Karat(US:KRT)2025-08-08 16:50PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presents Karat Packaging Inc.'s unaudited condensed consolidated financial statements and notes for interim periods Condensed Consolidated Balance Sheets (Unaudited) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :------------------ | | Total Assets | $320,963 | $294,522 | | Total Liabilities | $158,257 | $132,323 | | Total Stockholders' Equity | $162,706 | $162,199 | | Current Assets | $186,251 | $160,997 | | Current Liabilities | $69,498 | $46,447 | | Inventories | $88,779 | $70,722 | | Accounts Receivable, net | $36,385 | $26,736 | | Accounts Payable | $33,160 | $17,831 | | Related Party Payable | $7,974 | $3,130 | Condensed Consolidated Statements of Income (Unaudited) | Metric (in thousands, except per share data) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net sales | $123,986 | $112,600 | $227,610 | $208,213 | | Cost of goods sold | $74,879 | $69,193 | $137,741 | $127,204 | | Gross profit | $49,107 | $43,407 | $89,869 | $81,009 | | Operating income | $16,550 | $11,115 | $24,370 | $19,191 | | Net income | $11,052 | $9,227 | $17,867 | $15,703 | | Basic earnings per share | $0.55 | $0.46 | $0.87 | $0.76 | | Diluted earnings per share | $0.54 | $0.45 | $0.86 | $0.76 | Condensed Consolidated Statements of Stockholders' Equity (Unaudited) | Metric (in thousands) | January 1, 2025 | June 30, 2025 | | :-------------------- | :-------------- | :------------ | | Total Stockholders' Equity | $162,199 | $162,706 | Key Changes (Six Months Ended June 30, 2025): * Cash dividends declared: ($18,048) (sum of $9,017 and $9,031) * Net income attributable to Karat Packaging Inc.: $17,343 (sum of $6,409 and $10,934) Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $17,476 | $20,254 | | Net cash provided by (used in) investing activities | $1,164 | ($8,467) | | Net cash used in financing activities | ($19,675) | ($15,552) | | Net decrease in cash and cash equivalents | ($1,035) | ($3,765) | | Cash paid for income taxes | $5,491 | $3,315 | | Cash paid for interest | $948 | $1,040 | Notes to Condensed Consolidated Financial Statements 1. Nature of Operations - Karat Packaging Inc. (KRT) is a manufacturer and distributor of single-use disposable products for the restaurant and foodservice industries, including plastic, paper, biopolymer-based, and compostable forms20 - The company offers customized solutions such as new product design, custom printing, distribution of specialty food and beverage products, and logistics services20 - Products are supplied to national and regional distributors, restaurant chains, supermarkets, and small businesses, with manufacturing and distribution centers across the U.S.2122 2. Summary of Significant Accounting Policies - The unaudited condensed consolidated financial statements are prepared in accordance with US GAAP for interim financial information23 - The company consolidates its wholly-owned subsidiaries and Global Wells Investment Group, a variable interest entity where Karat Packaging is the primary beneficiary2534 - Revenue is primarily generated from product sales to chains, distributors, online, and retail customers, recognized upon transfer of control; logistics services revenue is recognized over time374143 Fair Value Measurements (in thousands) | Category | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 1 (Dec 31, 2024) | Level 2 (Dec 31, 2024) | | :------- | :---------------------- | :---------------------- | :--------------------- | :--------------------- | | Cash equivalents | $3,479 | $16,346 | $725 | $22,525 | | Short-term investments | — | $26,443 | — | $28,343 | | Publicly-traded equity securities | — | — | $31 | — | - The company adopted ASU 2023-07 (Segment Reporting) for its annual period beginning January 1, 2024, and interim period beginning January 1, 2025, requiring enhanced disclosure of significant expenses53 3. Inventories | Inventory Category (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :-------------- | :---------------- | | Raw materials | $4,325 | $6,640 | | Semi-finished goods | $1,733 | $1,885 | | Finished goods | $83,421 | $62,837 | | Subtotal | $89,479 | $71,362 | | Less: inventory reserve | ($700) | ($640) | | Total inventories | $88,779 | $70,722 | 4. Property and Equipment | Property and Equipment (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :------------------ | | Machinery and equipment | $66,203 | $66,928 | | Leasehold improvements | $19,212 | $19,193 | | Vehicles | $8,860 | $8,395 | | Furniture and fixtures | $1,015 | $1,015 | | Building | $38,779 | $38,779 | | Land | $11,907 | $11,907 | | Computer hardware and software | $113 | $94 | | Construction in progress | $256 | $431 | | Less: accumulated depreciation and amortization | ($62,850) | ($58,760) | | Total property and equipment, net | $83,495 | $87,982 | - Total depreciation and amortization expense for the six months ended June 30, 2025, was $5,353,000 ($2,270,000 in G&A and $3,083,000 in COGS)59 5. Goodwill | Goodwill (in thousands) | December 31, 2024 | June 30, 2025 | | :---------------------- | :---------------- | :------------ | | Balance | $3,510 | $3,510 | | Goodwill acquired | — | — | [6. Line of Credit](index=18&type=section&id=6.%20Line%20of%20Credit