Karat(KRT) - 2024 Q3 - Quarterly Results

Financial Performance - Net sales for Q3 2024 were $112.8 million, a 6.9% increase from $105.5 million in Q3 2023[2] - Gross profit for Q3 2024 rose to $43.5 million, up 11.7% from $38.9 million in the prior-year quarter, with a gross margin of 38.6%[2][8] - Net income for Q3 2024 was $9.3 million, reflecting a 1.3% increase from $9.1 million in Q3 2023, with a net income margin of 8.2%[2][12] - Adjusted EBITDA for Q3 2024 was $14.7 million, down from $15.2 million in the prior-year quarter, with an adjusted EBITDA margin of 13.0%[2][13] - Total net sales for the three months ended September 30, 2024, reached $112,771,000, up from $105,528,000 in the same period of 2023, representing a growth of 11.9%[31] - Online sales increased significantly to $18,950,000 for the three months ended September 30, 2024, compared to $14,271,000 in 2023, marking a growth of 33.5%[31] - Adjusted EBITDA for the three months ended September 30, 2024, was $14,715,000, which is 13.0% of net sales, down from $15,227,000 or 14.4% of net sales in the same period of 2023[33] Future Outlook - The company expects Q4 2024 net sales to increase by mid to high single digits compared to the prior-year quarter[3] - Gross margin for Q4 2024 is anticipated to be between 39% and 40%, compared to 35.7% in the prior-year quarter[3] Cash Flow and Capital Allocation - Cash flows from operations for Q3 2024 totaled $19.5 million, supporting a balanced capital allocation strategy[4] - Cash and cash equivalents increased to $38,903,000 as of September 30, 2024, from $23,076,000 as of December 31, 2023, indicating a growth of 68.3%[32] - Total assets rose to $306,803,000 as of September 30, 2024, compared to $276,397,000 as of December 31, 2023, reflecting an increase of 11.0%[32] - The company paid dividends totaling $23,006,000 in the nine months ended September 30, 2024, compared to $16,917,000 in the same period of 2023, representing a 36.5% increase[32] - The board approved an increase in the quarterly cash dividend to $0.40 per share from $0.35 per share, reflecting a commitment to shareholder returns[22] Operating Expenses - Operating expenses for Q3 2024 were $32.2 million, up from $27.6 million in Q3 2023, primarily due to increased online sales platform fees and higher shipping costs[9] Liabilities and Shareholder Equity - Total liabilities increased to $143,207,000 as of September 30, 2024, from $113,707,000 as of December 31, 2023, an increase of 25.9%[32] - The weighted average common shares outstanding, diluted, was 20,133,813 for the three months ended September 30, 2024, compared to 19,994,648 for the same period in 2023[29] Historical Performance - Net income for the three months ended September 30, 2023, was $9,140 million, compared to a loss of $87 million in the previous period[40] - Adjusted EBITDA for the same period was $15,227 million, reflecting an increase from $14,374 million[40] - For the nine months ended September 30, 2023, net income reached $29,003 million, up from $499 million[41] - Adjusted EBITDA for the nine months was $51,623 million, compared to $49,078 million in the prior period[41] Expenses and Write-offs - Interest expense for the three months was $536 million, while interest income was $(454) million, resulting in a net interest expense of $82 million[40] - The provision for income taxes for the three months was $2,904 million, consistent with the previous period[40] - Depreciation and amortization expenses for the three months totaled $2,708 million, an increase from $2,405 million[40] - The company incurred secondary offering transaction costs of $453 million during the three months[40] - Write-off of inventory for the nine months was $1,710 million, indicating a strategic scaling back of production[41][42] - Impairment expenses and losses on machinery disposal for the nine months amounted to $2,135 million, reflecting adjustments in operational strategy[41][42] Market Expansion - The company initiated shipments of customized bakery package containers and utensils to major grocery chains, indicating successful market expansion efforts[5]