Core Viewpoint - Karat Packaging, Inc. reported lower-than-expected fourth-quarter 2024 earnings, leading to a 5% decline in share price, despite a year-over-year earnings improvement of 21% [1][9]. Financial Performance - The adjusted EPS for Q4 2024 was 29 cents, missing the Zacks Consensus Estimate of 37 cents by 21.6% [1]. - Total revenues for the quarter were $101.6 million, slightly below the Zacks Consensus Estimate of $102.3 million, with a year-over-year revenue increase of 6% [3][4]. - The year-ago quarter benefited from a $4.8 million adjustment of online sales platform fees [3]. - Gross profit rose 17% year over year to $39.8 million, with a gross margin of 39.2%, reflecting a 350-basis point expansion from the previous year [6]. - Operating expenses increased by 10% year over year to $32.5 million, while adjusted EBITDA rose 32% to $11.3 million, resulting in an adjusted EBITDA margin of 11.1% [7]. Cash Flow and Position - As of December 31, 2024, cash and cash equivalents were reported at $21.6 million, down from $23.1 million a year earlier, with cash flow from operations at $48 million compared to $53 million in the prior year [8]. Guidance and Projections - For Q1 2025, the company anticipates year-over-year sales growth of 6-8%, with a projected gross margin between 37% and 39% [12]. - For the full year 2025, sales growth is expected to be in the range of 9-11%, with targeted gross margins between 36% and 48% [12]. Market Performance - Over the past year, Karat Packaging's shares have gained 3.3%, outperforming the industry growth of 2.6% [13].

FORM 10-K (Mark One) UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Washington, D.C. 20549 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from to Commission File Number 001-40336 For the fiscal year ended December 31, 2024 Karat Packaging Inc. (Address of registrant's principal executive offices) (Zip code) (626) 965-8882 (Registrant's telephone number ...

Financial Data and Key Metrics Changes - The company reported net sales of $101.6 million for Q4 2024, a 6.3% increase from $95.6 million in the prior year quarter [16] - Gross profit increased 16.8% to $39.8 million, with gross margin expanding by 350 basis points to 39.2% [20] - Net income for Q4 2024 rose 40.3% to $5.9 million, with a net income margin of 5.8% compared to 4.4% in the prior year [22] - Adjusted EBITDA increased to $11.3 million for Q4 2024 from $8.6 million in the prior year quarter, with an adjusted EBITDA margin of 11.1% [23] Business Line Data and Key Metrics Changes - Sales to the distributor channel increased by 13.8%, while sales to national and regional chains rose by 1.7%. Retail channel sales decreased by 1.4% [18] - Eco-Friendly product sales grew 11% year over year, representing 34.5% of total sales [10] Market Data and Key Metrics Changes - The strongest growth was observed in the Midwest, with California stabilizing and showing modest growth in December [8][9] - The company reduced reliance on China for imports to approximately 20%, with over 50% of global purchases coming from Taiwan in 2024 [7] Company Strategy and Development Direction - The strategic focus for 2025 includes driving sales growth and improving operational efficiencies, with plans to expand into the supermarket sector [11][13] - A new 187,000 square foot distribution center is set to be operational by May 2025, nearly doubling distribution capacity in California [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued positive momentum into 2025, with robust sales growth observed in January and February [11] - The company anticipates minimal long-term impact from recently imposed tariffs due to a strong U.S. dollar and stable ocean freight rates [8] Other Important Information - The Board of Directors approved an increase in the quarterly cash dividend payment to $0.45 per share [14] - The company expects net sales for Q1 2025 to increase by 6% to 8% over the prior year quarter, with a full-year revenue growth expectation of 9% to 11% [25][26] Q&A Session Summary Question: What is the expectation for revenue growth acceleration in Q1 2025? - Management noted that California's market has stabilized and is growing modestly, with significant growth in Texas and the Midwest [29] Question: How will adjusted EBITDA margins differ between Q1 and the full year? - Management indicated that operational savings from shipping and reduced lease rates will contribute positively to margins [36] Question: What are the drivers of revenue growth in 2025? - Volume growth is expected to be in the double digits, while pricing will see some increases due to tariffs [41] Question: How will the company handle freight costs in 2025? - Management expects freight costs to decrease, benefiting margins, with operational expenses anticipated to come down in Q2 [52][54] Question: What is the outlook for cash flow and capital spending in 2025? - The company plans to invest around $5 million in capital expenditures, primarily for new trucks, while maintaining a strong free cash flow conversion ratio [74][75]

Karat Packaging, Inc. (NASDAQ:KRT) Q4 2024 Earnings Conference Call March 13, 2025 5:00 PM ET Company Participants Roger Pondel - PondelWilkinson Inc., Investor Relations Alan Yu - Chairman and Chief Executive Officer Jian Guo - Chief Financial Officer Conference Call Participants Ryan Meyers - Lake Street Capital Markets Jake Bartlett - Truist Securities Brian Butler - Stifel Michael Francis - William Blair Roger Pondell Good afternoon, everyone. Welcome to Karat Packaging's 2024 fourth quarter conference ...

Karat Packing (KRT) came out with quarterly earnings of $0.29 per share, missing the Zacks Consensus Estimate of $0.37 per share. This compares to earnings of $0.24 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -21.62%. A quarter ago, it was expected that this company would post earnings of $0.52 per share when it actually produced earnings of $0.47, delivering a surprise of -9.62%.Over the last four quarters, the company ha ...

Karat Packaging Reports Fourth Quarter and Full Year 2024 Financial Results — Robust Growth, Including Record Full Year Gross Margin, as Business Continues to Expand — CHINO, Calif, March 13, 2025 – Karat Packaging Inc. (Nasdaq: KRT) ("Karat" or the "Company"), a specialty distributor and manufacturer of environmentally friendly, disposable foodservice products and related items, today announced financial results for its fourth quarter and full year ended December 31, 2024. Fourth Quarter 2024 Highlights Gu ...

Core Insights - Karat Packaging Inc. reported robust growth in its fourth quarter and full year 2024, achieving a record gross margin as the business continues to expand [1][4][8] Fourth Quarter 2024 Highlights - Sales volume grew by 14% and net sales increased by 6.3% to $101.6 million, compared to $95.6 million in the prior-year quarter [4][8] - Eco-friendly product sales rose by 11% year-over-year, accounting for 35% of total sales [6] - Gross profit for the fourth quarter increased by 16.8% to $39.8 million, with a gross margin of 39.2%, up from 35.7% in the prior-year quarter [9][11] - Net income for the fourth quarter was $5.9 million, a 40.3% increase from $4.2 million in the prior-year quarter, resulting in a net income margin of 5.8% [13] Full Year 2024 Results - Net sales for the full year increased by 4.2% to $422.6 million, driven by volume growth and changes in product mix [15] - Gross profit for the year rose by 7.4% to $164.3 million, with a gross margin of 38.9%, up from 37.7% in the prior year [18] - Operating expenses for the year were $126.6 million, or 29.9% of net sales, compared to $111.0 million, or 27.4% of net sales, in the prior year [19] - Net income for the full year was $30.8 million, down from $33.2 million in 2023, with adjusted EBITDA of $55.3 million [20][21] Guidance - For the first quarter of 2025, net sales are expected to increase by 6% to 8%, with a gross margin projected between 37% to 39% [9] - Full year 2025 net sales are anticipated to grow by 9% to 11%, with a gross margin expected to be between 36% to 38% [9] Strategic Initiatives - The company is diversifying its supply chain, reducing dependence on China to approximately 20%, and increasing sourcing from countries like Taiwan [5] - A new 187,000 square-foot distribution center in Chino, California, is set to enhance capacity ahead of the summer peak season [7]

Core Viewpoint - Karat Packaging Inc. has signed a lease for a new 187,000 square-foot warehouse and distribution center in Chino, California, which will nearly double its current distribution capabilities and support growth initiatives [1][2]. Company Expansion - The new facility will enhance inventory management and ensure faster delivery times, crucial for accommodating the company's growth strategy [2]. - The expansion allows for nearly doubling inventory in California and adding approximately 500 new SKUs of paper products, improving operational efficiencies [3]. Product and Service Offerings - Karat Packaging specializes in disposable foodservice products, including containers, bags, tableware, and eco-friendly options under the Karat Earth® line, which focuses on sustainability [4]. - The company also provides customized solutions, including product development, design, printing, and logistics services [4].

CHINO, Calif., Feb. 27, 2025 (GLOBE NEWSWIRE) -- Karat Packaging Inc. (“Karat” or the “Company”) (Nasdaq: KRT), a specialty distributor and manufacturer of environmentally friendly, disposable foodservice products and related items, today announced it will release its 2024 fourth quarter and full year financial results after market close on Thursday, March 13, 2025. The Company will host an investor conference call on the same day. Call Date: Thursday, March 13, 2025Time: 2:00 p.m. PT/5:00 p.m. ETPhone: 646 ...

Financial Data and Key Metrics - Net sales for Q3 2024 increased by 6.9% to $112.8 million compared to $105.5 million in Q3 2023 [14] - Sales volume grew nearly 10% year-over-year [14] - Gross margin improved to 38.6% in Q3 2024 from 36.9% in Q3 2023, despite higher ocean freight costs [11][17] - Net income increased by 1.3% to $9.3 million in Q3 2024, with a net income margin of 8.2% [19] - Adjusted EBITDA was $14.7 million in Q3 2024, down from $15.2 million in Q3 2023, with an adjusted EBITDA margin of 13.0% [20] - Operating cash flow for Q3 2024 was $19.5 million, and the company ended the quarter with $115.6 million in working capital [21] Business Line Performance - Online sales grew by 32.8% in Q3 2024, driven by $3 million in online platform fees [6][15] - Retail and distributor channel sales increased by 9.2% and 3.3% respectively [15] - Sales to national and regional chains remained flat [15] - Eco-friendly product sales grew by 9% year-over-year, representing 33.4% of total sales in Q3 2024 [8] Market Performance - Strong growth was observed in the Midwest, Northwest, and East Coast regions [10] - Sales in California, the company's largest market, stabilized after a sharp decline in previous quarters [10] Strategic Direction and Industry Competition - The company is expanding into the supermarket chain category, with initial shipments to major grocery chains starting in late September and mid-October [7] - A new line of rPET cups and lids, made with over 25% recycled PET material, is expected to launch by the end of Q4 2024 [9] - The company is focusing on eco-friendly product development to enhance its competitive edge [9] - Efforts to optimize inventory sourcing and management, control expenses, and enhance warehouse capabilities are ongoing [12][13] Management Commentary on Operating Environment and Future Outlook - Management is encouraged by the positive momentum and expects Q4 2024 gross margins to remain between 39% and 40% [11][23] - The company reaffirmed its full-year 2024 guidance and expects mid to high single-digit sales growth in Q4 2024 [23] - The Board of Directors approved an increase in the quarterly cash dividend to $0.40 per share, reflecting confidence in the company's liquidity and long-term outlook [22] Other Important Information - The company implemented measures to reduce labor and operating costs, which are expected to yield benefits in Q4 2024 [13] - A new distribution center in the Southeast region is being sought to support anticipated business growth [13] Q&A Session Summary Question: Clarification on Q4 sales growth guidance [24] - The company expects mid to high single-digit sales growth in Q4 2024, with a double-digit growth rate when excluding a $6 million accounting adjustment from Q4 2023 [25][26][31] Question: Flat revenue in national and regional chains [27] - Pricing adjustments were made to remain competitive, and full annualized volume with a major supermarket chain customer is expected to benefit Q4 2024 [29][30] Question: Supermarket chain opportunity [36] - Initial annualized revenue from new supermarket chain accounts is projected at $5-6 million, with potential growth to $15 million for one account [37] - The company is shifting focus to bakery and deli packaging, which offers higher growth potential compared to traditional cup business [38][39] Question: Eco-friendly product growth [40] - The company is launching new eco-friendly products, including corrugated box takeout containers, to meet rising demand for sustainable packaging [40][41] Question: Gross margin sustainability [43] - Gross margins are expected to remain in the high 30s to low 40s, supported by online sales growth and stabilizing ocean freight costs [44][45] Question: Double-digit growth outlook [49] - The company expects double-digit growth in Q1 2025, driven by strong online sales and new market opportunities [50] Question: Operating cost growth [51] - Increased online advertising expenses are expected to support revenue growth, with a goal to grow online sales to $125 million in 2025 [51] Question: Capital expenditure for growth [52] - Capital expenditure will focus on expanding warehouse space in the Southeast region, with no significant increase in other areas [52] Question: Data breach impact [53] - The company reported no material data breach or monetary damages from a recent incident [53]