Karat(US:KRT) Globenewswire·2025-11-06 21:05Core Insights - Karat Packaging Inc. reported record sales for the third quarter of 2025, achieving net sales of $124.5 million, a 10.4% increase from $112.8 million in the same quarter last year, driven by strong volume growth and a favorable product mix [4][7][8] - The company maintained a gross margin of 34.5%, despite rising import costs due to increased duties and tariffs, which accounted for 14.4% of net sales compared to 8.6% in the prior year [4][10] - Karat is diversifying its sourcing strategy, increasing domestic sourcing from 14.6% to 20.4% while reducing imports from Taiwan from 58.0% to 41.6% [5] Financial Performance - Net income for the third quarter was $7.6 million, down from $9.3 million in the prior-year quarter, resulting in a net income margin of 6.1% compared to 8.2% [8][13] - Adjusted EBITDA for the third quarter was $13.1 million, with an adjusted EBITDA margin of 10.5%, down from 13.0% in the prior-year quarter [14] - For the first nine months of 2025, net sales increased by 9.7% to $352.1 million, with net income rising 2.0% to $25.5 million [15][21] Business Developments - The company secured a major expansion to supply paper bags to a national chain, projected to add approximately $20 million in annual revenue, with full fulfillment expected by Q1 2026 [6] - Karat's business trends remain strong, with expectations for net sales in the fourth quarter to increase by 10% to 14% year-over-year [8] Cost Structure - Cost of goods sold for the third quarter increased by 17.8% to $81.6 million, primarily due to higher import costs and increased sales volume [9][16] - Operating expenses rose to $34.3 million, driven by higher shipping costs and rent expenses related to facility expansions [11][19] Guidance - The company is maintaining its full-year guidance for net sales, gross margin, and adjusted EBITDA margin, while closely monitoring potential impacts from tariff changes [8]