Karat Packaging Stock Dips 5% Since Reporting Q4 Earnings Miss

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].