Karat Packaging Broadens Global Sourcing Strategy with New Sourcing Arrangements in South America
Rhea-AI Summary
Karat Packaging (Nasdaq: KRT) has finalized new sourcing arrangements in South America and begun imports to diversify its global supply chain. The company also welcomed a U.S. reciprocal tariff reduction on Taiwanese goods to a maximum 15% (down from 20%).
The company said roughly half of its global sourcing comes from the Taiwan region; combined with South American sourcing, Karat expects to strengthen its cost structure and competitiveness and potentially improve margins over the year.
Positive
- Tariff cut from 20% to 15% on Taiwanese goods
- New South America sourcing arrangements now importing product
- ~50% of global sourcing tied to Taiwan region (clarifies exposure)
Negative
- Concentration risk: roughly 50% sourcing from Taiwan region remains
- Tariff still 15%: duties persist and continue to affect cost base
News Market Reaction – KRT
On the day this news was published, KRT declined 0.04%, reflecting a mild negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Market Reality Check
Peers on Argus
KRT is up 0.12% while peers are mixed: MYE -0.73%, PACK -5.04%, TRS +1.19%, AMBP -1.03%, ITPOF 0%. No momentum-clustered sector move is detected.
Historical Context
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Feb 06 | Dividend declaration | Positive | +0.9% | Board declared a regular quarterly cash dividend of $0.45 per share. |
| Nov 06 | Q3 2025 earnings | Positive | -5.4% | Record net sales with softer margins and reiterated guidance plus capital return plans. |
| Nov 05 | Dividend & buyback | Positive | +6.3% | Announced $0.45 dividend and first-ever $15M share repurchase authorization. |
| Oct 23 | Earnings call notice | Neutral | -0.4% | Scheduled Q3 2025 results release and investor conference call details. |
| Oct 17 | HQ relocation | Positive | +0.4% | Subsidiary headquarters moved to large Rockwall, Texas facility to improve efficiency. |
Recent shareholder-friendly actions (dividends, buybacks) generally saw aligned positive reactions, while strong earnings once coincided with a negative move, indicating occasional profit-taking or concern around margins and tariffs.
Over the past six months, KRT has emphasized capital returns and operational scaling. In Aug–Nov 2025, it posted record quarterly sales, declared recurring $0.45 dividends, and authorized a $15M repurchase program, though one strong earnings print on Nov 6, 2025 drew a negative reaction as margins compressed on higher tariffs. Operationally, the Oct 17, 2025 Texas headquarters relocation aimed to boost efficiency. Today’s sourcing and tariff update directly addresses those earlier cost-pressure themes.
Market Pulse Summary
This announcement emphasizes structural cost improvement: KRT finalized new South American sourcing and benefits from a U.S. tariff cap cut on Taiwanese goods to 15% from 20%. With prior filings citing elevated tariffs as a margin headwind, these steps directly address a known pressure point. Investors may watch future earnings for evidence that the diversified supply network and lower duty environment translate into sustained margin and cash-flow enhancement.
AI-generated analysis. Not financial advice.
Company Expects to Benefit from Recently Announced Tariff Reduction in Taiwan
CHINO, Calif., Feb. 18, 2026 (GLOBE NEWSWIRE) -- Karat Packaging Inc. (Nasdaq: KRT) (the “Karat” or “Company”), a specialty distributor and manufacturer of disposable foodservice products and related items, today announced it has finalized new sourcing arrangements and begun importing certain products from South America, further diversifying its global supply network and reinforcing its long-term cost structure.
The Company also welcomed the recent U.S. reciprocal tariff reduction on Taiwanese goods to a maximum rate of 15 percent without stacking, down from 20 percent. The Company believes this change is significant for Karat, as roughly half of its global sourcing is from the region. The lower tariff environment, together with the new South American arrangements, is expected to position the Company to further enhance its cost structure and long-term financial performance.
“Our new South American sourcing arrangements represent an important step in our global strategy to diversify our product sourcing and optimize costs,” said Alan Yu, Karat’s Chief Executive Officer. “Coupled with the recent substantial tariff reduction on goods from Taiwan, we expect these developments to position us to stay highly competitive, maintain attractive pricing for our customers, and improve margins as the year progresses.”
About Karat Packaging Inc.
Karat Packaging Inc. is a specialty distributor and manufacturer of a wide range of disposable foodservice products and related items, primarily used by national and regional restaurants and in foodservice settings throughout the United States. Its products include food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves and other products. The Company’s eco-friendly Karat Earth® line offers quality, sustainably focused products that are made from renewable resources. Karat Packaging also offers customized solutions, including new product development and design, printing, and logistics services. To learn more about Karat Packaging, please visit the Company’s website at www.karatpackaging.com.
Forward Looking Statements
Statements made in this release that are not statements of historical or current facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, the timing and expected impacts of the new sourcing arrangements and lower tariffs. Readers are cautioned that forward-looking statements are predictions based on current expectations about future events and are subject to risks and uncertainties. Actual results, performance, or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including the risks discussed under the heading “Risk Factors” discussed under the caption “Item 1A. Risk Factors” in Part I of the Company’s most recent Annual Report on Form 10-K or any updates discussed under the caption “Item 1A. Risk Factors” in Part II of our Quarterly Reports on Form 10-Q and in other Company filings with the SEC. The forward-looking statements included in this press release are made only as of the date hereof and are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that occur after that date, except as required by law.
Investor Relations and Media Contacts:
PondelWilkinson Inc.
Judy Lin or Roger Pondel
310-279-5980
IR@karatpackaging.com
FAQ
What did Karat Packaging (KRT) announce on February 18, 2026 about sourcing?
How does the U.S. tariff change affect Karat Packaging (KRT)?
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Will Karat Packaging's (KRT) new South American sourcing improve margins in 2026?
Are Karat Packaging's (KRT) South American sourcing arrangements already active?
What immediate risks remain for Karat Packaging (KRT) after the tariff reduction?
