FGI INDUSTRIES ANNOUNCES 3RD QUARTER 2022 RESULTS.

EAST HANOVER, N.J: FGI Industries Ltd. (Nasdaq: FGI) ("FGI" or the "Company"), a leading global supplier of kitchen and bath products, today announced results for the third quarter of 2022.

THIRD QUARTER 2022 HIGHLIGHTS

(As compared to the Third Quarter of 2021)

Total Revenues of $38.5 million, (24.3%) y/y

Operating Income of $1.7 million, (7.7%) y/y

Net Income of $1.3 million, (8.9%) y/y

Continued progress on core "BPC" organic growth drivers

Significant gross margin improvement of 490 bps y/y

Lowered full-year 2022 financial guidance

Total revenue decreased 24% on a year-over-year basis in the third quarter of 2022, driven primarily by declines in Sanitaryware and Bath Furniture, partially offset by continued growth in Other categories (including shower systems and custom kitchen cabinetry). Third quarter revenue increased modestly in Europe, while the United States and Canada decreased.

The Company reported significant progress in its gross margin initiatives, with sequential improvement in gross margin of 325 basis points versus the second quarter of 2022 and a year-over-year improvement of 490 basis points compared to the prior-year period. As a result, while revenue decreased 24% on a year-over-year basis, gross profits decreased only 1.1%.

The Company reported operating income of $1.7 million in the third quarter of 2022, a decline of $0.1 million versus the prior-year period, as lower revenues and incremental public company costs were partially offset by a more favorable mix and lower freight costs.

For the three months ended September 30, 2022, the Company reported GAAP net income of $1.3 million, or $0.11 per diluted share, versus net income of $1.4 million, or $0.20 per diluted share, in the third quarter of 2021.

MANAGEMENT COMMENTARY

"We made significant progress on our margin recovery initiatives during the third quarter; however, customer de-stocking negatively impacted our top-line results during the quarter," stated David Bruce, President and Chief Executive Officer of FGI. "End customer demand has declined modestly during 2022 owing to macroeconomic headwinds and has remained mostly in-line with our expectations entering the year; however, the decision by key customers to aggressively reduce channel inventories caused third quarter revenues to decline by 24% versus the prior-year period and fall short of expectations. The shortfall was driven primarily by our Canadian sanitaryware business and our Bath Furniture end markets. We remain encouraged by our key organic growth programs, as evidenced by the 61% growth in our Other product categories during...