IPO news: Here are a few points to note as FGI Industries goes public this week

The IPO market is expected to see strong activity in 2022 compared to the previous year with several new candidates likely to make their market debut. This week has FGI Industries on the list. Here’s what to look for when this supplier of bath furniture goes public.

IPO details

FGI Industries Ltd. is scheduled to go public on Thursday, January 13. It will begin trading on NASDAQ under the ticker symbol FGI. The company will offer 2.5 million shares at a price range of between $6 and $8. The IPO will be managed by The Benchmark Company and Northland Capital Markets.

Company intro

FGI Industries is a global supplier of kitchen and bath products. The company sells products such as sanitaryware, bath furniture, shower systems, kitchen cabinetry and other accessory items, mainly for repair and remodel and to a lesser extent, new home or commercial construction. Its products are sold through mass retail centers, wholesale and commercial distributors, online retailers and specialty stores.

The company’s products fall into three categories – Sanitaryware, Bath Furniture, and Other. The Sanitaryware category includes bath products such as toilets, sinks and pedestals. FGI’s main owned brands in this category include Foremost, which is retail-focused, and contrac, which is wholesale-focused.

The Bath Furniture category mainly includes wood and wood-substitute furniture for bathrooms such as vanities, mirrors, cabinets and other storage systems. These are mainly sold under the Foremost brand. The Other category includes shower system products which are typically sold as private label or under the Foremost and Jetcoat brands. The company is also developing a custom kitchen cabinetry brand under its Covered Bridge Cabinetry and Kitchens by Foremost lines of products within this category.

Financials

For the year ended December 31, 2020, FGI generated revenues of $134.8 million and net income of $4.7 million. This compares to revenues of $126.3 million and net income of $1.6 million in 2019. For the nine months ended September 30, 2021, the company generated revenue of $129.7 million and net income of $6.9 million compared to revenue of $99.3 million and net income of $4 million in the same period a year ago.

Market opportunity

In its regulatory filings, FGI states that according to the National Kitchen and Bath Association, the projected consumer spend for the US bath and kitchen markets is estimated to be approx. $158 billion in 2021, of which approx. $75 billion is in product categories that the company operates in.

Barring extreme recession years in the US such as 2007-2009, the repair and remodel markets have experienced consistent 3% to 5% annual growth rates for more than 25 years. This growth has mainly been driven by factors such as the pace of household formation, home price appreciation and strong housing turnover. These growth rates provide a predictable and recurring revenue model for the majority of the company’s product lines.

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