Karat Packaging Reports 2025 First Quarter Financial Results

Core Viewpoint - Karat Packaging Inc. reported strong revenue growth in Q1 2025, with net sales increasing by 8.4% year-over-year, positioning the company well amid global trade uncertainties and supply chain challenges [1][3][5]. Financial Performance - Net sales for Q1 2025 reached $103.6 million, up from $95.6 million in Q1 2024, driven by a $11.7 million volume growth and a favorable product mix [5][7]. - Gross profit increased by 8.4% to $40.8 million, maintaining a gross margin of 39.3%, consistent with the prior year [7][9]. - Net income rose by 5.2% to $6.8 million, with a net income margin of 6.6% compared to 6.8% in the previous year [11][12]. - Adjusted EBITDA for Q1 2025 was $11.9 million, down from $13.5 million in Q1 2024, with an adjusted EBITDA margin of 11.5% [12][24]. Operational Highlights - The company reduced its reliance on China for sourcing from approximately 20% at the end of 2024 to 15% by March 2025, securing inventory from alternative sources [3][4]. - Online sales experienced a nearly 20% increase during the first quarter, reflecting the company's focus on expanding its market share [4][22]. - Operating expenses increased by 11.6% to $32.9 million, primarily due to higher shipping and transportation costs [10][19]. Guidance and Future Outlook - The company expects net sales for Q2 2025 to increase by high single-digit to low double-digit percentages compared to the prior year [7][12]. - Additional price increases are anticipated in mid-May 2025 due to rising costs from global tariff developments [3][4]. Dividend Announcement - On May 6, 2025, the board of directors approved a quarterly dividend of $0.45 per share, payable on or about May 23, 2025 [13].