FGI Industries reported a sharp divergence across its geographic markets in the second quarter of 2026, with U.S. revenue increasing 20.3% year-over-year while sales declined substantially in Canada and Europe.
The kitchen and bath products supplier generated total Q2 revenue of $31.9 million, representing a 2.9% increase from the prior-year period. The U.S. was the primary source of growth, with revenue increasing 20.3%, while revenue decreased 24.5% in Canada and 21% in Europe. Management said Canada and Europe continued to experience softer demand conditions compared with the prior year.
FGI attributed part of the stronger U.S. performance to a recovery from the prior-year period, when the business was affected by the implementation of tariffs, along with contributions from recently launched programs. The company continues to evaluate ways to diversify and broaden its geographic sourcing as tariffs and broader economic uncertainty remain important factors affecting the industry.
Growth also varied considerably across FGI’s product categories. Sanitaryware revenue increased 5.9% year-over-year, while Shower Systems revenue rose 15.2%. By comparison, Bath Furniture revenue declined 15.5%, and the Other segment decreased 9.2%, reflecting what management described as a softer demand environment and continued tariff-related uncertainty affecting customer purchasing decisions.
In dollar terms, Sanitaryware revenue increased to $19.1 million from $18.1 million in the prior-year quarter, while Shower Systems revenue increased to $6 million from $5.2 million. Bath Furniture revenue decreased to $3.5 million from $4.1 million, and Other revenue, which primarily consists of Kitchen Cabinets, declined to $3.2 million from $3.5 million.
Despite the uneven demand environment, FGI delivered substantial improvement in profitability. Gross profit increased 22.5% year-over-year to $10.7 million, while gross margin expanded 530 basis points to 33.4% from 28.1% in the second quarter of 2025.
Operating income improved to $1.4 million from an operating loss of approximately $832,000 a year earlier. FGI said the improvement primarily reflected higher gross profit and lower selling and distribution costs. Operating margin and adjusted operating margin both reached 4.4%, compared with negative 2.7% in the prior-year period.
FGI also returned to bottom-line profitability. GAAP net income attributable to shareholders was approximately $1.3 million, or $0.65 per diluted share, compared with a net loss of $1.2 million, or $0.64 per diluted share, in the second quarter of 2025. Adjusted net income reached $1.2 million, or $0.60 per diluted share, compared with an adjusted net loss of $1.2 million in the prior-year period.
The company continues to invest in its Brands, Products and Channels strategy while maintaining discipline around operating expenses. Q2 operating expenses decreased 2.9% year-over-year to approximately $9.3 million, primarily due to lower selling and distribution expenses and optimization of warehouse operations.
FGI is also expanding several growth initiatives outside its established businesses. Covered Bridge continued to enter additional geographies and increase its dealer count, while the Isla Porter custom kitchen joint venture continued developing relationships with the premium design community. FGI also added dealers in India as it expands its presence in the market.
FGI ended the second quarter with $4.4 million of cash, $13 million of total debt and $3.4 million of availability under its credit facilities, resulting in total liquidity of $7.9 million. Management said internal investment remains the company’s near-term capital priority, including attracting new customers, expanding existing relationships, developing new products and manufacturing capabilities, and entering additional jurisdictions.
For fiscal 2026, FGI reaffirmed guidance for total net revenue of $134 million to $141 million. The company expects adjusted operating income of $0.7 million to $2.5 million and adjusted net income ranging from a loss of $0.3 million to income of $1.1 million.
KEY QUOTES:
“FGI reported total revenue of $31.9 million in the quarter, representing a year-over-year increase of 2.9%. Gross profit was $10.7 million, an increase of 22.5% compared to the prior year. The gross margin was 33.4% compared to 28.1% in the second quarter of 2025. The industry outlook remains uncertain due to tariffs and economic uncertainty but FGI’s strategic investments in our Brands, Products and Channels strategy continues. FGI and our customers continue to evaluate diversifying and broadening our geographic sourcing. Revenue increased 20.3% in the U.S., while revenue decreased 24.5% in Canada and 21.0% in the European market.”
Dave Bruce, CEO of FGI Industries
“FGI continues to invest in long-term growth through our BPC strategy and exercise discipline in overall operating expenses, which decreased 2.9% year-over-year to $9.3 million due primarily to lower selling and distribution and the optimization of our warehouse operations.”
Jae Chung, Chief Financial Officer of FGI Industries
