Karat(US:KRT)2025-11-07 18:18Financial Performance - Karat achieved record quarterly net sales of $124.5 million for the three months ended September 30, 2025, an increase of 10.4% compared to the same period in 2024[114] - Net income for the three months ended September 30, 2025, was $7.6 million, a decrease of 17.9% compared to the same period in 2024[114] - The company recorded consolidated Adjusted EBITDA of $13.1 million for the three months ended September 30, 2025, a decrease of 11.3% from the same period in 2024[115] - Net sales for the three months ended September 30, 2025, were $124.5 million, an increase of $11.7 million or 10.4% compared to the same period in 2024[122] - Operating income for the three months ended September 30, 2025, was $8.6 million, a decrease of $2.7 million or 23.9% compared to the same period in 2024[126] - For the nine months ended September 30, 2025, net sales were $352.1 million, an increase of $31.1 million or 9.7% compared to the same period in 2024[131] - Net income for the nine months ended September 30, 2025, was $25.5 million, an increase of $0.5 million or 2.0% compared to the same period in 2024[139] - The company reported a net income of $25.5 million for the nine months ended September 30, 2025, compared to $25.0 million in 2024[165] Profitability Metrics - The gross margin for the three months ended September 30, 2025, was 34.5%, reflecting a decrease of 410 basis points from the same period in 2024[114] - The company’s net income margin was 6.1% for the three months ended September 30, 2025, a decrease of 210 basis points from the same period in 2024[114] - Gross profit for the nine months ended September 30, 2025, was $132.8 million, an increase of $8.3 million or 6.7%, with a gross margin of 37.7%[133] - Adjusted EBITDA for the nine months ended September 30, 2025, was $42,656,000, accounting for 12.1% of net sales, down from $43,939,000 or 13.7% in 2024[147] Cash Flow and Liquidity - The company generated $1.0 million in net cash from operating activities for the three months ended September 30, 2025, a decrease of 95.0% compared to the same period in 2024[115] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $18.5 million, a decrease from $39.7 million in 2024[164] - Cash decreased by $23.6 million due to changes in working capital, primarily from a $13.9 million increase in inventory and an $11.2 million increase in accounts receivable[164] - The total cash and cash equivalents showed a net change of $(7.6) million for the nine months ended September 30, 2025[164] Expenses and Costs - Cost of goods sold increased by $12.3 million or 17.8% to $81.6 million for the three months ended September 30, 2025, primarily due to higher import costs and increased sales volume[123] - Operating expenses rose by $2.1 million or 6.6% to $34.3 million for the three months ended September 30, 2025, driven by increased shipping and transportation costs[125] Shareholder Returns - The Board of Directors approved a share repurchase program of up to $15.0 million in common stock on November 4, 2025[115] - A quarterly cash dividend of $0.45 per share was declared on November 4, 2025, to be paid on or about November 28, 2025[115] - The company declared a quarterly cash dividend of $0.45 per share, totaling $27,100,000 in dividends paid in the current fiscal year[159] - Cash dividends paid to shareholders amounted to $27.1 million for the nine months ended September 30, 2025, up from $23.0 million in 2024[168] Strategic Initiatives - The company strategically increased domestic purchases to mitigate the impact of tariffs and enhance supply chain resilience[114] - The company is exploring options for strategic acquisitions and investments to support growth, amid uncertainties in the global economy[160] Balance Sheet Highlights - Current assets increased to $170,679,000 as of September 30, 2025, from $160,997,000 at December 31, 2024, an increase of $9,682,000[162] - Current liabilities rose to $79,604,000 as of September 30, 2025, from $46,447,000 at December 31, 2024, an increase of $33,157,000[162] - Working capital decreased by $23,475,000, or 20.5%, to $91,075,000 as of September 30, 2025, compared to $114,550,000 at December 31, 2024[163] - The company had $1,000,000 of borrowings outstanding under the Line of Credit as of September 30, 2025, with a maximum remaining borrowing capacity of $10,700,000[153] - The company has a $25.2 million term loan maturing on July 1, 2027, with an outstanding balance of $23.8 million as of September 30, 2025[154]