Karat Packaging Q2 2023 Earnings Report
Key Takeaways
Karat Packaging reported a decrease in net sales by 5.3% to $108.7 million, but experienced a significant increase in gross profit by 23.3% to $41.9 million and net income by 48.3% to $10.7 million. The company's gross margin improved to 38.5%, and adjusted EBITDA increased by 78.6% to $21.1 million.
Net sales decreased by 5.3% year-over-year to $108.7 million.
Gross profit increased by 23.3% year-over-year to $41.9 million.
Gross margin improved to 38.5% compared to 29.6% in the prior-year quarter.
Net income increased by 48.3% year-over-year to $10.7 million.
Karat Packaging
Karat Packaging
Karat Packaging Revenue by Segment
Forward Guidance
The company expects net sales to decrease 3-4% in Q3 2023, increase 10-15% in Q4 2023, and decrease by low single digits for the full year 2023. The gross margin goal for the full year is 36-37%, and eco-friendly product sales are targeted to be 35% of total sales.
Positive Outlook
- Net sales for the 2023 fourth quarter expected to increase 10 to 15 percent over the prior year period.
- Gross margin goal for the 2023 full year: 36 to 37 percent versus 31.2 percent for 2022.
- Eco-friendly product sales objective for the 2023 full year: 35 percent of total sales, compared with 27 in 2022.
Challenges Ahead
- Net sales for the 2023 third quarter expected to decrease 3 to 4 percentage, compared with prior-year period, primarily due to implementation delays by new chain accounts and in opening new warehouses, and lower revenue from logistics services and shipping fees.
- Net sales for the 2023 full year expected to decrease by low single digits.
Revenue & Expenses
Visualization of income flow from segment revenue to net income