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Karat Packaging Reports Fourth Quarter and Full Year 2025 Financial Results

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Karat Packaging (Nasdaq: KRT) reported record Q4 2025 net sales of $115.6M, up 13.7% year‑over‑year, and full‑year 2025 net sales of $467.7M (+10.7%). Gross margin was 34.0% in Q4 and 36.8% for 2025, pressured by higher tariffs and duties. Net income rose to $7.2M in Q4 and $32.7M for the year. The company provided 2026 guidance for low double‑digit full‑year sales growth and Q1 sales up 8–10%.

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Positive

  • Q4 net sales +13.7% to $115.6M
  • Full‑year net sales +10.7% to $467.7M
  • Net income +6.0% to $32.7M in 2025
  • Share repurchases: $3.0M in Q4; $12.0M available

Negative

  • Gross margin down to 34.0% in Q4 from 39.2% due to tariffs
  • Import duty and tariff costs increased $8.4M in Q4
  • Adjusted EBITDA margin declined to 11.8% for 2025 from 13.1%

Key Figures

Q4 2025 net sales: $115.6M Q4 2025 gross margin: 34.0% Q4 2025 net income: $7.2M +5 more
8 metrics
Q4 2025 net sales $115.6M Fourth quarter 2025 net sales, up 13.7% year-over-year
Q4 2025 gross margin 34.0% Fourth quarter 2025 gross margin vs 39.2% prior-year
Q4 2025 net income $7.2M Fourth quarter 2025 net income, up 22.8% year-over-year
2025 net sales $467.7M Full year 2025 net sales, up 10.7% from $422.6M
2025 gross margin 36.8% Full year 2025 gross margin vs 38.9% last year
2025 net income $32.7M Full year 2025 net income, up 6.0% from $30.8M
Quarterly dividend $0.45 per share Regular quarterly dividend approved Feb 5, 2026
Q4 2025 buybacks 137,374 shares at $21.74 $3.0M repurchased during fourth quarter 2025

Market Reality Check

Price: $26.92 Vol: Volume 52,130 is slightly...
normal vol
$26.92 Last Close
Volume Volume 52,130 is slightly below the 20-day average of 56,596 (relative volume 0.92). normal
Technical Price at 22.82 is trading below the 200-day moving average of 25.24.

Peers on Argus

KRT is up 2.15% with modest volume, while only one peer in momentum (PACK) is up...
1 Up

KRT is up 2.15% with modest volume, while only one peer in momentum (PACK) is up 0.62%; other packaging peers show mixed or flat moves, pointing to a stock-specific reaction.

Previous Earnings Reports

5 past events · Latest: Nov 06 (Neutral)
Same Type Pattern 5 events
Date Event Sentiment Move Catalyst
Nov 06 Q3 2025 earnings Neutral -6.3% Record sales with margin pressure and lower net income versus prior year.
Aug 07 Q2 2025 earnings Positive -6.3% Record net sales, higher gross margin, and record net income with dividend.
May 08 Q1 2025 earnings Positive +10.7% Strong sales and income growth with steady margins and dividend declaration.
Mar 13 Q4 2024 earnings Positive -2.1% Sales, gross profit, and net income up sharply, margin expansion and dividend.
Nov 07 Q3 2024 earnings Positive +0.9% Strong sales growth, improved gross margin, modest net income increase, dividend.
Pattern Detected

Earnings releases often highlight solid growth, but price reactions have been mixed, with several strong quarters followed by negative next-day moves and others seeing gains.

Recent Company History

Over the last five earnings reports from Nov 2024 through Nov 2025, Karat Packaging repeatedly delivered record or strong net sales, often with expanding or resilient gross margins despite tariff and freight pressures. Net income and Adjusted EBITDA have generally remained healthy, supported by sourcing diversification and eco-friendly demand. The company has consistently paid a $0.45 quarterly dividend and occasionally paired results with capital return actions. Today’s Q4 and full-year 2025 report fits this pattern of growth under tariff headwinds.

Historical Comparison

-0.6% avg move · Across the last five earnings releases, average next-day move was about -0.61%, showing that solid r...
earnings
-0.6%
Average Historical Move earnings

Across the last five earnings releases, average next-day move was about -0.61%, showing that solid reported growth has not always translated into consistently positive price reactions.

From Q3 2024 through Q3 2025, earnings reports show steady net sales growth and generally strong margins, while tariff-driven cost pressures have increasingly weighed on profitability trends.

Market Pulse Summary

This announcement details record Q4 2025 net sales of $115.6M and full-year revenue of $467.7M, alon...
Analysis

This announcement details record Q4 2025 net sales of $115.6M and full-year revenue of $467.7M, alongside margin compression from higher tariffs and freight costs. Net income rose to $7.2M for Q4 and $32.7M for 2025, while the board maintained a $0.45 quarterly dividend and executed $3.0M of repurchases. Investors may watch how sourcing shifts, tariff policy, and the growing paper bag category influence future gross margin and Adjusted EBITDA targets.

Key Terms

adjusted ebitda, net income margin, right-of-use asset
3 terms
adjusted ebitda financial
"Adjusted EBITDA of $12.5 million, versus $11.3 million in the prior-year quarter."
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
net income margin financial
"Net income margin of 6.2 percent, from 5.8 percent in the prior-year quarter."
Net income margin measures the portion of a company’s sales that remains as profit after paying all costs, interest, and taxes, expressed as a percentage of revenue. It matters to investors because it shows how much profit a business keeps from each dollar of sales—like the slice of a pie left after all the bills are paid—helping compare profitability across companies and track whether management is improving efficiency or facing pressure on margins.
right-of-use asset financial
"a $2.0 million non-cash impairment charge of a right-of-use asset from the sublease"
A right-of-use asset is the value a company records on its balance sheet for the practical use of something it leases — like the benefit of living in a rented office or using leased equipment for a set period. Investors care because it turns many leases into on-balance-sheet assets and matching liabilities, which can change reported leverage, asset base and performance metrics much like taking on a loan would.

AI-generated analysis. Not financial advice.

— Continued Profitable Growth and Business Expansion —

CHINO, Calif., March 12, 2026 (GLOBE NEWSWIRE) -- Karat Packaging Inc. (Nasdaq: KRT) (“Karat” or the “Company”), a specialty distributor and manufacturer of environmentally friendly, disposable foodservice products and related items, today announced financial results for its fourth quarter and full year ended December 31, 2025.

Fourth Quarter 2025 Highlights

  • Record fourth quarter net sales of $115.6 million, up 13.7 percent, from $101.6 million in the prior-year quarter.
  • Gross profit of $39.3 million, versus $39.8 million in the prior-year quarter.
  • Gross margin of 34.0 percent, reflecting an expected decrease from 39.2 percent in the prior-year quarter due to elevated tariffs.
  • Net income of $7.2 million, up 22.8 percent, from $5.9 million in the prior-year quarter.
  • Net income margin of 6.2 percent, from 5.8 percent in the prior-year quarter.
  • Adjusted EBITDA of $12.5 million, versus $11.3 million in the prior-year quarter.
  • Adjusted EBITDA margin of 10.8 percent, versus 11.1 percent in the prior-year quarter.

Guidance

  • Net sales for the 2026 first quarter expected to increase by 8 to 10 percent from the prior-year quarter.
  • Gross margin for the 2026 first quarter expected to be between 34 and 36 percent.
  • Adjusted EBITDA margin for the 2026 first quarter expected to be between 9 and 11 percent.
  • Net sales for full-year 2026 expected to increase by low double-digits from the prior year.
  • Gross margin and adjusted EBITDA margin for full year 2026 expected to continue to improve compared with the prior year, under current global tariff policy.

“We finished 2025 with a strong fourth quarter, demonstrating the strength and resilience of our business model and our ability to continue to drive profitable growth against an uncertain macroeconomic backdrop. We again achieved double-digit volume growth and our pricing turned positive for the first time since the first quarter of 2023,” said Alan Yu, Chief Executive Officer. “Our strategy to diversify sourcing is proving successful, enabling us to continue to strengthen our global supply chain and maintain a 34 percent gross margin, despite significantly higher tariffs and duty costs.

“We continue to closely monitor tariff and foreign currency developments and adjust our global supply chain as appropriate. During the fourth quarter of 2025, 46 percent of our goods were sourced from Taiwan, 14 percent from China, 13 percent from the United States, and 11 percent each from Vietnam and Malaysia. Following the recent U.S. Supreme Court ruling on tariffs and the stabilization of the U.S. Dollar and New Taiwan Dollar exchange rates, we expect tailwinds on the margin to be realized beginning in the second quarter of 2026.

“Our new paper bags product category continues to perform strongly, expanding steadily and generating meaningful revenue growth. In 2025, we won a significant paper bag contract with one of our largest national chain accounts, and we are actively pursuing further opportunities, some of which are at the final confirmation stage. We are also strengthening this category by supplying generic paper bags to smaller customer accounts, and we expect to continue gaining market share in this category in the coming years.

“In today’s dynamic trade environment, we are confident that Karat’s proven global sourcing flexibility and efficient logistics capabilities will support a solid growth trajectory,” Yu added.

Fourth Quarter 2025 Financial Results

Net sales for the 2025 fourth quarter increased 13.7 percent to $115.6 million, from $101.6 million in the prior-year quarter. The increase primarily reflected $8.2 million in volume and a $6.3 million favorable impact from pricing and product mix.

Cost of goods sold for the 2025 fourth quarter increased 23.4 percent to $76.3 million, from $61.8 million in the prior-year quarter. Product costs increased $6.1 million due to sales growth, partially offset by more favorable vendor pricing and product mix. Within import costs, duty and tariff costs increased $8.4 million, reflecting the overall higher tariff rates and a $0.4 million adjustment to the duty reserve previously recorded on certain imports.

Gross profit for the 2025 fourth quarter was $39.3 million, compared with $39.8 million in the prior-year quarter. Gross margin for the 2025 fourth quarter was 34.0 percent, compared with 39.2 percent in the prior-year quarter, reflecting the expected impact from higher import costs, as discussed above, which, as a percentage of net sales, increased to 14.5 percent from 8.3 percent in the prior-year quarter. The decrease in margin was partially offset by a decrease in product costs as a percentage of net sales, due to more favorable vendor pricing and product mix, as well as lower logistics expense as a percentage of net sales.

Operating expenses in the 2025 fourth quarter decreased to $30.9 million, from $32.5 million in the prior-year quarter. The decrease was mainly driven by reduced online platform fees of $1.6 million, lower marketing expense of $0.5 million, reduced professional services expense of $0.4 million, partially offset by higher rent expense of $0.5 million primarily due to the opening of a new Chino distribution center in 2025.

Other income, net, increased 17.7 percent to $1.2 million for the 2025 fourth quarter, from $1.0 million in the prior-year quarter.

Net income for the 2025 fourth quarter increased 22.8 percent to $7.2 million, from $5.9 million for the prior-year quarter. Net income margin rose to 6.2 percent in the 2025 fourth quarter, from 5.8 percent in the prior-year quarter.

Net income attributable to Karat for the 2025 fourth quarter increased 21.3 percent to $6.8 million, or $0.34 per diluted share, from $5.6 million, or $0.28 per diluted share, in the prior-year quarter.

Adjusted EBITDA, a non-GAAP measure defined below, totaled $12.5 million for the 2025 fourth quarter, compared with $11.3 million for the prior-year quarter. Adjusted EBITDA margin, a non-GAAP measure defined below, was 10.8 percent, compared with 11.1 percent for the prior-year quarter.

Adjusted diluted earnings per common share, a non-GAAP measure defined below, was $0.34 per share for the 2025 fourth quarter, compared with $0.29 per share in the prior-year quarter.

2025 Full Year Results

Net sales for the year ended December 31, 2025 increased 10.7 percent to $467.7 million, from $422.6 million last year. The increase in net sales was primarily driven by an increase of $39.7 million in volume and an increase of $11.9 million in product mix, partially offset by a $6.5 million unfavorable year-over-year pricing comparison.

Cost of goods sold for the year ended December 31, 2025 was $295.6 million, compared with $258.3 million last year. The increase primarily reflected $20.6 million in ocean freight and duty costs, from higher duties and tariffs of $14.6 million, as well as a 22.0 percent increase in import volume, partially offset by a 5.4 percent decrease in average freight container rates. In addition, product costs increased by $18.1 million due to higher sales volume and better product mix, partially offset by more favorable vendor pricing.

Gross profit for the year ended December 31, 2025 increased 4.8 percent to $172.1 million, from $164.3 million last year. Gross margin was 36.8 percent for the year ended December 31, 2025, compared with 38.9 percent last year. Gross margin was negatively impacted by rising freight and duty costs, as discussed above, which as a percentage of net sales increased to 11.8 percent during the year ended December 31, 2025, compared with 8.2 percent in the same period last year. The decrease was partially offset by a decrease in product costs and depreciation expense on production equipment as a percentage of net sales.

Operating expenses for the year ended December 31, 2025 were $130.7 million, compared with $126.6 million last year. The increase was mainly driven by $7.0 million of higher shipping and transportation costs primarily due to increases in both offline sales shipping volume and shipping rates, $3.3 million of higher rent expense due to a higher rate on the Chino, California facility lease extension, as well as the opening of a new Chino distribution center, and $1.4 million of higher salaries and benefit expenses. These increases were partially offset by a reduction in online platform fees and marketing expenses. Additionally, the year ended December 31, 2025 included a gain on disposal of machinery in the normal course of business, while the prior year included a $2.0 million non-cash impairment charge of a right-of-use asset from the sublease of the Company’s City of Industry warehouse in California and a loss on disposal of machinery in the normal course of business.

Other income, net, was $1.6 million for the year ended December 31, 2025, compared with $2.9 million last year. The decrease was primarily attributable to a loss on foreign currency transactions of $1.5 million, due to the weakening of the U.S. Dollar against the New Taiwan Dollar, partially offset by an increase in rental income from the sublet of the City of Industry warehouse in California in 2024.

Net income for the year ended December 31, 2025 increased 6.0 percent to $32.7 million, from $30.8 million last year. Net income margin was 7.0 percent for the year ended December 31, 2025, compared with 7.3 percent last year.

Net income attributable to Karat Packaging increased 5.0 percent to $31.5 million, or $1.56 per diluted share, for the year ended December 31, 2025, from $30.0 million, or $1.49 per diluted share, last year.

Adjusted EBITDA, a non-GAAP measure defined below, was $55.2 million for the year ended December 31, 2025, compared with $55.3 million last year. Adjusted EBITDA margin, a non-GAAP measure defined below, was 11.8 percent for the year ended December 31, 2025, compared with 13.1 percent last year.

Adjusted diluted earnings per common share, a non-GAAP measure defined below, was $1.61 per share for the year ended December 31, 2025, compared with $1.64 per share last year.

Dividend

On February 5, 2026, Karat’s board of directors approved a regular quarterly dividend of $0.45 per share on the Company’s common stock, payable on or about February 27, 2026, to stockholders of record as of February 20, 2026.

Share Repurchase Program

During the 2025 fourth quarter, the Company purchased 137,374 shares of its common stock at an average purchase price of $21.74 per share, for a total amount of $3.0 million. As of March 11, 2026, approximately $12.0 million remained available for repurchase under the authorized repurchase program.

Investor Conference Call

The Company will host an investor conference call today, March 12, 2026, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its 2025 fourth quarter and full year results.

Phone:(877) 418-4045 (domestic); (412) 317-6745 (international)
Conference ID:Karat Packaging Inc.
Webcast:Accessible at https://irkarat.com/events-presentations/; archive available for approximately one year
  
  

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.

Caution Concerning 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. We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements, including, but not limited to, achieving our financial guidance, are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our 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 caption “Item 1A. Risk Factors” in Part I of our most recent Annual Report on Form 10-K and any updates discussed under the caption “Item 1A. Risk Factors” in Part II of our Quarterly Reports on Form 10-Q and in our other filings with the Securities and Exchange Commission. 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 the date of this release, except as required by law.

Investor Relations and Media Contacts:

PondelWilkinson Inc.
Judy Lin or Roger Pondel
310-279-5980
ir@karatpackaging.com 

    
KARAT PACKAGING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
    
 Three Months Ended
December 31,
 Year Ended
December 31,
  2025   2024   2025   2024 
 (Unaudited) (Unaudited) (Unaudited)  
Net sales$115,617  $101,649  $467,743  $422,633 
Cost of goods sold 76,268   61,826   295,607   258,304 
Gross profit 39,349   39,823   172,136   164,329 
Operating expenses       
Selling expenses 11,919   13,909   53,844   52,286 
General and administrative expenses (including $669 and $470 associated with variable interest entity for the three months ended December 31, 2025 and 2024, respectively, and $2,855 and $2,358 associated with variable interest entity for the years ended December 31, 2025 and 2024, respectively) 18,749   18,360   77,371   71,530 
Loss (gain), net, on disposal of machinery and impairment expense 210   254   (493)  2,752 
Total operating expenses 30,878   32,523   130,722   126,568 
Operating income 8,471   7,300   41,414   37,761 
Other income (expenses)       
Rental income (including $339 and $262 associated with variable interest entity for the three months ended December 31, 2025 and 2024, respectively, and $1,516 and $1,038 associated with variable interest entity for the years ended December 31, 2025 and 2024, respectively) 682   592   2,923   2,076 
Other income, net 44   8   73   162 
Gain (loss) on foreign currency transactions 404   368   (1,543)  520 
Interest income (including $155 and $1 associated with variable interest entity for the three months ended December 31, 2025 and 2024, respectively, and $586 and $470 associated with variable interest entity for the years ended December 31, 2025 and 2024, respectively) 553   565   2,210   2,299 
Interest expense (including $452 and $509 associated with variable interest entity for the three months ended December 31, 2025 and 2024, respectively, and $1,966 and $2,062 associated with variable interest entity for the years ended December 31, 2025 and 2024, respectively) (486)  (516)  (2,055)  (2,123)
Total other income, net 1,197   1,017   1,608   2,934 
Income before provision for income taxes 9,668   8,317   43,022   40,695 
Provision for income taxes 2,474   2,458   10,358   9,871 
Net income 7,194   5,859   32,664   30,824 
Net income attributable to noncontrolling interest 384   244   1,186   849 
Net income attributable to Karat Packaging Inc.$6,810  $5,615  $31,478  $29,975 
Basic and diluted earnings per share:       
Basic$0.34  $0.28  $1.57  $1.50 
Diluted$0.34  $0.28  $1.56  $1.49 
Weighted average common shares outstanding, basic 20,037,669   20,026,773   20,057,549   20,002,211 
Weighted average common shares outstanding, diluted 20,122,932   20,173,554   20,180,070   20,124,284 
                


KARAT PACKAGING INC. AND SUBSIDIARIES
NET SALES BY CATEGORY (UNAUDITED)
(In thousands)
    
 Three Months Ended
December 31,
 Year Ended
December 31,
  2025  2024  2025  2024
Chains and Distributors *$93,327 $79,411 $370,556 $329,448
Online 17,071  16,755  75,286  70,130
Retail * 5,219  5,483  21,901  23,055
 $115,617 $101,649 $467,743 $422,633
            

* During the three months ended June 30, 2025, the Company reclassified one customer from the retail to the chains and distributors channel, and reclassified the corresponding net sales amounts of approximately $1,064,000 for the three months ended December 31, 2024 and $4,272,000 for the year ended December 31, 2024, respectively, to conform to the current period presentation. The reclassification had no effect on previously reported condensed consolidated net sales for the three months and year ended December 31, 2024.

    
KARAT PACKAGING INC. AND SUBSIDIARIES
SELECTED BALANCE SHEET AND CASH FLOW INFORMATION
(In thousands)
    
Selected Balance Sheet Information:December 31, 2025 December 31, 2024
 (Unaudited)  
Cash and cash equivalents$37,880 $31,584
Short-term investments$ $28,343
Accounts receivable, net of allowance for bad debt$36,402 $26,736
Inventories$81,682 $70,722
Total assets$287,686 $294,522
Accounts payable$26,323 $17,831
Total current liabilities$70,220 $46,447
Total liabilities$130,816 $132,323
Total stockholders’ equity$156,870 $162,199
      


Selected Cash Flow Information:Year Ended December 31,
  2025   2024 
 (Unaudited)  
Net cash provided by operating activities$33,815  $47,982 
Net cash provided by (used in) investing activities$25,399  $(5,855)
Dividends paid to shareholders$(36,100) $(31,016)
Repurchases of common stock$(2,998) $ 
Net cash used in financing activities$(52,918) $(33,619)
        


KARAT PACKAGING INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(In thousands, except per share amounts)
    
Reconciliation of Adjusted EBITDA and Adjusted EBITDA margin:
Three Months Ended December 31, Year Ended December 31,
 2025   2024   2025   2024 
Amounts % of Net Sales Amounts % of Net Sales Amounts % of Net Sales Amounts % of Net Sales
Net income$7,194  6.2% $5,859  5.8% $32,664  7.0% $30,824  7.3%
Add (deduct):               
Interest income (553) (0.5)  (565) (0.6)  (2,210) (0.5)  (2,299) (0.5)
Interest expense 486  0.4   516  0.5   2,055  0.4   2,123  0.5 
Provision for income taxes 2,474  2.2   2,458  2.4   10,358  2.3   9,871  2.3 
Depreciation and amortization 2,759  2.4   2,695  2.7   10,891  2.3   10,675  2.5 
Stock-based compensation expense 138  0.1   350  0.3   1,182  0.3   2,065  0.5 
Secondary offering transaction costs (1)           214        
Impairment of operating right-of-use asset                1,993  0.5 
Adjusted EBITDA$12,498  10.8% $11,313  11.1% $55,154  11.8% $55,252  13.1%
                


Reconciliation of Adjusted Diluted Earnings Per Common Share

Three Months Ended
December 31,
 Year Ended
December 31,
 2025   2024  2025   2024 
Diluted earnings per common share$0.34  $0.28 $1.56  $1.49 
Add (deduct):       
Stock-based compensation expense 0.01   0.01  0.06   0.10 
Impairment of operating right-of-use asset         0.10 
Secondary offering transaction costs (1)      0.01    
Tax impact (0.01)    (0.02)  (0.05)
Adjusted diluted earnings per common share$0.34  $0.29 $1.61  $1.64 
        

(1) Secondary offering transaction costs represent legal and professional fees incurred in connection with the completion of the secondary offering by certain executive officers and stockholders of the Company, which were directly related to the offering and were incremental to our normal operating expenses.

  
Reconciliation of Adjusted EBITDA by EntityThree Months Ended December 31, 2025
 Karat Packaging Global Wells Eliminations Consolidated
Net income (loss)$6,803  $452  $(61) $7,194 
Add (deduct):       
Interest income (398)  (155)     (553)
Interest expense 34   452      486 
Provision for income taxes 2,474         2,474 
Depreciation and amortization 2,456   303      2,759 
Stock-based compensation expense 138         138 
Adjusted EBITDA$11,507  $1,052  $(61) $12,498 
        


Reconciliation of Adjusted EBITDA by EntityYear Ended December 31, 2025
 Karat Packaging Global Wells Eliminations Consolidated
Net income (loss)$31,464  $1,396  $(196) $32,664 
Add (deduct):       
Interest income (1,624)  (586)     (2,210)
Interest expense 89   1,966      2,055 
Provision for income taxes 10,358         10,358 
Depreciation and amortization 9,678   1,213      10,891 
Stock-based compensation expense 1,182         1,182 
Secondary offering transaction costs (1) 214         214 
Adjusted EBITDA$51,361  $3,989  $(196) $55,154 
        

(1) Secondary offering transaction costs represent legal and professional fees incurred in connection with the completion of the secondary offering by certain executive officers and stockholders of the Company, which were directly related to the offering and were incremental to our normal operating expenses.

  
Reconciliation of Adjusted EBITDA by EntityThree Months Ended December 31, 2024
 Karat Packaging Global Wells Eliminations Consolidated
Net income (loss)$5,634  $287  $(62) $5,859 
Add (deduct):       
Interest income (564)  (1)     (565)
Interest expense 7   509      516 
Provision for income taxes 2,458         2,458 
Depreciation and amortization 2,391   304      2,695 
Stock-based compensation expense 350         350 
Adjusted EBITDA$10,276  $1,099  $(62) $11,313 
        


Reconciliation of Adjusted EBITDA by EntityYear Ended December 31, 2024
 Karat Packaging Global Wells Eliminations Consolidated
Net income$29,678  $994  $152 $30,824 
Add (deduct):       
Interest income (1,829)  (470)    (2,299)
Interest expense 61   2,062     2,123 
Provision for income taxes 9,871        9,871 
Depreciation and amortization 9,461   1,214     10,675 
Stock-based compensation expense 2,065        2,065 
Impairment of operating right-of-use asset 1,993        1,993 
Adjusted EBITDA$51,300  $3,800  $152 $55,252 
               


Reconciliation of Free Cash FlowThree Months Ended
December 31,
 Year Ended
December 31,
  2025   2024   2025   2024 
Net cash provided by operating activities$15,357  $8,250  $33,815  $47,982 
Add (deduct):       
Purchase of property and equipment (236)  (216)  (756)  (934)
Deposits paid for property and equipment (505)  (544)  (3,749)  (3,134)
Free Cash Flow$14,616  $7,490  $29,310  $43,914 
        
        

Use of Non-GAAP Financial Measures

Karat utilizes certain financial measures and key performance indicators that are not defined by, or calculated in accordance with, GAAP to assess our financial and operating performance. A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the statement of operations; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable GAAP measure so calculated and presented. The following non-GAAP measures are presented in this press release:

  • Adjusted EBITDA is calculated as net income before interest income and interest expense, provision for income taxes, depreciation and amortization, stock-based compensation expense, secondary offering transaction costs, and impairment of operating right-of-use asset.
  • Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by net sales.
  • Free Cash Flow is calculated as cash from operating activities less cash used in (i) purchases of property and equipment, and (ii) deposits paid for property and equipment.
  • Adjusted diluted earnings per common share is calculated as diluted earnings per common share, plus the per share impact of stock-based compensation, secondary offering transaction costs, impairment of operating right-of-use asset, and adjusted for the related tax effects of these adjustments.

We believe the above-mentioned non-GAAP measures, which are used by management to assess the core performance of Karat, provide useful information and additional clarity of our operating results to our investors in their own evaluation of the financial performance and liquidity of Karat and facilitate a comparison of such performance from period to period. These are not measurements of financial performance or liquidity under GAAP and should not be considered in isolation or construed as substitutes for net income or other cash flow data prepared in accordance with GAAP for purposes of analyzing our financial performance or liquidity. These measures should be considered in addition to, and not as a substitute for, revenue, net income, earnings per share, cash flows or other measures of financial performance and liquidity prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies, as other companies may calculate such financial results differently.


FAQ

What were Karat Packaging (KRT) Q4 2025 sales and growth?

Karat reported Q4 2025 net sales of $115.6 million, a 13.7% increase year‑over‑year. According to the company, the growth was driven by volume (+$8.2M) and favorable pricing/product mix (+$6.3M), partially offset by higher import costs.

How did tariffs affect Karat Packaging’s Q4 2025 margin (KRT)?

Tariffs materially pressured margins, with gross margin falling to 34.0% in Q4 2025 from 39.2%. According to the company, higher duty and tariff costs increased import expenses to 14.5% of sales versus 8.3% the prior year.

What guidance did Karat Packaging (KRT) give for Q1 2026 and full year 2026?

Karat expects Q1 2026 net sales to rise 8–10% year‑over‑year and full‑year 2026 net sales to increase by low double‑digits. According to the company, gross and adjusted EBITDA margins should improve under current tariff policy.

Did Karat Packaging (KRT) announce a dividend or share repurchase recently?

The board approved a regular quarterly dividend of $0.45 per share, payable Feb 27, 2026. According to the company, it repurchased 137,374 shares for $3.0M in Q4 and has approximately $12.0M remaining under the program.

What drove Karat Packaging’s full‑year 2025 results and profit (KRT)?

Full‑year 2025 net sales rose to $467.7M driven by $39.7M volume increase and $11.9M product mix. According to the company, higher ocean freight, duties (+$20.6M) and import volume weighed on gross margin despite profit growth.
Karat Packaging Inc.

NASDAQ:KRT

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448.42M
8.54M
Packaging & Containers
Plastics Products, Nec
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United States
CHINO