Experienced Management Team John S. Chen David Bruce Perry Lin Bob Kermelewicz Jennifer Earl Norman Kroenke Executive Chairman Chief Executive Officer Chief Financial Officer EVP of FGI USA EVP of FGI Canada EVP of FGI Europe John appointed Dave was named CEO Perry was named CFO Bob
Slide 7: Key Investment Highlights
Key Investment Highlights FGl
Slide 8: Key Investment Highlights
Key Investment Highlights Opportunity to drive significant shareholder value We are dedicated to Diversified Portfolio and History of Innovation • Diversified mix of products, market segments and sales channels driving shareholder value • Tradition of strong innovation with leading ‘on-trend’ design
Slide 9: Diversified Portfolio and History of Innovation
Diversified Portfolio and History of Innovation Positioned for growth with diversified portfolio of innovative products GOOD, BETTER, BEST STRATEGY GOOD BETTER BEST by by 9
Slide 10: Attractive Growth Opportunity
Attractive Growth Opportunity BPC Strategy Provides Opportunity for Above Market Growth 100% self-designed Recent investment products into “3D” capabilities PRODUCTS •75% existing products; Product design teams ~25% new products in in US, Asia and Europe Well-defined brand any given year (4+ Driving
Slide 11: Margin Improvement Initiatives
Margin Improvement Initiatives Growth and efficiency plans to generate improvement in operating margins Margins were pressured during ADJUSTED OPERATING MARGIN(1) 2022 due to supply chain challenges and inflationary headwinds, but we expect 7-9% meaningful margin improvement in coming years. Operati
Slide 12: Attractive Operating Model
Attractive Operating Model Flexible, capital-lite operating model provides protection in a downturn FGI benefits from a Step 1 Step 3 Product Innovation and Design Global Distribution and Support flexible, capital-lite • Tradition of strong innovation across Network operating model. FGI is a various
Slide 13: Favorable Industry Trends
Favorable Industry Trends Kitchen and Bath R&R market provides stable, predictable growth Kitchen and Bath Represent Most Significant Area of Home Improvement Spending and Provide, Highest, Return to Homeowners 10 Best ROI Home Improvement Projects: Repair & Remodel Provides #1 Minor Bathroom Remode
Slide 14: Capital Deployment Strategy
Capital Deployment Strategy Opportunity to create value through efficient capital deployment Capital Deployment Priorities 2023 -2024 2025+ Capital Allocation Priorities Capital Allocation Priorities • Re-Invest in Core Businesses with Evergreen • Acquisitions and Organic Growth Investments Expansio
Slide 15: New Business Integration
New Business Integration Focus on value-add through meaningful acquisitions History of Innovation Bolt-On Strategy Shower Business MARKET VALUE • Hired shower-door team • Thousands of small • Price is right suppliers • Must be financially from competitor • Evergreen product accretive lines, categori
Slide 16: Value Creation Strategy
Value Creation Strategy Deploying capital to drive long-term shareholder value LONG-TERM VALUE BPC Strategy CREATION FORMULA: • Grow Brands, Product categories and sales Channels • Focus on higher incremental margin sales opportunities Above industry organic growth + Operating margin expansion + Enh
Slide 17: Repair and Remodel Industry Outlook
Repair and Remodel Industry Outlook 17
Slide 18: Repair and Remodel Industry Outlook
Repair and Remodel Industry Outlook Repair & Remodel Growth Expected to Remain Resilient R&R Spending is expecting to remain resilient during Long-term drivers of R&R spending current downturn remain favorable 800 25.0% 700 17.5% 16.0% 20.0% Structural deficit in 15.8% 12.0% 11.4% 13.8% 15.0% housin
Slide 19: Market Share Gains and New Market Expansion
Repair and Remodel Industry Outlook Significant Opportunity for Market Share Gains and New Market Expansion (in Billions) FGI has significant opportunity to expand TOTAL KITCHEN share in its current product & BATH portfolio, with a market $158.6 BATH KITCHEN MARKET share position of MARKET $82.4 $76
Slide 20: First Quarter Overview and Financial Review
First Quarter Overview and Financial Review 20
Slide 21: Business Highlights – 1Q23
Business Highlights – 1Q23 1Q23 results were Revenue Operating Income highlighted by First quarter revenue declined 38% driven Operating income was impacted by by continued inventory de-stocking ongoing investments in our BPC organic continued progress on growth initiatives our BPC strategy, signifi
Slide 22: Quarterly Consolidated Financial Results
Quarterly Consolidated Financial Results Total Revenue Gross Profit Adjusted Operating Income (1) Adjusted Net Income (1) $MM $MM $MM $MM $5.3 $189.1 $32.4 $31.2 $6.8 $145.3 $4.9 $3.1 $43.6 $7.5 $0.7 $7.2 $27.2 $0.9 $0.1 $(0.2) 1Q22 1Q23 LTM - LTM - 1Q22 1Q23 LTM - LTM - 1Q22 1Q23 LTM - LTM - 1Q22 1
Slide 23: Quarterly Business Line Results
Quarterly Business Line Results Revenue by product category Sanitaryware Bath Furniture Shower Systems Other ($MM) ($MM) ($MM) ($MM) $55.3 $104.5 $104.8 $21.9 $20.9 $6.9 $93.3 $19.1 $5.8 $29.5 $24.4 $3.1 $26.8 $6.0 $5.0 $1.8 $10.1 $15.4 $5.0 $0.7 1Q22 1Q23 2021 2022 LTM 1Q22 1Q23 2021 2022 LTM 1Q22
Slide 24: Balance Sheet & Liquidity Update
Balance Sheet & Liquidity Update Cash & Availability ($MM) Net Debt (1) ($MM) $23.8 $22.5 Significant working capital improvements have $11.6 strengthened the balance $10.5 $11.0 sheet and liquidity $6.4 • Cash and availability was $22.5 million $7.5 at 1Q23 owing to strong free cash flow $7.0 conve
Slide 25: Financial Outlook
Financial Outlook 2023 FINANCIAL OUTLOOK Adjusted Operating Adjusted Revenue Income Net Income $145 – 163 $6.0 – 6.8 $4.2 – 4.7 million million million 2023 guidance includes roughly $0.5 million of costs related to investments in a new kitchen program. Guidance for adjusted operating income and adj
Slide 26: Investment Conclusion
Investment Conclusion Ample liquidity to support ongoing growth of business TRUSTED GLOBAL SUPPLIER STRONG ORGANIC GROWH We are global, diversified, and reputable We pursue a “BPC” strategy: focus on Brands, supplier of quality kitchen & bath products Products and sales Channel. Our BPC plan is (Inn
Slide 27: Appendix
Appendix (USD) 2020 2021 2022 1Q22 1Q23 REVENUES 134,827,701 181,943,027 161,718,543 43,575,239 27,162,266 GROSS PROFIT 28,404,640 32,202,408 31,509,005 7,524,586 7,202,158 GROSS MARGINS 21.1% 17.7% 19.5% 17.3% 26.5% SELLING AND DISTRIBUTION 15,487,306 17,636,820 17,533,028 4,677,352 4,711,089 GENER
Slide 28: Appendix
Appendix 1Q22 2Q22 3Q22 4Q22 1Q23 Cash $ 8,793,338 $ 3,126,305 $ 5,981,019 $ 10,067,428 $ 7,380,212 Total Debt 16,321,410 14,690,048 13,007,649 9,795,052 8,426,548 Net Debt $ 7,528,072 $ 11,563,743 $ 7,026,630 $ (272,376) $ 1,046,336 28