Financial Performance - Record quarterly net sales of $124.5 million, up 10.4% from $112.8 million in the prior-year quarter[6] - Net income for the third quarter was $7.6 million, compared to $9.3 million in the prior-year quarter, resulting in a net income margin of 6.1%[13] - Adjusted EBITDA for the third quarter was $13.1 million, with an adjusted EBITDA margin of 10.5%, down from 13.0% in the prior-year quarter[14] - Net sales for Q3 2025 reached $124.5 million, a 10.4% increase from $112.8 million in Q3 2024[28] - Adjusted diluted earnings per common share for the first nine months of 2025 was $1.27, compared to $1.35 per share in the same period last year[22] - Operating income for Q3 2025 decreased to $8.6 million, compared to $11.3 million in Q3 2024, reflecting a decline in operating margin from 10.0% to 6.9%[28] - Net income attributable to Karat Packaging Inc. for Q3 2025 was $7.3 million, down from $9.1 million in Q3 2024, with diluted earnings per share of $0.36[28] - The diluted earnings per common share for Q3 2025 was $0.36, compared to $0.45 in Q3 2024, while the nine-month diluted earnings per share was $1.22 for 2025, slightly up from $1.21 in 2024[36] Cost and Expenses - Gross margin decreased to 34.5%, down from 38.6% in the prior-year quarter, primarily due to increased import costs[10] - Cost of goods sold for the third quarter increased 17.8% to $81.6 million, driven by higher import duties and tariffs[9] - Operating expenses for the third quarter were $34.3 million, an increase from $32.2 million in the prior-year quarter, mainly due to higher shipping costs[11] - Gross profit for Q3 2025 was $42.9 million, slightly down from $43.5 million in Q3 2024, resulting in a gross margin of 34.4%[28] - Stock-based compensation expense for Q3 2025 was $0.01 per share, down from $0.02 per share in Q3 2024[36] Guidance and Future Projections - Full year guidance maintained for net sales, gross margin, and adjusted EBITDA margin, pending potential impacts from additional tariff changes[6] - Anticipated new business supplying paper bags projected to add approximately $20 million in annual revenue, with full fulfillment expected by Q1 2026[7] Cash Flow and Assets - Cash and cash equivalents decreased to $24.0 million from $31.6 million at the end of 2024[32] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $18.5 million, down from $39.7 million in the same period of 2024[32] - Free Cash Flow for the nine months ended September 30, 2025, was $14,694 million, a decrease from $36,424 million in the same period of 2024[38] - Total assets increased to $302.8 million as of September 30, 2025, compared to $294.5 million at the end of 2024[32] - The company reported a total of $84.1 million in inventories as of September 30, 2025, up from $70.7 million at the end of 2024[32] - Total liabilities increased to $141.3 million as of September 30, 2025, compared to $132.3 million at the end of 2024[32] Adjusted EBITDA and Non-GAAP Measures - Adjusted EBITDA for Q3 2025 was $13.1 million, representing 10.5% of net sales, compared to $14.7 million or 13.0% in Q3 2024[33] - The adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by net sales, providing insight into operational efficiency[41] - The company emphasizes the use of non-GAAP financial measures to assess core performance, which may not be directly comparable to other companies[39] - Future financial targets for adjusted EBITDA margin are subject to variability and complexity, making precise GAAP reconciliations challenging[41] Other Financial Information - The company incurred secondary offering transaction costs of $214 million for the nine months ended September 30, 2025, impacting the adjusted earnings per share[37] - The company reported a net income of $9,262 million for the three months ended September 30, 2024, with a significant contribution from interest income and tax provisions[35] - For the nine months ended September 30, 2025, consolidated Adjusted EBITDA reached $42,656 million, with Karat Packaging at $39,854 million and Global Wells at $2,937 million[35] - Adjusted EBITDA for the three months ended September 30, 2024, was $14,715 million, with Karat Packaging contributing $13,850 million and Global Wells contributing $894 million[35]

Core Insights - Karat Packaging Inc. reported record sales for the third quarter of 2025, achieving net sales of $124.5 million, a 10.4% increase from $112.8 million in the same quarter last year, driven by strong volume growth and a favorable product mix [4][7][8] - The company maintained a gross margin of 34.5%, despite rising import costs due to increased duties and tariffs, which accounted for 14.4% of net sales compared to 8.6% in the prior year [4][10] - Karat is diversifying its sourcing strategy, increasing domestic sourcing from 14.6% to 20.4% while reducing imports from Taiwan from 58.0% to 41.6% [5] Financial Performance - Net income for the third quarter was $7.6 million, down from $9.3 million in the prior-year quarter, resulting in a net income margin of 6.1% compared to 8.2% [8][13] - Adjusted EBITDA for the third quarter was $13.1 million, with an adjusted EBITDA margin of 10.5%, down from 13.0% in the prior-year quarter [14] - For the first nine months of 2025, net sales increased by 9.7% to $352.1 million, with net income rising 2.0% to $25.5 million [15][21] Business Developments - The company secured a major expansion to supply paper bags to a national chain, projected to add approximately $20 million in annual revenue, with full fulfillment expected by Q1 2026 [6] - Karat's business trends remain strong, with expectations for net sales in the fourth quarter to increase by 10% to 14% year-over-year [8] Cost Structure - Cost of goods sold for the third quarter increased by 17.8% to $81.6 million, primarily due to higher import costs and increased sales volume [9][16] - Operating expenses rose to $34.3 million, driven by higher shipping costs and rent expenses related to facility expansions [11][19] Guidance - The company is maintaining its full-year guidance for net sales, gross margin, and adjusted EBITDA margin, while closely monitoring potential impacts from tariff changes [8]

Core Points - Karat Packaging Inc. has declared a regular quarterly dividend of $0.45 per share, payable on or about November 28, 2025, to stockholders of record as of November 21, 2025 [1] - The board has authorized a share repurchase program to buy up to $15.0 million of the Company's common stock [2] - The CEO expressed confidence in the Company's growth potential and financial strength, emphasizing a commitment to delivering long-term value to shareholders [3] Dividend Announcement - The declared quarterly dividend is $0.45 per share [1] - Payment date is set for November 28, 2025, with a record date of November 21, 2025 [1] Share Repurchase Program - The program allows for the repurchase of up to $15.0 million of common stock [2] - Repurchases will be conducted in accordance with applicable securities laws and can occur through various methods [4] - The program has no expiration date and can be modified or terminated at the board's discretion [4] Company Overview - Karat Packaging Inc. specializes in disposable foodservice products, serving national and regional restaurants [5] - Product offerings include food containers, bags, tableware, cups, and eco-friendly options under the Karat Earth® line [5] - The company also provides customized solutions, including product development and logistics services [5]

Core Insights - Investors are increasingly turning to dividend-yielding stocks during market turbulence and uncertainty, as these companies typically have high free cash flows and offer substantial dividend payouts [1] Company Summaries - **Robert Half Inc (NYSE:RHI)** - Dividend Yield: 8.89% - Barclays analyst Manav Patnaik maintained an Equal-Weight rating and reduced the price target from $45 to $36 as of October 23, 2025, with an accuracy rate of 74% [7] - BMO Capital analyst Jeffrey Silber maintained a Market Perform rating and cut the price target from $36 to $31 on October 23, 2025, with an accuracy rate of 72% [7] - Recent quarterly results were disappointing, as reported on October 22 [7] - **Karat Packaging Inc (NASDAQ:KRT)** - Dividend Yield: 7.54% - Truist Securities analyst Jake Bartlett maintained a Hold rating and raised the price target from $28 to $31 on May 12, 2025, with an accuracy rate of 67% [7] - William Blair analyst Ryan Merkel downgraded the stock from Outperform to Market Perform on January 2, 2025, with an accuracy rate of 65% [7] - The company is set to report third-quarter financial results on November 6 [7] - **United Parcel Service Inc (NYSE:UPS)** - Dividend Yield: 6.90% - Citigroup analyst Ariel Rosa maintained a Buy rating and increased the price target from $112 to $120 on October 29, 2025, with an accuracy rate of 68% [7] - UBS analyst Thomas Wadewitz maintained a Buy rating and raised the price target from $110 to $113 on October 29, 2025, with an accuracy rate of 71% [7] - The company reported better-than-expected third-quarter financial results and provided fourth-quarter sales guidance above estimates on October 28 [7]

Company Overview - Karat Packaging Inc. (KRT) is a holding company with its major subsidiary, Lollicup USA Inc., specializing in the distribution and manufacturing of single-use disposable products primarily for the restaurant and foodservice industry [1]. Market Outlook - The company expresses an optimistic outlook for the future, emphasizing the importance of adapting investment styles as the world evolves [1]. - The sentiment highlights that opportunities are abundant, but success requires a humble mindset and a commitment to continuous learning [1]. Investment Strategy - The company acknowledges that while it is possible to outperform the market, this may come with increased volatility, which is acceptable as part of a broader investment plan [1].

Core Insights - Karat Packaging (KRT) operates as a holding company with its primary subsidiary, Lollicup USA Inc, focusing on the distribution and manufacturing of single-use disposable products for the restaurant and foodservice industry [1] Company Overview - KRT's major subsidiary, Lollicup USA Inc, specializes in single-use disposable products, indicating a strong position in the foodservice sector [1] Market Outlook - The company expresses an optimistic view towards the future, emphasizing the importance of adaptability in investment strategies as the market evolves [1] - The sentiment reflects a belief in the presence of numerous opportunities, albeit with the acknowledgment of potential market volatility [1]

Core Insights - The article compares two companies in the Containers - Paper and Packaging sector: Karat Packing (KRT) and Packaging Corp. (PKG), focusing on which stock may be undervalued [1] Valuation Metrics - KRT has a forward P/E ratio of 14.90, while PKG has a forward P/E of 19.80, indicating KRT may be more attractively priced [5] - KRT's PEG ratio is 1.23, compared to PKG's PEG ratio of 1.44, suggesting KRT has a better growth-to-price ratio [5] - KRT's P/B ratio is 3.02, while PKG's P/B ratio is 3.82, further indicating KRT's relative undervaluation [6] Analyst Outlook - KRT currently holds a Zacks Rank of 2 (Buy), reflecting a more favorable earnings estimate revision trend compared to PKG, which has a Zacks Rank of 3 (Hold) [3][7] - The improving earnings outlook for KRT positions it as a superior value option in the current market [7] Value Grades - KRT has a Value grade of B, while PKG has a Value grade of C, highlighting KRT's stronger valuation metrics [6]

Core Viewpoint - The market anticipates a year-over-year decline in earnings for Karat Packing (KRT) despite an increase in revenues, with the actual results being crucial for stock price movement [1][2]. Earnings Expectations - Karat Packing is expected to report quarterly earnings of $0.39 per share, reflecting a year-over-year decrease of 17% [3]. - Revenues are projected to reach $124 million, which is a 10% increase compared to the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the past 30 days, indicating a stable outlook from covering analysts [4]. - The Most Accurate Estimate for Karat Packing is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -1.30%, suggesting a bearish sentiment among analysts [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict deviations from consensus estimates, but it is more reliable for positive readings [9][10]. - Karat Packing's current Zacks Rank is 2 (Buy), but the negative Earnings ESP complicates predictions for an earnings beat [12]. Historical Performance - In the last reported quarter, Karat Packing was expected to earn $0.60 per share but only achieved $0.57, resulting in a surprise of -5.00% [13]. - Over the last four quarters, the company has only surpassed consensus EPS estimates once [14]. Industry Context - Greif (GEF), a competitor in the Zacks Containers - Paper and Packaging industry, is expected to report earnings of $0.61 per share, indicating a significant year-over-year decline of 46% [18]. - Greif's revenues are projected to be $687.24 million, down 51.5% from the previous year, with a negative Earnings ESP of -2.06% and a Zacks Rank of 4 (Sell) [19][20].

Core Viewpoint - The article emphasizes the importance of value investing and highlights Karat Packaging (KRT) as a strong candidate for value investors due to its favorable financial metrics and Zacks Rank [2][3][7] Company Analysis - Karat Packaging (KRT) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating it is considered a high-quality value stock [3] - KRT's PEG ratio is 1.13, which is lower than the industry average of 1.48, suggesting it may be undervalued relative to its expected earnings growth [4] - The company has a P/B ratio of 2.98, significantly lower than the industry average of 4.64, indicating a favorable market value compared to its book value [5] - KRT's P/S ratio stands at 1.13, which is slightly below the industry average of 1.18, reinforcing the notion of its undervaluation [6] - Overall, KRT's financial metrics suggest it is likely being undervalued, supported by a strong earnings outlook [7]

Company Overview - Karat Packaging Inc. is a specialty distributor and manufacturer of a wide range of disposable foodservice products, primarily serving national and regional restaurants and foodservice settings across the United States [2] - The product offerings include food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves, and other related items [2] - The company emphasizes eco-friendliness through its Karat Earth® line, which features sustainably focused products made from renewable resources [2] - Karat Packaging also provides customized solutions, including new product development, design, printing, and logistics services [2] Financial Results Announcement - Karat Packaging Inc. will release its 2025 third quarter financial results after market close on Thursday, November 6, 2025 [1] - An investor conference call will be held on the same day at 2:00 p.m. PT/5:00 p.m. ET [1] - The conference call can be accessed via phone or through a webcast available on the company's investor relations website [1]