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Karat Packaging (KRT) investor relations material

Karat Packaging Q2 2025 earnings summary

Complete event summary combining all related documents: earnings call transcript, report, and slide presentation.
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Q2 2025 earnings summary7 Aug, 2025

Executive summary

  • Achieved record Q2 2025 net sales of $124M, up 10.1% year-over-year, and net income of $11.1M, up 19.8%, with 13% sales volume growth despite foreign currency headwinds.

  • Gross margin improved to 39.6% (up 110 bps), driven by favorable vendor pricing and product mix.

  • Diversified global sourcing, reducing China exposure to 10% and expanding in other Asian and Latin American countries.

  • New Chino distribution center fully operational, enhancing logistics and supporting inventory buildup for growth.

  • Board declared a quarterly dividend of $0.45 per share, payable August 27, 2025.

Financial highlights

  • Q2 2025 net sales: $124M (+10.1% YoY); gross profit: $49.1M (+13.1% YoY); gross margin: 39.6% (+110 bps YoY).

  • Q2 2025 net income: $11.1M (+19.8% YoY); net income margin: 8.9% (+70 bps YoY); adjusted EBITDA: $17.7M (14.3% margin).

  • Adjusted diluted EPS for Q2 2025 was $0.57, up from $0.49.

  • Operating cash flow was $9.8M in Q2; free cash flow for the first half of 2025 was $16.2M.

  • Working capital at June 30, 2025: $116.8M; cash and cash equivalents: $30.5M; short-term investments: $26.4M.

Outlook and guidance

  • Q3 2025 net sales expected to grow 9–10% YoY; gross margin projected in low to mid-30s; adjusted EBITDA margin expected at 10–12% due to elevated tariff costs.

  • Full-year 2025 guidance for net sales, gross margin, and adjusted EBITDA margin maintained, pending further tariff impacts.

  • Pricing expected to be close to breakeven in the second half, improving from Q2's negative price impact.

  • Ongoing supply chain diversification and domestic manufacturing ramp-up to mitigate tariff and import cost pressures.

  • Management expects continued positive impact from food delivery trends and demand for eco-friendly products.

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Frequently asked questions

Karat Packaging Inc. is a manufacturer and distributor of environmentally friendly, disposable foodservice products. The company provides a wide range of products, including cups, lids, utensils, food containers, and eco-friendly alternatives made from biodegradable materials. Karat Packaging serves customers in the restaurant, hospitality, retail, and beverage industries, with a focus on quick-service restaurants and foodservice distributors. Karat Packaging is headquartered in Chino, California, and its shares are listed on the NASDAQ Stock Exchange.

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