Karat Packaging (KRT) Q2 2026 earnings summary

Executive summary

• Achieved record quarterly net sales of $136.3 million for Q2 2026, up 9.9% year-over-year, driven by strong customer demand and online sales growth.

• Net income surged 168.3% to $29.6 million, with gross margin rising to 56.6%, both significantly boosted by IEEPA tariff refunds.

• Adjusted EBITDA for Q2 2026 was $41.6 million (30.5% margin), up 135.2% year-over-year.

• Board increased quarterly dividend to $0.47 per share, effective August 2026.

• Expanded sales pipeline with four new chain accounts and finalized a lease for a new Orlando distribution center to support growth.

Financial highlights

• Net sales: $136.3M for Q2 2026 (+9.9% YoY); $253.2M for H1 2026 (+11.3% YoY).

• Net income: $29.6M for Q2 2026 (+168.3% YoY); $36.8M for H1 2026 (+105.9% YoY).

• Gross profit: $77.2M for Q2 2026 (+57.1% YoY); $118.7M for H1 2026 (+32.1% YoY).

• Adjusted EBITDA: $41.6M for Q2 2026 (+135.2% YoY); $54.1M for H1 2026 (+82.7% YoY).

• Free cash flow for H1 2026: $38.1M, aided by $25.2M in tariff refund receipts.

Outlook and guidance

• Q3 2026 net sales expected to grow in the low double-digit range year-over-year.

• Q3 gross margin guided to 35%-37%, adjusted EBITDA margin to 9%-11%, with minimal tariff refund impact.

• Full year 2026 net sales expected to grow in the low double-digit range; gross margin in the low 40% range, adjusted EBITDA margin in the mid-teens.

• Management expects continued benefit from increased demand for take-out and delivery packaging and eco-friendly products.

• Ongoing supply chain diversification and margin expansion initiatives are expected to support future growth.