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spk00: and ongoing investment in our growth initiative, including marketing spend for FlashGuard, Ida Porter, and Keychain Cabinetry. Gap operating income was negative 0.3 million in the quarter down from breakeven year over year. Higher operating expenses due to investing in our growth initiative accounted for the loss as overall revenue and growth margin were higher in the quarter. Moving to our balance sheet, at the end of the first quarter, FGI has $17.8 million of total liquidity, which we believe is more than sufficient to fund our growth initiative. The decline in total liquidity from year-end 2023 was largely driven by an increase in working capital requirements, which is seasonally highest in the first quarter of the year. We are leaving 2024 guidance unchanged with revenue in the range of 115 to 128 million, adjusted operating income in the range of 2.8 to 3.8 million, and adjusted net income in the range of 1.2 to 2 million. Please note that the guidance for adjusted operating income and adjusted net income is through certain non-recurring items. That completes our prepared remarks operator. We are now ready for the question and answer portion of our call.
spk02: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, our first question comes from Greg Gibbous with Northland Securities. Please go ahead.
spk03: Hey, good morning, David Perry. Thanks for taking the questions. Congrats on the results. You know, I guess first we could touch a little bit more on kind of your outlook remaining unchanged. Curious if, you know, Any changing expectations, you know, kind of implicit in that maintained range, you know, kind of drivers of where there was some upside in Q1, and maybe if anything's changed on a quarterly cadence basis relative to your expectations?
spk01: Sure. Yeah, it's a good question, and good morning, Greg. Yeah, Q1 went as expected. I think we've talked previously as we entered the year. We did expect some organic rebound. We didn't want to mention anything word tea stocking anymore and i think we've we've we've gotten past that so we saw a nice rebound in our pro sanitary wear business we're also seeing uh the results of some new implementation of our our new shower program uh rollouts that we have had mentioned on some previous calls so the momentum going in uh to q2 is as expected um you know it aligns with the guidance that we've put in place that's why we haven't made any adjustments and we continue to look forward to some of the additional new programs, rollouts that we expect that will be executed primarily in the second half. So as of now, I would say the order cadence and pipeline are positive, and we're looking forward to continuing in Q2.
spk03: Okay, got it. And you alluded to it a little bit in your pro channel, but wondering if you could just kind of discuss high level trends that you're seeing in your key channels? You know, whether anything is kind of standing out or changing favorably or unfavorably.
spk01: Yeah, I think what we're seeing, we're seeing and hearing things. So we're starting to see a moderation of inventory levels, which is the bright spot. Again, we talked a lot last year about the heavy inventory positions that our customers faced throughout the year. And a lot of that is moderated for the most part. And I think I mentioned On our last call, there's still some pockets in the market with individual customers of individual areas that may still be persistent. But for the most part, that's not going to be material on our business. And so what we're seeing is we are seeing a more organic rebound on the pro side. And there's some optimism there as well. The pros are looking at the builder side of the business, especially in the second half, going into Q4 as positive. Some of the builders have have discussed that in some of their reporting as far as their confidence in building recovery. And we're feeling some of that momentum on our pro business. And I would say just generally on the sanitary ware side, I think the momentum with, due to the lack of the destocking now is gonna rebound. And that's again, that's something that we have in our guide because it was sort of expected as we entered Q1 and Q2.
spk03: Perfect, appreciate the color there. And as it relates to maybe your gross margin expectations or how those you expect to trend relative to Q1, should we think about kind of continued expansion just due to that product line shift trend?
spk01: Yeah, we believe we will maintain our gross margins, but we're pretty confident based on a lot of the new business that we see coming our way that we'll be able to maintain those margins. And we've talked about this before. We will accelerate our overall gross margin dollars as we scale a lot of the higher margin businesses like Shower, which we're doing, but particularly Kitchens, not only the Covered Bridge Kitchens, but also the new digital venture with Isla Porter. So as those scale, you're going to see continued margin dollar growth. And I think we've also mentioned as pro-business rebounds and as we grow our sanitary ware business, while the sanitary ware business has lower gross profit percentages overall, we would expect, which is our midterm and long-term goal, is to grow our EBIT percentage on our dollars, our gross margin dollars, right? So as you combine the dollars from the sanitary ware business along with the higher gross profit percentages from our kitchens, We think we're going to be able to have a healthy growth in the short to midterm.
spk04: Great. Appreciate the caller. Thanks, guys. Sure.
spk02: This concludes our question and answer session. I would like to turn the conference back over to David Bruce for any closing remarks.
spk01: Thank you for the time and interest today. We appreciate your continued support of FGI. Stay well, and if we don't connect during the quarter, we look forward to speaking with you on our next quarterly call. The conference is now concluded.
spk02: Thank you for attending today's presentation. You may now disconnect.
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