FGI Industries Ltd.

Previous wording

•Efficient capital deployment. We will continue to prioritize capital deployment in support of organic growth opportunities, while continuing to evaluate strategic M&A opportunities. With total liquidity of $16.4 million as of June 30, 2025, the Company believes it has sufficient financial flexibility to fund its organic growth strategy.

Current wording

•Efficient capital deployment. We will continue to prioritize capital deployment in support of organic growth opportunities, while continuing to evaluate strategic M&A opportunities. With total liquidity of $14.2 million as of September 30, 2025, the Company believes it has sufficient financial flexibility to fund its organic growth strategy.

Previous wording

The following table summarizes the results of our operations for the three and six months ended June 30, 2025 and 2024 and provides information regarding the dollar and percentage increase (decrease) during such periods.

Current wording

The following table summarizes the results of our operations for the three and nine months ended September 30, 2025 and 2024 and provides information regarding the dollar and percentage increase (decrease) during such periods.

Previous wording

Our revenue increased by $1.6 million, or 5.5%, to $31.0 million for the three months ended June 30, 2025, from $29.4 million for the three months ended June 30, 2024. The increase in our revenue was primarily driven by increases in sales of sanitaryware and custom kitchen cabinetry.

Current wording

For the nine months ended September 30, 2025, our revenue increased by $3.8 million, or 4.0%, to $100.1 million from $96.2 million for the same period last year. The increase in our revenue was primarily driven by increases in sales of sanitaryware, bath furniture and custom kitchen cabinetry. Revenue for the three months ended September 30, 2025 was $35.8 million, essentially consistent with the prior-year period.

Previous wording

We derive the majority of our revenue from sales of sanitaryware, which accounted for 58.3% and 59.6% of our total revenue for the three and six months ended June 30, 2025, compared to 59.0% and 63.0% for the comparable periods of 2024. Revenue generated from the sales of sanitaryware increased by 4.3% to $18.1 million for the three months ended June 30, 2025 from $17.3 million for same period of 2024. For the six months ended June 30, 2025, this revenue increased by 1.0% to $38.2 million from $37.9 million for the same period of 2024. While the U.S. and China have temporarily agreed to reduce their reciprocal tariffs during trade talks, we expect demand for this category to be uncertain due to the current environment as consumers await clarity on tariffs affecting a number of jurisdictions.

Current wording

We derive the majority of our revenue from sales of sanitaryware, which accounted for 64.0% and 61.2% of our total revenue for the three and nine months ended September 30, 2025, compared to 59.4% and 61.6% for the comparable periods of 2024. Revenue generated from the sales of sanitaryware increased by 7.0% to $22.9 million for the three months ended September 30, 2025 from $21.5 million for same period of 2024. For the nine months ended September 30, 2025, this revenue increased by 3.2% to $61.2 million from $59.3 million for the same period of 2024. Demand for sanitaryware remains subject to uncertainty given ongoing tariff considerations and broader trade conditions, despite easing of certain trade tensions between the U.S. and China.

Previous wording

Our revenue from bath furniture sales accounted for 13.3% and 12.8% of our total revenue for the three and six months ended June 30, 2025, compared to 13.7% and 11.8% for the comparable periods of 2024. Bath Furniture sales increased by 2.7% to $4.1 million for the three months ended June 30, 2025, compared to $4.0 million for the same period of 2024. For the six months ended June 30, 2025, revenue from Bath Furniture sales increased by 15.7% to $8.2 million from $7.1 million for the same period of 2024. Our recently launched mid-tier product lines, launched to better address the current demand environment of trading down to lower priced offerings, is gaining traction.

Current wording

Our revenue from bath furniture sales accounted for 10.4% and 11.9% of our total revenue for the three and nine months ended September 30, 2025, compared to 11.5% and 11.7% for the comparable periods of 2024. Bath furniture sales decreased by 10.8% to $3.7 million for the three months ended September 30, 2025, compared to $4.2 million for the same period of 2024. For the nine months ended September 30, 2025, revenue from bath furniture sales increased by 5.9% to $12.0 million from $11.3 million for the same period of 2024. Our recently launched mid-tier product lines, launched to better address the current demand environment of trading down to lower priced offerings, is gaining traction.

Previous wording

Revenue from sales of Shower Systems made up approximately 16.9% and 17.0% of our total revenue for the three and six months ended June 30, 2025, compared to 20.1% and 19.4% for the comparable periods of 2024. Revenue from sales of shower systems decreased by 11.2% to $5.2 million for the three months ended June 30, 2025, compared to $5.9 million for the comparable period of 2024. For the six months ended June 30, 2025, revenue from sales of shower systems decreased by 6.3% to $10.9 million from $11.7 million for the same period of 2024. While shower system revenue dropped year-over-year this quarter, our recently launched programs have driven growth in recent periods and we anticipate them continuing to be a positive driver moving forward. Similar to Sanitaryware, however, we expect demand to be uncertain due to the current environment as consumers await tariff clarity, which may offset the impact of these programs.

Current wording

Revenue from sales of shower systems made up approximately 16.4% and 16.8% of our total revenue for the three and nine months ended September 30, 2025, compared to 19.8% and 19.5% for the comparable periods of 2024. Revenue from sales of shower systems decreased by 17.8% to $5.9 million for the three months ended September 30, 2025, compared to $7.1 million for the comparable period of 2024. For the nine months ended September 30, 2025, revenue from sales of shower systems decreased by 10.7% to $16.8 million from $18.8 million for the same period of 2024. While shower system revenue dropped year-over-year this quarter, our recently launched programs have driven growth in recent periods and we anticipate them continuing to be a positive driver moving forward. Similar to sanitaryware, however, we expect demand to be uncertain due to the current environment as consumers await tariff clarity, which may offset the impact of these programs.

Previous wording

Our revenue from sales of other products (custom kitchen cabinetry and other small offerings) increased by 67.7% to $3.5 million for the three months ended June 30, 2025, compared to $2.1 million for the same period of 2024. For the six months ended June 30, 2025, other revenue increased by 94.6% to $6.8 million from $3.5 million for the same period of 2024. The increase was primarily driven by volume growth resulting from continued strength in sales of the Covered Bridge custom-kitchen cabinetry businesses.

Current wording

For the nine months ended September 30, 2025, other revenue increased by 48.1% to $10.1 million from $6.8 million for the same period of 2024. Other revenue for the three months ended September 30, 2025 was $3.3 million, essentially consistent with the prior-year period. The increase was primarily driven by volume growth resulting from continued strength in sales of the Covered Bridge custom-kitchen cabinetry businesses.

Previous wording

We consistently generated the majority of our revenue in the United States market, which amounted to $18.0 million for the three months ended June 30, 2025 and June 30, 2024. For the six months ended June 30, 2025, however, revenue from United States market increased by 4.0% to $39.1 million, compared to $37.6 million for the same period of 2024. Such revenue accounted for approximately 60% of our total revenue for the three and six months ended June 30, 2025 and 2024, with minor period-to-period variation. The growth during the six months period was largely attributable to higher sales of bath furniture and kitchen cabinetry, as previously discussed, partially offset by a decrease due to tariff related uncertainties in the second quarter.

Current wording

We consistently generated the majority of our revenue in the United States market, which amounted to $22.5 million and $22.2 million for the three months ended September 30, 2025 and September 30, 2024, respectively. For the nine months ended September 30, 2025, however, revenue from United States market increased by 3.0% to $61.6 million, compared to $59.8 million for the same period of 2024. Such revenue accounted for approximately 62% of our total revenue for the three and nine months ended September 30, 2025 and 2024, with minor period-to-period variation. The growth during the nine-month period was largely attributable to higher sales of bath furniture and kitchen cabinetry, as previously discussed, partially offset by a decrease due to tariff related uncertainties in the second quarter.

Previous wording

Our second largest market is Canada. Our revenue generated in the Canadian market was $8.8 million for the three months ended June 30, 2025, compared to $8.6 million for the three months ended June 30, 2024, representing a 2.0% increase. For the six months ended June 30, 2025, revenue from Canadian market increased by 2.9% to $17.0 million, compared to $16.5 million for the same period in 2024. The increased sales in the Canada market were primarily driven by stabilized demand from wholesale customers.

Current wording

Our second largest market is Canada. Our revenue generated in the Canadian market was $9.1 million for the three months ended September 30, 2025, compared to $9.9 million for the three months ended September 30, 2024, representing a 8.0% decrease. For the nine months ended September 30, 2025, revenue from Canadian market decreased by 1.2% to $26.1 million, compared to $26.4 million for the same period in 2024. Revenue in the Canadian market remained largely stable for the nine months ended September 30, 2025, with third-quarter sales moderating as retailers slowed purchases following strong activity in the first half of this year. In the wholesale channel, after a slower start to the year, purchasing activity picked up in the third quarter.

Previous wording

We also derive revenue from Europe, which consists primarily of sales in Germany. This amounted to $3.6 million and $6.7 million for the three and six months ended June 30, 2025, compared to $2.7 million and $5.9 million for the three and six months ended June 30, 2024, representing a 36.7% and 15.1% increase for the three-month and six-month periods, respectively.

Current wording

We also derive revenue from Europe, which consists primarily of sales in Germany. This amounted to $3.7 million and $10.4 million for the three and nine months ended September 30, 2025, compared to $3.4 million and $9.3 million for the three and nine months ended September 30, 2024, representing a 7.3% and 12.2% increase for the three-month and nine-month periods, respectively. We believe this growth reflects continued demand in the European market.

Previous wording

Gross profit was $8.7 million and $17.6 million for the three and six months ended June 30, 2025, a decrease of 2.9% and an increase of 1.3% compared to the same periods of 2024, respectively. Gross profit margin was 28.1% and 27.4% for the three and six months ended June 30, 2025, down 240 and 150 basis points from 30.5% and 28.9% for the three and six months ended June 30, 2024, respectively.

Current wording

Gross profit was $9.5 million and $27.1 million for the three and nine months ended September 30, 2025, a decrease of 2.0% and an increase of 1.6% compared to the same periods of 2024, respectively. Gross profit margin was 26.5% and 27.1% for the three and nine months ended September 30, 2025, down 70 and 60 basis points from 25.8% and 27.7% for the three and nine months ended September 30, 2024, respectively.

Previous wording

Selling and distribution expenses primarily consisted of personnel costs, marketing and promotion costs, commission, and freight and leasing charges. Our selling and distribution expenses decreased by $0.1 million, or 0.8%, to $6.2 million for the three months ended June 30, 2025, from $6.3 million for the three months ended June 30, 2024, and increased by $1.0 million, or 7.9%, to $13.4 million for the six months ended June 30, 2025, from $12.4 million for the six months ended June 30, 2024. The increase was largely due to expanded marketing efforts aimed at supporting our growth initiatives including Isla Porter and FGI India, higher personnel-related expenses, and the one-time cost associated with the termination of a warehouse lease. These investments were aligned with our strategic focus on strengthening brand visibility and optimizing our distribution network.

Current wording

Selling and distribution expenses primarily consisted of personnel costs, marketing and promotion costs, commission, and freight and leasing charges. Our selling and distribution expenses decreased by $0.2 million, or 3.6%, to $6.1 million for the three months ended September 30, 2025, from $6.3 million for the three months ended September 30, 2024, and increased by $0.8 million, or 4.1%, to $19.4 million for the nine months ended September 30, 2025, from $18.7 million for the nine months ended September 30, 2024. The year-to-date increase primarily reflects higher marketing and personnel expenses, as well as a one-time warehouse lease termination cost. In the third quarter, however, selling and distribution expenses declined, reflecting our ongoing efforts to optimize operations and reduce overall operating expenses.

Previous wording

General and administrative expenses primarily consisted of personnel costs, professional service fees, depreciation, travel, and office supply expenses. Our general and administrative expenses increased by $0.2 million, or 8.5%, to $2.8 million for the three months ended June 30, 2025, from $2.6 million for the three months ended June 30, 2024, and increased by $0.6 million, or 13.1%, to $5.5 million for the six months ended June 30, 2025, from $4.9 million for the six months ended June 30, 2024. The increase was primarily due to inflationary pressures and additional expenditures related to corporate support activities.

Current wording

General and administrative expenses primarily consisted of personnel costs, professional service fees, depreciation, travel, and office supply expenses. Our general and administrative expenses increased by $0.1 million, or 5.6%, to $2.8 million for the three months ended September 30, 2025, from $2.6 million for the three months ended September 30, 2024, and increased by $0.8 million, or 10.5%, to $8.3 million for the nine months ended September 30, 2025, from $7.5 million for the nine months ended September 30, 2024. The increase was primarily due to inflationary pressures and additional expenditures related to corporate support activities.

Previous wording

We incurred net loss of $1.4 million and $23,000 for the three months ended June 30, 2025 and 2024, respectively, and net loss of $2.2 million and $0.6 million for the six months ended June 30, 2025 and 2024, respectively. These changes had resulted from the combination of the changes discussed above.

Current wording

We incurred net loss of $1.9 million and $0.7 million for the three months ended September 30, 2025 and 2024, respectively, and net loss of $4.1 million and $1.3 million for the nine months ended September 30, 2025 and 2024, respectively. These changes had resulted from the combination of the changes discussed above.

Previous wording

The Company's unaudited condensed consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue to operate in the normal course of business and will be able to realize its assets and discharge its liabilities as they become due. However, substantial doubt exists about the Company's ability to continue as a going concern. The Company has incurred net loss of $2.2 million and $1.7 million for the six months ended June 30, 2025 and the year ended December 31, 2024, respectively. In addition, the Company had net cash provided by operating activities of $0.2 million and net cash used in operating activities of $7.4 million for the same respective periods. As of June 30, 2025, the Company had approximately $2.5 million in cash and cash equivalents and had $12.6 million outstanding under its credit facilities, which were used primarily for working capital purposes.

Current wording

The Company's unaudited condensed consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue to operate in the normal course of business and will be able to realize its assets and discharge its liabilities as they become due. However, substantial doubt exists about the Company's ability to continue as a going concern. The Company has incurred net loss of $4.1 million and $1.7 million for the nine months ended September 30, 2025 and the year ended December 31, 2024, respectively. In addition, the Company had net cash used in operating activities of $1.7 million and net cash used in operating activities of $7.4 million for the same respective periods. As of September 30, 2025, the Company had approximately $1.9 million in cash and cash equivalents and had $14.1 million outstanding under its credit facilities, which were used primarily for working capital purposes.

Previous wording

The loan bears interest at a rate equal to, at the Company’s option, either (i) 0.25 percentage points less than the Prime Rate quoted by the Wall Street Journal or (ii) the SOFR Rate (as administered by CME Group Benchmark Administration Limited and displayed by Bloomberg LP) plus 2.20% per annum (in either case, subject to a minimum rate of 4.500% per annum). The interest rate as of June 30, 2025 and December 31, 2024 was 7.25% and 7.25%, resp ectively.

Current wording

The loan bears interest at a rate equal to, at the Company’s option, either (i) 0.25 percentage points less than the Prime Rate quoted by the Wall Street Journal or (ii) the SOFR Rate (as administered by CME Group Benchmark Administration Limited and displayed by Bloomberg LP) plus 2.20% per annum (in either case, subject to a minimum rate of 4.500% per annum). The interest rate as of September 30, 2025 and December 31, 2024 was 7.00% and 7.25%, resp ectively.

Previous wording

Each sum of borrowings under the Credit Agreement is deemed due on demand and is classified as a short-term loan. The outstanding balance of such loan was $9.5 million and $9.6 million as of June 30, 2025 and December 31, 2024, respectively.

Current wording

Each sum of borrowings under the Credit Agreement is deemed due on demand and is classified as a short-term loan. The outstanding balance of such loan was $9.7 million and $9.6 million as of September 30, 2025 and December 31, 2024, respectively.

Previous wording

Borrowings under this line of credit amounted to $1.2 million and $2.6 million as of June 30, 2025 and December 31, 2024, respectively. The facility matures at the discretion of RBC upon 60 days’ notice.

Current wording

Borrowings under this line of credit amounted to $1.8 million and $2.6 million as of September 30, 2025 and December 31, 2024, respectively. The facility matures at the discretion of RBC upon 60 days’ notice.

Previous wording

On January 25, 2024, FGI International entered into an omnibus credit line (the “CTBC Credit Line”) with CTBC Bank Co., Ltd. (“CTBC”). Under the CTBC Credit Line, FGI International may borrow, from time to time, up to $2.3 million, with borrowings limited to 90% of FGI International’s export “open account” trade receivables. On January 14, 2025, FGI International and CTBC agreed to increase the CTBC Credit Line to $3.0 million. The CTBC Credit Line will bear interest at a rate of “Base Rate”, which is based on monthly or quarterly Taipei Interbank Offered in effect from time to time, plus 120 base points and handling fees, unless otherwise agreed to by the parties. The CTBC Credit Line is unsecured and is fully guaranteed by the Company and partially guaranteed by Liang Chou Chen. Borrowings under this line of credit amounted to $1.8 million and $2.3 million as of June 30, 2025 and December 31, 2024, respectively.

Current wording

On January 25, 2024, FGI International entered into an omnibus credit line (the “CTBC Credit Line”) with CTBC Bank Co., Ltd. (“CTBC”). Under the CTBC Credit Line, FGI International may borrow, from time to time, up to $2.3 million, with borrowings limited to 90% of FGI International’s export “open account” trade receivables. On January 14, 2025, FGI International and CTBC agreed to increase the CTBC Credit Line to $3.0 million. The CTBC Credit Line will bear interest at a rate of “Base Rate”, which is based on monthly or quarterly Taipei Interbank Offered in effect from time to time, plus 120 base points and handling fees, unless otherwise agreed to by the parties. The CTBC Credit Line is unsecured and is fully guaranteed by the Company and partially guaranteed by Liang Chou Chen. Borrowings under this line of credit amounted to $2.6 million and $2.3 million as of September 30, 2025 and December 31, 2024, respectively.

Previous wording

The following table summarizes the key components of our cash flows for the six months ended June 30, 2025 and 2024.

Current wording

The following table summarizes the key components of our cash flows for the nine months ended September 30, 2025 and 2024.

Previous wording

Net cash provided by operating activities was $0.2 million for the six months ended June 30, 2025, compared to net cash used of $7.1 million in the prior-year period. This improvement was driven by favorable working capital movements, including a $3.9 million decrease in accounts receivable and a $1.3 million reduction in inventory. A $2.1 million increase in accounts payable also supported operating cash flow. These inflows helped offset cash usage related to the $2.2 million net loss, payments on lease obligations, and reductions in accrued expenses. Non-cash items such as $1.1 million of amortization, $0.3 million of depreciation, and $0.2 million of share-based compensation contributed to narrowing the gap between the net loss and operating cash flow. Additionally, a higher deferred tax benefit of $1.0 million reduced the non-cash tax burden during the period.

Current wording

Net cash used in operating activities was $1.7 million for the nine months ended September 30, 2025, compared to $8.0 million in the prior-year period. The improvement was primarily driven by favorable movements in liabilities, including a $3.3 million increase in accounts payable, which partially offset cash used for operating losses. These inflows helped mitigate the impact of the $4.1 million net loss, lease payments, and reductions in accrued expenses. Non-cash items such as $1.7 million of amortization, $0.5 million of depreciation, and $0.3 million of share-based compensation narrowed the gap between net loss and operating cash flow. Offsetting these factors were increases in operating assets, including $1.7 million in accounts receivable and $1.6 million in inventory, which used cash during the period.

Previous wording

Net cash used in investing activities totaled $0.6 million for the six months ended June 30, 2025, compared to $1.9 million in the same period of 2024. The lower outflow resulted from a more conservative pace of capital investments, as spending on both equipment and intangible assets was reduced during the current period.

Current wording

Net cash used in investing activities totaled $0.9 million for the nine months ended September 30, 2025, compared to $2.0 million in the prior-year period, primarily attributable to reduced spending on property, equipment, and intangible assets.

Previous wording

Net cash used in financing activities was $1.9 million for the six months ended June 30, 2025, due to net repayments on the Company’s revolving credit facilities. In contrast, the prior-year period saw $2.7 million in cash provided by financing activities, reflecting net proceeds from borrowings under the same facilities.

Current wording

Net cash used in financing activities was $0.4 million for the nine months ended September 30, 2025, due to net repayments under the Company’s revolving credit facilities. In contrast, the prior-year period generated $5.5 million in cash from financing activities arising from net borrowings under the same facilities.

Previous wording

Our capital expenditures were incurred primarily in connection with the acquisition of property and equipment. Our capital expenditures amounted to $0.6 million and $1.9 million for the six months ended June 30, 2025 and 2024, respectively. We do not expect to incur significant capital expenditures in the immediate future.

Current wording

Our capital expenditures were incurred primarily in connection with the acquisition of property and equipment. Our capital expenditures amounted to $0.9 million and $2.0 million for the nine months ended September 30, 2025 and 2024, respectively. We do not expect to incur significant capital expenditures in the immediate future.

Previous wording

A discussion of our critical accounting policies and significant accounting estimates is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K. The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenue and expenses during the applicable reporting period. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in different policies or estimates being reported for the six months ended June 30, 2025.

Current wording

A discussion of our critical accounting policies and significant accounting estimates is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K. The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenue and expenses during the applicable reporting period. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in different policies or estimates being reported for the nine months ended September 30, 2025.