FGI Industries Ltd.

11/14/2025 | Press release | Distributed by Public on 11/14/2025 15:31

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
The disclosures in this Quarterly Report on Form 10-Q are complementary to those made in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2025 (the "2024 Form 10-K"). You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Quarterly Report on Form 10-Q as well as our audited financial statements, notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our 2024 Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this Quarterly Report on Form 10-Q and of our 2024 Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. All amounts in Management's Discussion and Analysis of Financial Condition and Results of Operations are approximate.
Overview
FGI is a global supplier of kitchen and bath products. Over the course of 30 years, we have built an industry-wide reputation for product innovation, quality, and excellent customer service. We are currently focused on the following product categories: sanitaryware (primarily toilets, sinks, pedestals and toilet seats), bath furniture (vanities, mirrors and cabinets), shower systems, custom kitchen cabinetry and other accessory items. These products are sold primarily for R&R activity and, to a lesser extent, new home or commercial construction. We sell our products through numerous partners, including mass retail centers, wholesale and commercial distributors, online retailers and specialty stores.
Consistent with our long-term strategic plan, we expect to continue to make significant investments across our business in order to continue to attract new customers, expand existing relationships, develop new products and manufacturing capabilities and expand into new jurisdictions, thereby prioritizing long-term growth over short-term profitability. We intend to drive long-term value creation for our shareholders through a balanced focus on product innovation, organic growth, and efficient capital deployment. The following initiatives represent key strategic priorities for us:
•Commitment to product innovation. We have a history of being an innovator in the kitchen and bath markets and developing "on-trend" products and bringing them to market ahead of the competition. We have developed deep marketing skills, leading design capabilities, and product development expertise. A recent example of our innovative product development includes the Jetcoat shower wall systems, which offer a stylized design option without the fuss of messy grout. We expect to continue to invest in research and development to drive product innovation in 2025.
•"BPC" (Brands, Products, Channels) strategy to drive above-market organic growth. We have continued to invest in our BPC strategy despite the market challenges, which is expected to drive improved organic growth in the longer term. We have entered into a 5-year licensing agreement that will provide us access to an industry leading overflow toilet technology. We will continue to market this technology as FLUSH GUARD®Overflow Technology. In addition, we continue to focus on our initiatives to expand geographically, with recently signed agreements providing entry into India, Eastern Europe and the UK.
•Enhanced margin performance. Our focus on higher-margin products has continued to deliver results, with gross margins reaching 26.9% in 2024 and 27.4% in 2023, a significant rise from 19.5% in 2022. This positive trajectory in margins reflects our commitment to optimizing our product mix and operational efficiency despite recent headwinds from tariffs. Looking ahead, we anticipate gross margins to remain in line with the levels achieved in 2024 and 2023.
•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.
•Deep manufacturing partners and customer relationships. We have developed strong manufacturing and sourcing partners over the last 30+ years, which we believe will continue to give us a competitive advantage in the markets we serve. We also have deep relationships with an established global customer base, offering end-to-end solutions to support category growth. While recent supply chain and inflation pressures have been a headwind, our durable partnerships with manufacturing and sourcing partners have helped to mitigate these challenges.
We were incorporated in the Cayman Islands on May 26, 2021 in connection with a reorganization and separation our parent company, Foremost Groups Ltd. ("Foremost"), and its affiliates, pursuant to which, among other actions, Foremost contributed all of its equity interests in FGI Industries Inc. ("FGI Industries"), FGI Europe Investment Limited, an entity formed in the British Virgin Islands, and FGI International, Limited, an entity formed under the laws of Hong Kong, each a wholly-owned subsidiary of Foremost, to the newly formed FGI Industries Ltd. Foremost was established in 1987 and has become a global leader in kitchen and bath design, indoor and outdoor furniture, food service equipment, and manufacturing.
Reverse Stock Split
On July 28, 2025, the Company filed an amendment (the "Amendment") to the Company's Amended and Restated Memorandum and Articles of Association with the Registrar of Companies in the Cayman Islands to effect a 1-for-5 reverse share split (the "Reverse Share Split") of the Company's ordinary shares, which was effected on July 31, 2025. Unless otherwise noted, the share and per share information in this Quarterly Report on Form 10-Q have been adjusted to give effect to the Reverse Stock Split.
Results of Operations
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.
For the Three and Nine Months Ended September 30, 2025 and 2024
For the Three Months Ended
September 30, 		Change
2025 2024 Amount Percentage
USD %
Revenue $ 35,848,861 $ 36,099,179 $ (250,318) (0.7)
Cost of revenue 26,350,193 26,790,957 (440,764) (1.6)
Gross profit 9,498,668 9,308,222 190,446 2.0
Selling and distribution expenses 6,060,571 6,284,932 (224,361) (3.6)
General and administrative expenses 2,784,507 2,637,141 147,366 5.6
Research and development expenses 283,867 451,975 (168,108) (37.2)
Income (loss) from operations 369,723 (65,826) 435,549 (661.7)
Operating margins (%) 1.0 (0.2) 120 bps
Total other expenses, net (438,190) (364,885) (73,305) 20.1
Provision for income taxes 1,879,599 267,537 1,612,062 602.6
Net loss (1,948,066) (698,248) (1,249,818) 179.0
Net loss attributable to FGI Industries Ltd. shareholders (1,651,332) (550,137) (1,101,195) 200.2
Adjusted income from operations(1)
369,723 55,663 314,060 564.2
Adjusted operating margins (%)(1)
1.0 0.2 80 bps
Adjusted net income (loss) attributable to FGI Industries Ltd. shareholders(1)
$ 240,591 $ (105,451) $ 346,042 (328.2)
For the Nine Months Ended
September 30, 		Change
2025 2024 Amount Percentage
USD
USD
USD %
Revenue $ 100,059,669 $ 96,223,647 $ 3,836,022 4.0
Cost of revenue 72,954,136 69,538,640 3,415,496 4.9
Gross profit 27,105,533 26,685,007 420,526 1.6
Selling and distribution expenses 19,433,477 18,676,665 756,812 4.1
General and administrative expenses 8,330,435 7,542,019 788,416 10.5
Research and development expenses 1,085,095 1,303,445 (218,350) (16.8)
Loss from operations (1,743,474) (837,122) (906,352) 108.3
Operating margins (%) (1.7) (0.9) (80) bps
Total other expenses, net (1,459,121) (430,989) (1,028,132) 238.6
provision for (benefit of) income taxes 925,493 (8,589) 934,082 (10875.3)
Net loss (4,128,088) (1,259,522) (2,868,566) 227.8
Net loss attributable to FGI Industries Ltd. shareholders (3,511,948) (798,761) (2,713,187) 339.7
Adjusted loss from operations(1)
(1,723,568) (472,655) (1,250,913) 264.7
Adjusted operating margins (%)(1)
(1.7) (0.5) (120) bps
Adjusted net loss attributable to FGI Industries Ltd. shareholders(1)
$ (1,993,665) $ (280,227) $ (1,713,438) 611.4
_________________________________________________
(1)See "Non-GAAP Measures" below for more information on our use of these adjusted figures and a reconciliation of these financial measures to their closest U.S. generally accepted accounting principles ("GAAP") comparators.
Revenue
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.
Revenue categories by product are summarized as follow:
For the Three Months Ended September 30, Change
2025 Percentage 2024 Percentage Percentage
USD % USD % %
Sanitaryware $ 22,945,010 64.0 $ 21,451,387 59.4 7.0
Bath Furniture 3,714,301 10.4 4,162,292 11.5 (10.8)
Shower System 5,869,423 16.4 7,143,283 19.8 (17.8)
Others 3,320,127 9.2 3,342,217 9.3 (0.7)
Total $ 35,848,861 100.0 $ 36,099,179 100.0 (0.7)
For the Nine Months Ended September 30, Change
2025 Percentage 2024 Percentage Percentage
USD % USD % %
Sanitaryware $ 61,187,767 61.2 $ 59,303,663 61.6 3.2
Bath Furniture 11,952,906 11.9 11,282,623 11.7 5.9
Shower System 16,786,602 16.8 18,793,999 19.5 (10.7)
Others 10,132,394 10.1 6,843,362 7.2 48.1
Total $ 100,059,669 100.0 $ 96,223,647 100.0 4.0
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.
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.
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.
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.
Revenue Categories by Geographic Location
We derive our revenue primarily from the United States, Canada and Europe. Revenue categories by geographic location are summarized as follows:
For the Three Months Ended September 30, Change
2025 Percentage 2024 Percentage Percentage
USD % USD % %
United States $ 22,493,458 62.7 $ 22,195,976 61.5 1.3
Canada 9,120,195 25.4 9,916,907 27.5 (8.0)
Europe 3,666,761 10.2 3,418,826 9.5 7.3
Rest of World 568,447 1.7 567,470 1.5 0.2
Total $ 35,848,861 100.0 $ 36,099,179 100.0 (0.7)
For the Nine Months Ended September 30, Change
2025 Percentage 2024 Percentage Percentage
USD % USD % %
United States $ 61,632,691 61.6 $ 59,833,465 62.2 3.0
Canada 26,072,809 26.1 26,391,317 27.4 (1.2)
Europe 10,407,865 10.4 9,273,872 9.6 12.2
Rest of World 1,946,304 1.9 724,993 0.8 168.5
Total $ 100,059,669 100.0 $ 96,223,647 100.0 4.0
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.
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.
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.
Gross Profit
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.
Operating Expenses
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.
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.
Research and development expenses mainly consisted of personnel costs and product development costs. Our research and development activities remained stable and are relatively immaterial to our unaudited condensed consolidated statements of operations and comprehensive loss.
Other Income (Expenses)
Other income (expenses) represents interest income and expenses, as well as non-recurring non-operating gains and losses. Interest expense increased due to a higher average loan balance during the period.
Provision for Income Taxes
We recorded $1.8 million and $0.9 million of income tax provision for the three and nine months ended September 30, 2025, respectively, compared to an income tax provision of approximately $0.3 million and a minimal income tax benefit for the same periods in 2024. The Company assesses all available positive and negative evidence to evaluate the realizability of its deferred tax assets and whether or not a valuation allowance is necessary. The Company's three-year cumulative loss position was significant negative evidence in assessing the need for a valuation allowance. The weight given to positive and negative evidence is commensurate with the extent such evidence may be objectively verified. Given the weight of objectively verifiable historical losses from operations, during the three months ended September 30, 2025, we recorded a $1.8 million valuation allowance on our deferred tax assets. This allowance significantly impacts the effective tax rate for the period. The Company may be able to reverse the valuation allowance when sufficient positive evidence exists to support the reversal of the valuation allowance.
Net Loss
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.
Liquidity and Capital Resources
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.
As discussed in Note 8, the Company was not in compliance with certain financial covenants related to its debt coverage ratio as of September 30, 2025. The Company is in discussions with its lenders regarding these covenant breaches.
Additionally, the Company has been facing adverse impacts from elevated tariff costs on imported goods. These increased costs have put pressure on gross margins and have contributed to the overall liquidity challenges.
In response to the conditions that gave rise to the substantial doubt, the Company implemented a number of actions, including:
•Termination of the lease for one of its warehouse facilities in the first quarter of 2025, which resulted in a non-recurring lease exit cost. The facility had idle capacity, and the termination reduced the Company's ongoing fixed overhead expenses.
•Execution of cost control initiatives across multiple operating departments, targeting to lower recurring operating expenses.
•Commercial launch and promotion of new product lines, including anti-overflow toilets, shower systems, and custom kitchen cabinetry, which have begun generating increased revenue.
•In the event of a requirement for immediate loan repayment, the Company has sufficient accounts receivable available for factoring to meet such obligations.
As a result of these actions, the Company expects to improve its liquidity and reduce its cost structure. The Company's management is of the opinion that it has sufficient funds to meet the Company's working capital requirements and debt obligations as they become due over the next twelve (12) months.
East West Bank Credit Facility
The Company's wholly-owned subsidiary, FGI Industries, has a line of credit agreement (the "Credit Agreement") with East West Bank, which is collateralized by all assets of FGI Industries and personally guaranteed by Liang Chou Chen, who holds approximately 49.91% of the voting control of Foremost. The current amount of maximum borrowings is $18,000,000 and the Credit Agreement had a maturity date of December 21, 2024. East West Bank has agreed to extend the maturity date to December 5, 2025 while efforts regarding a renewal of the facility are ongoing.
Pursuant to the Credit Agreement, FGI Industries is required to maintain (a) a debt coverage ratio (defined as earnings before interest, taxes, depreciation and amortization divided by current portion of long-term debt plus interest expense) of not less than 1.25 to 1, tested at the end of each fiscal quarter; (b) an effective tangible net worth (defined as total book net worth plus minority interest, less amounts due from officers, shareholders and affiliates, minus intangible assets and accumulated amortization, plus debt subordinated to East West Bank) of not less than $10,000,000, tested at the end of each fiscal quarter, on a consolidated basis; and (c) a total debt to tangible net worth ratio (defined as total liabilities divided by tangible net worth, which is defined as total book net worth plus minority interest, less loans to officers, shareholders, and affiliates minus intangible assets and accumulated amortization) not to exceed 4.0 to 1, tested at the end of each fiscal quarter, on a consolidated basis. As of September 30, 2025, FGI Industries was not in compliance with certain financial covenants related to its debt coverage ratio. As of the date of this quarterly report, FGI Industries has requested a waiver from the lender, which is being processed by the lender. In the absence of an executed waiver, the Company has classified the outstanding balance of the loan as a current liability on the unaudited condensed consolidated balance sheet as of September 30, 2025.
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%, respectively.
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.
RBC Bank Loan
FGI Canada Ltd. ("FGI Canada") has a line of credit agreement with Royal Bank of Canada ("RBC"), successor by amalgamation of HSBC Canada (the "Canadian Revolver"). The revolving line of credit with RBC allows for borrowing up to CAD7.5 million (USD5.4 million as of September 30, 2025). This is an assets-based line of credit, the borrowing limit is calculated based on certain percentage of accounts receivable and inventory balances. Pursuant to the Canadian Revolver, FGI Canada is required to maintain (a) a debt to tangible net worth ratio of no more than 3.00 to 1.00; and (b) a ratio of current assets to current liabilities of at least 1.25 to 1.00. The loan bears interest at a rate of Prime rate plus 0.50%. As of September 30, 2025, FGI Canada was in compliance with these financial covenants.
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.
FGI Canada also has a revolving foreign exchange facility with RBC of up to a permitted maximum of USD3.0 million. The advances are available to purchase foreign exchange forward contracts from time to time up to six months, subject to an overall maximum aggregate USD Equivalent outstanding face value not exceeding USD3.0 million.
CTBC Credit Facility
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.
The following table summarizes the key components of our cash flows for the nine months ended September 30, 2025 and 2024.
For the Nine Months Ended September 30,
2025 2024
USD USD
Net cash used in operating activities $ (1,670,736) $ (8,042,745)
Net cash used in investing activities (893,846) (2,044,264)
Net cash (used in) provided by financing activities (426,021) 5,526,322
Effect of exchange rate fluctuation on cash 308,125 (171,892)
Net changes in cash (2,682,478) (4,732,579)
Cash, beginning of period 4,558,160 7,777,241
Cash, end of period $ 1,875,682 $ 3,044,662
Operating Activities
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.
Investing Activities
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.
Financing Activities
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.
Commitments and Contingencies
Capital Expenditures
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.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
Critical Accounting Policies and Significant Accounting Estimates
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.
Recently Issued Accounting Pronouncements
See Note 2, "Summary of significant accounting policies" in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Non-GAAP Measures
In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following non-GAAP measures to evaluate our business, measure our performance, identify trends affecting our business and assist us in making strategic decisions. Our non-GAAP measures are: Adjusted Income from Operations, Adjusted Operating Margins and Adjusted Net Income. These non-GAAP financial measures are not prepared in accordance with GAAP. They are supplemental financial measures of our performance only, and should not be considered substitutes for net income, income from operations or any other measure derived in accordance with GAAP and may not be comparable to similarly titled measures reported by other entities.
We define Adjusted Income from Operations as GAAP income from operations excluding the impact of certain non-recurring expenses, including IPO-related compensation (cash and stock-based), legal fees and business expansion expenses. We define Adjusted Net Income as GAAP income before income taxes excluding the impact of certain non-recurring expenses and income, such as IPO-related compensation, legal fees and business expansion expenses, income taxes at historical average effective rate, as well as net income attributable to non-controlling shareholders. We define Adjusted Operating Margins as adjusted income from operations divided by revenue.
We use these non-GAAP measures, along with GAAP measures, to evaluate our business, measure our financial performance and profitability and our ability to manage expenses, after adjusting for certain one-time expenses, identify trends affecting our business and assist us in making strategic decisions. We believe these non-GAAP measures, when reviewed in conjunction with GAAP financial measures, and not in isolation or as substitutes for analysis of our results of operations under GAAP, are useful to investors as they are widely used measures of performance and the adjustments we make to these non-GAAP measures provide investors further insight into our profitability and additional perspectives in comparing our performance over time on a consistent basis.
The following table reconciles Income from Operations to Adjusted Income from Operations and Adjusted Operating Margins, as well as Net income to Adjusted Net Income for the periods presented.
For the Three Months Ended
September 30, 		For the Nine Months Ended
September 30,
2025 2024 2025 2024
USD USD USD USD
Loss from operations $ 369,723 $ (65,826) $ (1,743,474) $ (837,122)
Adjustments:
Non-recurring IPO-related share-based compensation - 59,719 19,906 179,157
Business expansion expense - 61,770 - 185,310
Adjusted Operating Income (Loss) $ 369,723 $ 55,663 $ (1,723,568) $ (472,655)
Revenue $ 35,848,861 $ 36,099,179 $ 100,059,669 $ 96,223,647
Adjusted Operating Margins (%) 1.0 0.2 (1.7) (0.5)
For the Three Months Ended
September 30, 		For the Nine Months Ended
September 30,
2025 2024 2025 2024
USD USD USD USD
Loss before income taxes $ (68,467) $ (430,711) $ (3,202,595) $ (1,268,111)
Adjustments:
Non-recurring IPO-related share-based compensation - 59,719 19,906 179,157
Business expansion expense - 61,770 - 185,310
Adjusted loss before income taxes (68,467) (309,222) (3,182,689) (903,644)
Less: income taxes at 18% rate (12,324) (55,660) (572,884) (162,656)
Less: net loss attributable to non-controlling shareholders (296,734) (148,111) (616,140) (460,761)
Adjusted Net Income (Loss) $ 240,591 $ (105,451) $ (1,993,665) $ (280,227)
Beginning in the first quarter of 2025, we have revised the presentation of non-GAAP measures to provide more meaningful insight into the Company's performance. Historical comparative figures have been adjusted to reflect the current presentation format. These changes are intended to better align with how management evaluates results and makes operating decisions. Reconciliations to the most directly comparable GAAP measures are provided to support transparency and comparability.
FGI Industries Ltd. published this content on November 14, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 14, 2025 at 21:31 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]