FGI Industries Ltd.

Thank you for standing by. This is the conference operator. Welcome to the FGI second quarter 2022 earnings call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Paul Bartolai, Managing Director. Please go ahead.

Thank you. Welcome to FGI Industries' second 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, including the final prospectus from our initial public offering. Additionally, please note that you can find reconciliations of historical non-GAAP financial measures discussed during our call in the press release issued yesterday and in the appendix to this presentation. Today's call will begin with a performance review and strategic update from David 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'll turn the call over to Dave.

Thanks, Paul, and good morning to everyone. We generated another quarter of solid operating results with second quarter revenue and adjusted operating income coming in ahead of our expectations. As we forecasted, we have seen some moderation in the broader R&R market as a result of some of the headwinds facing the housing market. So I'm very proud of our ability to generate continued strong revenue growth and sequential margin recovery despite the slower market growth. We remain encouraged by the organic growth outlook for our business, as our portfolio of innovative, high-quality products continues to be received favorably by consumers and the solid order momentum we experienced during the first half is continuing into the third quarter. As a result, we believe we will remain on track to achieve our full-year financial guidance. Demand trends remain steady across our key product categories during the second quarter, with total revenue increasing by 13% on a year-over-year basis, driven by a strong demand for sanitary wear, and continued growth at our newer product categories. Our sanitary ware business grew over 50% in the second quarter, with both the wholesale and retail channels generating strong growth, while our other product category, which is primarily our shower systems and custom kitchen cabinetry business, grew 35% in the quarter. As I mentioned, we have seen some moderation in the broader R&R market, with our bath furniture segment seeing the biggest impact within our product portfolio. Our bath furniture business was also negatively impacted by continued order delays due to supply chain issues and some pockets of elevated channel inventory. However, we remain encouraged by the broader trends in our bath furniture business and expect improved results in coming quarters. Overall, our strong growth in the quarter highlights the resilience of our key product categories and our ability to grow through broader market softness as a result of market share gains, growth in our new products, and expansion into new product categories. Based on our resilient end markets, portfolio of innovative products, and encouraging new organic growth initiatives, we expect our organic growth momentum to continue into the back half of the year. As we have highlighted on past calls, it is important to remember that roughly 80% of our revenue is tied to the repair and remodel market, which tends to be more stable and predictable than the new construction market. While June new home sales fell 17% year over year, the R&R market has remained more stable. We continue to make good progress in our efforts to offset elevated supply chain costs through pricing initiatives and other efficiency measures. While our adjusted operating margin was down year over year in the quarter, we saw roughly 150 basis points of sequential adjusted operating margin improvement from the first quarter of 2022, and we expect to see continued margin improvement in the back half of the year as a result of ongoing pricing actions, increased scale, improved mix, and efficiency gains. While we continue to monitor the macro environment, our focus is on driving above-market growth and creating value regardless of the market environment. Consistent with our long-term strategic plan to compound our growth rates above industry averages, FGI intends to drive value creation through a balanced focus on product innovation, organic growth, operational improvements, and efficient capital deployment. Some of our key accomplishments against these initiatives during the second quarter are as follows. First is our BPC strategy, which stands for Brands, Products, and Channels, and is the key driver of our organic growth strategy. We are pursuing a number of potentially meaningful organic growth programs that could be nice contributors to organic growth over the near and medium term. One area I would like to highlight is our custom kitchen cabinetry business, which includes our Covered Bridge and Craft & Main cabinetry brands. As a result of rapid growth in our dealer base, as well as ongoing discussions with large customers for future growth, we have invested in manufacturing capacity to address the current and future growth needs of this business, which, as we have stated before, generates higher incremental gross margins than the FGI average. We are making progress with our channel expansion as well, as we recently expanded our relationship with Hajoka Corporation, one of the largest wholesalers and building products and industrial supplies in the United States. We have significantly expanded the number of products available through Gojoka, and we are excited to expand our relationship with this important partner. Second is our focus on driving margin expansion. We continue to make progress offsetting the margin headwinds caused by supply chain disruptions and inflationary pressures. We generated strong sequential operating margin improvements during the second quarter, despite the negative impact on mix. We continue to expect sequential margin improvement in the back half of 2022, And longer term, we believe we have an opportunity to further expand margins through a more profitable mix, efficiency gains, and operating leverage. Finally is our dedication to efficient capital deployment. As we stated last quarter, our primary focus will continue to be on deploying capital towards organic growth strategies in the near term. We have a number of exciting programs in development and believe this is currently the best use of capital, as highlighted by our manufacturing investment in our custom kitchen cabinetry business. Meanwhile, we continue to actively pursue bolt-on opportunities and are engaged in conversations with potential targets, although we do not have clarity on the timing of when a potential transaction could occur. We are excited by the early progress on our strategic priorities, and we look forward to continuing to update the investment community on our progress against these important goals. With that, I will turn it over to Perry for a more detailed review of our financials.