Karat Packaging (KRT) Q3 2026 earnings summary

Executive summary

• Q3 net sales rose 8.2% YoY to $134.7M, while net income fell to $4.7M from $7.6M and Adjusted EBITDA declined to $8.9M from $13.1M.

• 9M net sales grew 10.2% to $388.0M and net income reached $41.5M; results included $26.7M in IEEPA tariff refunds, comprising $25.8M in COGS benefits and $0.9M interest income.

• Online sales grew 37.7% YoY; new chain wins and East Coast and Midwest expansion support the growth pipeline into 2027.

Financial highlights

• Q3 net sales rose to $134.7M from $124.5M; volume and mix added $10.7M and pricing added $0.4M, partly offset by $0.8M lower shipping and logistics revenue.

• Q3 gross profit increased 5.2% to $45.1M, while gross margin declined to 33.5% from 34.5%.

• Q3 operating income fell to $4.9M from $8.6M; net income was $4.7M versus $7.6M, diluted EPS was $0.22 versus $0.36, and adjusted diluted EPS was $0.24 versus $0.37.

• 9M operating income rose to $50.9M from $32.9M; Adjusted EBITDA was $63.0M versus $42.7M, including $25.8M from tariff refunds.

• Q3 operating cash flow was $9.7M; 9M operating cash flow was $50.0M, including $25.2M in tariff-refund receipts.

Outlook and guidance

• Q4 2026 net sales expected to grow 9%-11% YoY; gross margin guidance is 33%-35%, with Adjusted EBITDA margin in the high single digits.

• FY 2026 net sales expected to grow 9%-11%; gross margin guidance is 39%-41% and Adjusted EBITDA margin is in the mid-teens, both including H1 IEEPA tariff refunds.

• Price increases planned for November and January 1, 2027; the January increase is 3%-13% on select items to address cost pressure.

• Orlando distribution center, under a 50-month lease, expected to be fully operational in November 2026; cash, operating flows and borrowing availability expected to cover obligations for at least 12 months.