Loading...
•
Sep 30, 2023
Karat Packaging Q3 2023 Earnings Report
Net income increased significantly due to margin growth, driven by scaling back US manufacturing and lower freight costs, despite a slight decrease in net sales.
Key Takeaways
Karat Packaging reported a 4.1% decrease in net sales to $105.5 million, but net income increased by 48.5% to $9.1 million. The increase in net income was driven by a 14.0% increase in gross profit to $38.9 million and margin expansion.
Net sales decreased by 4.1% year-over-year to $105.5 million.
Gross profit increased by 14.0% year-over-year to $38.9 million.
Net income increased by 48.5% year-over-year to $9.1 million.
Eco-friendly product sales represented approximately 33% of total sales.
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 anticipates net sales for the fourth quarter of 2023 to increase by 2-5% compared to the prior year. Gross margin is expected to be between 36.0% and 38.0%. For the full year 2023, net sales are expected to decrease by mid-single digit and gross margin is expected to be between 37.5% and 38.5%. Eco-friendly product sales are projected to be 33-34% of total sales.
Positive Outlook
- Net sales for Q4 2023 expected to increase 2 to 5 percent from the prior year quarter.
- Gross margin goal for Q4 2023: 36.0 to 38.0 percent versus 32.0 percent for 2022 fourth quarter.
- Gross margin goal for the 2023 full year: 37.5 to 38.5 percent versus 31.2 percent for 2022.
- Eco-friendly product sales objective for the 2023 full year: 33 to 34 percent of total sales, compared with 27 percent in 2022.
- Board of directors authorized an increase in the quarterly cash dividend payment to $0.20 per share from $0.10 per share.
Challenges Ahead
- Net sales for the 2023 full year expected to decrease by mid-single digit.
- Total revenue was impacted by unfavorable year-over-year pricing comparison.
- Operating expenses increased primarily due to workforce expansion.
- Increase in operating expenses due to higher marketing expense to support online sales growth.
- Increase in operating expenses due to higher professional expenses in connection with the secondary offering completed during the quarter.
Revenue & Expenses
Visualization of income flow from segment revenue to net income