FGI Industries Ltd. (NASDAQ:FGI) Q3 2022 Earnings Conference Call November 10, 2022 8:00 AM ET

Company Participants

Paul Bartolai - Investor Relations

David Bruce - President and Chief Executive Officer

Perry Lin - Chief Financial Officer

Conference Call Participants

Reuben Gardner - Benchmark

Greg Gibas - Northland Securities

Operator

Good morning and welcome to FGI Industries’ Third Quarter 2022 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Paul Bartolai. Please go ahead.

Paul Bartolai

Thank you. Welcome to FGI Industries’ third quarter 2022 results conference call. Leading the call today are President and CEO, David Bruce; and Chief Financial Officer, Perry Lin. We issued a press release after the market closed yesterday detailing our recent operational and financial results.

I would like to remind you that management’s commentary and responses to questions on today’s conference call may include forward-looking statements, which by their nature are uncertain and outside of the company’s control. Although these forward-looking statements are based on management’s current expectations and beliefs, actual results may differ materially. For a discussion of some of the factors that could cause actual results to differ, please refer to the Risk Factors section of our latest filings with the SEC.

Additionally, please note that you can find reconciliations of historical non-GAAP financial measures in the press release issued yesterday and in the appendix of this presentation. Today’s call will begin with the performance review and strategic update from Dave Bruce, followed by a financial review from Perry Lin. At the conclusion of these prepared remarks, we will open the line for questions.

With that, I will turn the call over to Dave.

David Bruce

Thanks, Paul and good morning to everyone. Our team continued to execute well during the third quarter, despite the uneven market conditions as we made significant progress on our margin recovery initiatives and made solid advancements on our organic growth programs.

As we forecasted entering the year, we have seen some moderation in the broader R&R market demand trends owing to the headwinds facing the housing market and these pressures were exacerbated by significant inventory destocking during the last two quarters. We were able to overcome these issues in the second quarter and still generate year-over-year revenue growth. However, the level of channel inventory reduction at some of our key customers was too significant to overcome in the third quarter, causing our revenues to decline versus the prior year period and come in below our expectations. While it is difficult to predict how long the channel inventory destocking will continue, we believe based on current discussions with our customers that we should return to more normalized levels of inventory purchases in 2023.