Karat Packaging (KRT) 46th Annual William Blair Growth Stock Conference summary

Business overview and growth strategy

• Supplies eco-friendly, single-use food service products to major national chains and restaurants across the U.S., with a strong presence in Hawaii and a one-stop shop model for packaging needs.

• Revenue reached $467 million in 2025, with expectations to surpass $500 million in 2026, driven by a diverse product range and expansion of paper and compostable product lines.

• Plans to add 100 new paper bag SKUs and expand aluminum and drink packaging offerings, while continuing to innovate in compostable products.

• Customer base includes hundreds of large and mid-size chains, with a goal to add 10-20 new national chain accounts and expand the delivery fleet by 10-20 trucks in 2026.

Supply chain, sourcing, and manufacturing

• Sourcing is diversified across 150+ overseas vendors in Asia and Latin America to mitigate tariff and supply chain risks.

• Manufacturing is shifting from domestic to overseas, with U.S. factory sales dropping from 25% to 9% over five years, and further reductions expected.

• Ability to quickly scale manufacturing up or down in response to demand and supply disruptions.

• Multi-region sourcing for key products like cups to avoid geopolitical and tariff-related disruptions.

Financial performance and outlook

• Achieved double-digit revenue growth and strong gross margins in Q1 2026, outperforming peers who are mostly flat or negative in growth.

• Gross margin was 35%-36% in 2025, expected to improve in 2026 as tariffs drop and cost pressures ease.

• Free cash flow and return on capital remain strong, with dividends provided to shareholders.

• Maintains a strong balance sheet with low leverage and robust liquidity.