FGI Industries (NASDAQ:FGI) reported fourth-quarter 2025 results that management said reflected the company’s investments in organic growth initiatives across its “brands, products, and channels” (BPC) strategy, even as shifting trade policies and tariffs affected ordering patterns and volumes.
Fourth-quarter results shaped by pull-forward and tariffs
Chief Executive Officer David Bruce said investors should consider two factors when looking at fourth-quarter revenue of $30.5 million. First, he pointed to a difficult comparison versus the prior year, when customers “accelerated purchases ahead of anticipated trade policy shifts,” creating a significant order pull-forward in the fourth quarter of 2024. Second, Bruce cited “tariff headwinds” that contributed to lower volumes in the company’s sanitaryware and shower systems businesses, despite what he described as “positive underlying demand trends.”
Margins improved as expenses declined
Chief Financial Officer Jae Chung said fourth-quarter revenue declined 14.4% year over year to $30.5 million. Gross profit was $8.1 million, down 6.8% from the prior-year period, while gross margin increased to 26.7% from 24.6%.
Chung attributed the gross margin improvement to “better relative performance of some of our higher-margin businesses.” Operating expenses declined to $8.8 million from $10.0 million a year earlier, “due primarily to optimizing our warehouse operations,” he said.
GAAP operating loss improved to $0.7 million from a $1.3 million operating loss in the prior-year quarter. Chung said the improvement was driven by lower selling and distribution costs as well as lower R&D costs.
GAAP net loss attributable to shareholders was $2.6 million, compared with a net loss of $0.4 million in the year-ago period. Chung said net loss in both fourth-quarter 2025 and fourth-quarter 2024 included a valuation allowance on deferred tax assets, business expansion expense, and non-recurring IPO-related compensation. Excluding those items, adjusted net loss was $0.6 million versus an adjusted net loss of $0.7 million in the prior-year quarter.
Liquidity update and 2026 guidance
Chung said the company ended the fourth quarter with total liquidity of $8.5 million.
For full-year 2026, the company provided the following guidance:
- Revenue: $134 million to $141 million
- Adjusted operating income: $0.7 million to $2.5 million
- Adjusted net income: loss of $0.3 million to positive $1.1 million
Chung noted that adjusted operating income guidance excludes certain non-recurring items, and adjusted net income excludes certain non-recurring items and includes an adjustment for minority interest.
Management discusses demand trends and tariff uncertainty
During Q&A, Benchmark associate analyst John McGlade asked about end-market assumptions behind the company’s outlook. Bruce said the company entered 2025 with momentum before “global trade issues hit and disrupted some of that.” He added that management feels “really comfortable in all of our broader category momentum,” but expects uncertainty to persist “until the trade and tariff situation sort of equalize.” Bruce also referenced broader geopolitical risk, including “what’s happening now with the war in the Middle East.”
On demand early in 2026, Bruce said the company liked what it was seeing in the first quarter relative to expectations embedded in guidance. “We’ve been pretty happy with what we’ve been seeing for the most part,” he said, while reiterating that uncertainty remains.
McGlade also asked whether FGI or its customers might benefit from tariff refunds if they occur. Bruce said it was “way too early to tell,” and added that the company’s planning assumes tariffs will not remain static. He said management expects that “the IEPA tariffs that were negated by the Supreme Court most likely will come back in other forms in sectoral tariffs as the year goes on.”
Sourcing diversification and geographic growth initiatives
Northland Securities analyst Greg Gibas asked about the pickup in activity in the first quarter of 2026 versus ordering activity in the fourth quarter. Bruce again pointed to the prior-year pull-forward in late 2024 and described 2025 as a “whipsaw effect,” saying customers paused orders after major tariff impacts in the second quarter of 2025 while they assessed the situation. Bruce said those shifts disrupted inventory momentum and ordering patterns through the year.
Gibas also asked about progress on a “China Plus One” sourcing strategy. Bruce said the company had “secured some additional partnerships outside of China” and expects diversification to have business impact, including sourcing “such as Thailand, and others,” which he said would help lessen uncertainty. He added that the company is evaluating other regions beyond Southeast Asia and is working with new partners, saying management is “pretty confident” it can execute on several initiatives in the short term.
On growth opportunities, Bruce highlighted progress in India, saying dealer additions continued to drive growth, with a large part of it coming from Mumbai as the company begins to penetrate Delhi through new distributors and dealers. He also discussed a “new wholesale FAF initiative in Germany,” including the opening of a small distribution center and hiring a dedicated employee focused on that wholesale business, which Bruce said had been going well for the last eight to 10 months and “is continuing to grow.”
In the U.S., Bruce said the company has been making headway building representation and distribution for its wholesale business and is evaluating its logistics and distribution center footprint to better serve newer markets as it expands into new customers and territories.
About FGI Industries (NASDAQ:FGI)
FGI Industries ltd. supplies kitchen and bath products in the United States, Canada, Europe, and internationally. The company sells sanitaryware products, such as toilets, sinks, pedestals, and toilet seats; wood and wood-substitute furniture for bathrooms, including vanities, mirrors, laundry, medicine cabinets, and other storage systems; shower systems; and customer kitchen cabinetry and other accessory items under the Foremost, avenue, contrac, Jetcoat, rosenberg, and Covered Bridge Cabinetry brand names.
