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Karat Packaging Q1 2025 Earnings Report
Karat Packaging Inc. reported strong first quarter 2025 financial results with increased net sales and gross profit, despite a slight decrease in adjusted EBITDA.
Key Takeaways
Karat Packaging Inc. announced strong first quarter 2025 financial results, with net sales increasing 8.4% to $103.6 million and gross profit up 8.4% to $40.8 million. Net income rose 5.2% to $6.8 million, while adjusted EBITDA decreased to $11.9 million. The company is strategically reducing reliance on China for sourcing and implementing price increases to offset higher costs.
Net sales increased 8.4% to $103.6 million, driven by a 10.9% increase in sales volume.
Gross profit grew 8.4% to $40.8 million, maintaining a consistent gross margin of 39.3%.
Net income increased 5.2% to $6.8 million, resulting in diluted EPS of $0.32.
Adjusted EBITDA was $11.9 million, with an adjusted EBITDA margin of 11.5%.
Karat Packaging
Karat Packaging
Karat Packaging Revenue by Segment
Revenue by Segment
Chains and distributors Revenue
CapyFin.comOnline Revenue
CapyFin.comRetail Revenue
CapyFin.com Forward Guidance
Karat Packaging expects high single-digit to low double-digit net sales growth for the second quarter of 2025, with gross margin in line with Q1 and adjusted EBITDA margin in the mid-teens. The company reiterated its full-year 2025 guidance.
Positive Outlook
- Expected high single-digit to low double-digit net sales increase for Q2 2025.
- Gross margin for Q2 2025 expected to be in line with Q1.
- Adjusted EBITDA margin for Q2 2025 expected to be in the mid-teens.
- Reiterated full-year 2025 guidance on net sales, gross margin, and adjusted EBITDA margin.
- Strategic sourcing capabilities reducing reliance on China and securing inventory from alternative sources with favorable trade terms.
Challenges Ahead
- Uncertain global trade environment and supply chain challenges.
- Recently imposed extreme tariffs leading to temporary suspension of imports from most vendors in China starting mid-April.
- Higher costs from global tariff developments necessitating additional price increases in mid-May.
- Net income margin expected to be slightly lower than prior year.
- Adjusted EBITDA margin expected to be lower than prior year.
Revenue & Expenses
Visualization of income flow from segment revenue to net income