Karat Packaging Reports 2024 Second Quarter Financial Results
Karat Packaging Inc. (Nasdaq: KRT) reported its Q2 2024 financial results. Net sales increased 3.5% to $112.6 million, while gross profit rose 3.7% to $43.4 million. Net income decreased to $9.2 million from $10.7 million in the prior-year quarter. The company maintained a gross margin of 38.5%. Karat expects Q3 2024 net sales to increase by mid to high single digits and full-year 2024 net sales to grow by mid-single digits. The company's business pipeline is expanding with new national and regional chain accounts. Karat's warehouse expansion strategy is contributing to growth across sales channels, including online sales, which now represent 17.4% of total sales.
Karat Packaging Inc. (Nasdaq: KRT) ha riportato i risultati finanziari del secondo trimestre del 2024. Le vendite nette sono aumentate del 3,5% a 112,6 milioni di dollari, mentre il profitto lordo è salito del 3,7% a 43,4 milioni di dollari. Il reddito netto è diminuito a 9,2 milioni di dollari rispetto ai 10,7 milioni dello stesso trimestre dell'anno precedente. L'azienda ha mantenuto un margine lordo del 38,5%. Karat prevede che le vendite nette del terzo trimestre 2024 aumenteranno di una percentuale media bassa o alta a una cifra, e che le vendite nette annuali del 2024 cresceranno di una percentuale media a una cifra. Il portafoglio commerciale dell'azienda si sta espandendo con nuovi conti di catene nazionali e regionali. La strategia di espansione del magazzino di Karat sta contribuendo alla crescita su diversi canali di vendita, compresi i vendite online, che ora rappresentano il 17,4% delle vendite totali.
Karat Packaging Inc. (Nasdaq: KRT) reportó sus resultados financieros del segundo trimestre de 2024. Las ventas netas aumentaron un 3,5% a 112,6 millones de dólares, mientras que el beneficio bruto creció un 3,7% a 43,4 millones de dólares. El ingreso neto disminuyó a 9,2 millones de dólares desde los 10,7 millones del trimestre del año anterior. La empresa mantuvo un margen bruto del 38,5%. Karat espera que las ventas netas del tercer trimestre de 2024 aumenten entre un 5% y un 10%, y que las ventas netas del año completo 2024 crezcan en cifras individuales medias. El pipeline de negocios de la empresa se está expandiendo con nuevas cuentas de cadenas nacionales y regionales. La estrategia de expansión de almacenes de Karat está contribuyendo al crecimiento a través de los canales de ventas, incluyendo las ventas en línea, que ahora representan el 17,4% de las ventas totales.
Karat Packaging Inc. (Nasdaq: KRT)는 2024년 2분기 재무 결과를 발표했습니다. 순매출은 3.5% 증가하여 1억 1,260만 달러에 달했고, 총이익은 3.7% 상승하여 4,340만 달러에 도달했습니다. 순이익은 전년도 같은 분기 1,070만 달러에서 920만 달러로 감소했습니다. 회사는 38.5%의 총마진을 유지했습니다. Karat은 2024년 3분기 순매출이 중간에서 높은 한 자릿수 성장률을 기록할 것으로 예상하며, 2024년 전체 연도 순매출은 중간 한 자릿수 성장률을 나타낼 것으로 보입니다. 회사의 사업 파이프라인은 새로운 국내 및 지역 체인 계정으로 확장되고 있습니다. Karat의 창고 확장 전략은 온라인 판매를 포함한 여러 판매 채널의 성장에 기여하고 있으며, 현재 온라인 판매는 전체 판매의 17.4%를 차지하고 있습니다.
Karat Packaging Inc. (Nasdaq: KRT) a présenté ses résultats financiers du deuxième trimestre 2024. Les ventes nettes ont augmenté de 3,5% pour atteindre 112,6 millions de dollars, tandis que le bénéfice brut a crû de 3,7% pour s'établir à 43,4 millions de dollars. Le revenu net a diminué à 9,2 millions de dollars, contre 10,7 millions de dollars au cours du trimestre de l'année précédente. L'entreprise a maintenu une marge brute de 38,5%. Karat prévoit une augmentation des ventes nettes au troisième trimestre 2024 de l'ordre de chiffres simples moyens à élevés et une croissance des ventes nettes pour l'année entière 2024 d'un chiffre simple moyen. Le portefeuille commercial de l'entreprise s'élargit avec de nouveaux comptes de chaînes nationales et régionales. La stratégie d'expansion des entrepôts de Karat contribue à la croissance à travers les canaux de vente, y compris les ventes en ligne, qui représentent désormais 17,4% des ventes totales.
Karat Packaging Inc. (Nasdaq: KRT) hat die finanziellen Ergebnisse für das zweite Quartal 2024 veröffentlicht. Der Nettoumsatz stieg um 3,5% auf 112,6 Millionen Dollar, während der Bruttogewinn um 3,7% auf 43,4 Millionen Dollar anstieg. Der Nettogewinn fiel auf 9,2 Millionen Dollar im Vergleich zu 10,7 Millionen Dollar im Vorjahresquartal. Das Unternehmen hielt eine Bruttomarge von 38,5%. Karat erwartet, dass der Nettoumsatz im 3. Quartal 2024 um niedrige bis hohe einstellige Prozentsätze steigen wird und dass der Nettoumsatz für das Gesamtjahr 2024 um mittlere einstellige Prozentsätze wachsen wird. Die Unternehmenspipeline erweitert sich mit neuen nationalen und regionalen Kettenkonten. Die Lagererweiterungsstrategie von Karat trägt zum Wachstum über verschiedene Vertriebskanäle bei, einschließlich Online-Verkäufen, die nun 17,4% des Gesamtumsatzes ausmachen.
- Net sales increased 3.5% to $112.6 million in Q2 2024
- Gross profit rose 3.7% to $43.4 million
- Maintained gross margin of 38.5%
- Expects Q3 2024 net sales to increase by mid to high single digits
- Forecasts full-year 2024 net sales growth by mid-single digits
- Online sales now represent 17.4% of total sales
- Expanding business pipeline with new national and regional chain accounts
- Warehouse expansion strategy contributing to growth across sales channels
- Net income decreased to $9.2 million from $10.7 million in the prior-year quarter
- Net income margin declined to 8.2% from 9.8% in the prior-year quarter
- Adjusted EBITDA decreased to $15.7 million from $21.1 million in the prior-year quarter
- Operating expenses increased to $32.3 million from $28.5 million in the prior-year quarter
- Faced pressure from significantly higher ocean freight costs in Q2
Insights
Karat Packaging's Q2 2024 results show mixed performance. While net sales increased by
The company's strategic expansion of warehouse footprint is paying off, contributing to growth across sales channels. Online sales now represent
Karat Packaging's Q2 results reflect broader industry trends. The competitive pricing environment, especially in the distributor channel, indicates a saturated market. However, the company's ability to grow volume despite a
The expansion of Karat's warehouse footprint is a strategic move that aligns with the growing trend of e-commerce in the foodservice industry. The increase in online sales to
CHINO, Calif., Aug. 08, 2024 (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 2024 second quarter ended June 30, 2024.
Second Quarter 2024 Highlights
- Net sales of
$112.6 million , versus$108.7 million in the prior-year quarter. - Gross profit of
$43.4 million , versus$41.9 million in the prior-year quarter. - Gross margin of 38.5 percent, equal to that of the prior-year quarter.
- Net income of
$9.2 million , versus$10.7 million in the prior-year quarter. - Net income margin of 8.2 percent, versus 9.8 percent in the prior-year quarter.
- Adjusted EBITDA of
$15.7 million , versus$21.1 million in the prior-year quarter. - Adjusted EBITDA margin of 13.9 percent, versus 19.4 percent in the prior-year quarter.
2024 Guidance
- Net sales for the 2024 third quarter expected to increase by mid to high single digits from the prior-year quarter.
- Gross margin for the 2024 third quarter expected to be 38 to 39 percent versus 36.9 percent for the prior-year quarter.
- Net sales for the 2024 full year expected to increase by mid-single digits from the prior year.
- Gross margin goal for the 2024 full year expected to be 38 to 40 percent versus 37.7 percent from the prior year.
“Our business pipeline continues to expand, with the signing of new national and regional chain accounts. During the second quarter, however, initiation of certain new orders took longer than anticipated, due, in part, to administrative set-up procedures at a number of the larger chain accounts and softer demand in certain categories, which we do not expect either to recur in the second-half of the year,” said Alan Yu, Chief Executive Officer. “Net sales for the second quarter rose by 3.5 percent, even with approximately 6.4 percent lower prices, compared with last year.
“We were pleased that gross margin remained steady, despite pressure from significantly higher ocean freight costs, which spiked in mid-May and remained high through July. Freight costs have since started to moderate.
“Our strategic initiative established last year to expand Karat’s warehouse footprint in new geographic markets and enlarge existing warehouses is paying off and contributing to business growth across most of our sales channels, including online sales, which typically carries the highest margin and now represents 17.4 percent of total sales,” Yu said.
Second Quarter 2024 Financial Results
Net sales for the 2024 second quarter increased 3.5 percent to
Gross profit for the 2024 second quarter increased 3.7 percent to
Operating expenses in the 2024 second quarter were
Operating income in the 2024 second quarter decreased to
Total other income, net, was
Net income for the 2024 second quarter decreased to
Net income attributable to Karat for the 2024 second quarter was
Adjusted EBITDA, a non-GAAP measure defined below, totaled
Adjusted diluted earnings per common share, a non-GAAP measure defined below, was
Six-Month 2024 Financial Results
Net sales for the first half of 2024 increased 1.8 percent to
Gross profit for the first half of 2024 increased 1.3 percent to
Operating expenses were
Operating income decreased to
Total other income, net, was
Net income decreased to
Net income attributable to Karat was
Adjusted EBITDA, a non-GAAP measure defined below, decreased to
Adjusted diluted earnings per common share, a non-GAAP measure defined below, was
Dividends
On August 6, 2024, Karat’s board of directors approved a quarterly regular cash dividend of
Investor Conference Call
The Company will host an investor conference call today, August 8, 2024, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).
Phone: 646-307-1963 (domestic); (800) 715-9871 (international)
Conference ID: 4261013
Webcast: Accessible at http://irkarat.com/; 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 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 heading “Risk Factors” discussed under the caption “Item 1A. Risk Factors” in Part I of our 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 our other filings with the SEC. 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 /Roger Pondel
310-279-5980; ir@karatpackaging.com
KARAT PACKAGING INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except share and per share data) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Net sales | $ | 112,600 | $ | 108,740 | $ | 208,213 | $ | 204,541 | |||||||
Cost of goods sold | 69,193 | 66,879 | 127,204 | 124,536 | |||||||||||
Gross profit | 43,407 | 41,861 | 81,009 | 80,005 | |||||||||||
Operating expenses: | |||||||||||||||
Selling expenses | 13,868 | 8,871 | 24,631 | 17,572 | |||||||||||
General and administrative expenses (including | 17,893 | 17,192 | 34,662 | 33,821 | |||||||||||
Impairment expense and loss, net, on disposal of machinery | 531 | 2,459 | 2,525 | 2,541 | |||||||||||
Total operating expenses | 32,292 | 28,522 | 61,818 | 53,934 | |||||||||||
Operating income | 11,115 | 13,339 | 19,191 | 26,071 | |||||||||||
Other income (expenses) | |||||||||||||||
Rental income (including | 600 | 275 | 891 | 522 | |||||||||||
Other income (expenses), net | 51 | 118 | 106 | (90 | ) | ||||||||||
Gain (loss) on foreign currency transactions | 317 | 322 | 439 | (105 | ) | ||||||||||
Interest income (including | 533 | 519 | 964 | 586 | |||||||||||
Interest expense (including | (548 | ) | (573 | ) | (1,072 | ) | (980 | ) | |||||||
Total other income (expenses), net | 953 | 661 | 1,328 | (67 | ) | ||||||||||
Income before provision for income taxes | 12,068 | 14,000 | 20,519 | 26,004 | |||||||||||
Provision for income taxes | 2,841 | 3,323 | 4,816 | 6,141 | |||||||||||
Net income | 9,227 | 10,677 | 15,703 | 19,863 | |||||||||||
Net income attributable to noncontrolling interest | 127 | 175 | 437 | 356 | |||||||||||
Net income attributable to Karat Packaging Inc. | $ | 9,100 | $ | 10,502 | $ | 15,266 | $ | 19,507 | |||||||
Basic and diluted earnings per share: | |||||||||||||||
Basic | $ | 0.46 | $ | 0.53 | $ | 0.76 | $ | 0.98 | |||||||
Diluted | $ | 0.45 | $ | 0.53 | $ | 0.76 | $ | 0.98 | |||||||
Weighted average common shares outstanding, basic | 19,994,250 | 19,886,585 | 19,981,928 | 19,887,023 | |||||||||||
Weighted average common shares outstanding, diluted | 20,113,842 | 19,953,510 | 20,094,664 | 19,947,155 | |||||||||||
KARAT PACKAGING INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share and per share data) | |||||||
June 30, 2024 | December 31, 2023 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents (including | $ | 19,311 | $ | 23,076 | |||
Short-term investments (including | 32,743 | 26,343 | |||||
Accounts receivable, net of allowance for bad debt of | 33,683 | 27,763 | |||||
Inventories | 79,841 | 71,528 | |||||
Prepaid expenses and other current assets (including | 4,265 | 6,219 | |||||
Total current assets | 169,843 | 154,929 | |||||
Property and equipment, net (including | 92,281 | 95,226 | |||||
Deposits | 159 | 1,047 | |||||
Goodwill | 3,510 | 3,510 | |||||
Intangible assets, net | 313 | 327 | |||||
Operating right-of-use assets | 43,403 | 20,739 | |||||
Other non-current assets (including | 1,184 | 619 | |||||
Total assets | $ | 310,693 | $ | 276,397 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities | |||||||
Accounts payable (including | $ | 24,316 | $ | 18,446 | |||
Accrued expenses (including | 13,947 | 10,576 | |||||
Related party payable | 3,873 | 5,306 | |||||
Customer deposits (including | 877 | 951 | |||||
Long-term debt, current portion (including | 1,150 | 1,122 | |||||
Operating lease liabilities, current portion | 7,758 | 4,800 | |||||
Other current liabilities (including | 3,686 | 3,200 | |||||
Total current liabilities | 55,607 | 44,401 | |||||
Deferred tax liability | 4,197 | 4,197 | |||||
Long-term debt, net of current portion and debt discount of | 47,844 | 48,396 | |||||
Operating lease liabilities, net of current portion | 38,854 | 16,687 | |||||
Other non-current liabilities (including | 363 | 26 | |||||
Total liabilities | 146,865 | 113,707 | |||||
Karat Packaging Inc. stockholders’ equity | |||||||
Preferred stock, | — | — | |||||
Common stock, | 20 | 20 | |||||
Additional paid in capital | 88,307 | 86,667 | |||||
Treasury stock, | (248 | ) | (248 | ) | |||
Retained earnings | 69,633 | 67,679 | |||||
Total Karat Packaging Inc. stockholders’ equity | 157,712 | 154,118 | |||||
Noncontrolling interest | 6,116 | 8,572 | |||||
Total stockholders’ equity | 163,828 | 162,690 | |||||
Total liabilities and stockholders’ equity | $ | 310,693 | $ | 276,397 | |||
KARAT PACKAGING, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) | |||||||
Six Months Ended June 30, | |||||||
2024 | 2023 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 15,703 | $ | 19,863 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization (including | 5,289 | 5,350 | |||||
Adjustments to allowance for bad debt | 140 | (843 | ) | ||||
Adjustments to inventory reserve | 375 | (408 | ) | ||||
Write-off of inventory | 451 | 2,944 | |||||
Impairment of deposits | — | 523 | |||||
Impairment of operating right-of-use asset | 1,993 | — | |||||
Loss, net, on disposal of machinery and equipment | 532 | 2,018 | |||||
Amortization of loan fees (including | 46 | 40 | |||||
Accrued interest on certificates of deposit (including | (299 | ) | — | ||||
Stock-based compensation | 1,315 | 493 | |||||
Amortization of operating right-of-use assets | 3,461 | 2,281 | |||||
(Increase) decrease in operating assets | |||||||
Accounts receivable (including | (6,060 | ) | (2,061 | ) | |||
Inventories | (9,139 | ) | (7,625 | ) | |||
Prepaid expenses and other current assets (including | 1,976 | 478 | |||||
Other non-current assets (including | (165 | ) | (36 | ) | |||
Increase (decrease) in operating liabilities | |||||||
Accounts payable (including | 6,300 | 4,006 | |||||
Accrued expenses (including | 3,371 | (1,059 | ) | ||||
Related party payable | (1,433 | ) | 2,187 | ||||
Income taxes payable | — | 5,105 | |||||
Customer deposits (including | (449 | ) | (302 | ) | |||
Operating lease liabilities | (3,093 | ) | (2,205 | ) | |||
Other liabilities | (60 | ) | 304 | ||||
Net cash provided by operating activities | $ | 20,254 | $ | 31,053 | |||
Cash flows from investing activities | |||||||
Purchases of property and equipment | (415 | ) | (1,816 | ) | |||
Proceeds on disposal of property and equipment | 90 | 28 | |||||
Payments for costs incurred from sale of machinery and equipment | — | (209 | ) | ||||
Deposits paid for joint venture investment | — | (2,900 | ) | ||||
Deposits refunded from joint venture investment | — | 6,900 | |||||
Deposit refund from cancelled property and equipment purchase | — | 503 | |||||
Deposits paid for property and equipment | (2,041 | ) | (3,823 | ) | |||
Purchases of short-term investments (including | (22,513 | ) | (28,000 | ) | |||
Redemption of short-term investments | 16,412 | — | |||||
Net cash used in investing activities | $ | (8,467 | ) | $ | (29,317 | ) | |
Cash flows from financing activities | |||||||
Proceeds from long-term debt (including | — | 8,000 | |||||
Payments for lender fees | — | (61 | ) | ||||
Payments on long-term debt (including | (555 | ) | (476 | ) | |||
Tax withholding on vesting of restricted stock units | — | (18 | ) | ||||
Proceeds from exercise of common stock options | 325 | — | |||||
Dividends paid to shareholders | (12,996 | ) | (6,965 | ) | |||
Payment for Global Wells noncontrolling membership interest redemption (including | (2,326 | ) | — | ||||
Net cash (used in) provided by financing activities | $ | (15,552 | ) | $ | 480 | ||
Net (decrease) increase in cash and cash equivalents | $ | (3,765 | ) | $ | 2,216 | ||
Cash and cash equivalents | |||||||
Beginning of period | $ | 23,076 | $ | 16,041 | |||
End of period | $ | 19,311 | $ | 18,257 | |||
Supplemental disclosures of non-cash investing and financing activities: | |||||||
Transfers from deposit to property and equipment | $ | 2,492 | $ | 5,273 | |||
Non-cash purchases of property and equipment | $ | 118 | $ | 819 | |||
Supplemental disclosures of cash flow information: | |||||||
Income tax refund | $ | 3,315 | $ | 200 | |||
Cash paid for interest | $ | 1,040 | $ | 1,026 | |||
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 June 30, | Six Months Ended June 30, | |||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||
Amounts | % of net sale | Amounts | % of net sale | Amounts | % of net sale | Amounts | % of net sale | ||||||||||||||
Net income: | $ | 9,227 | 8.2 | % | $ | 10,677 | 9.8 | % | $ | 15,703 | 7.5 | % | $ | 19,863 | 9.7 | % | |||||
Add (deduct): | |||||||||||||||||||||
Interest income | (533 | ) | (0.5 | ) | (519 | ) | (0.5 | ) | (964 | ) | (0.5 | ) | (586 | ) | (0.3 | ) | |||||
Interest expense | 548 | 0.5 | 573 | 0.5 | 1,072 | 0.5 | 980 | 0.5 | |||||||||||||
Provision for income taxes | 2,841 | 2.5 | 3,323 | 3.1 | 4,816 | 2.3 | 6,141 | 3.0 | |||||||||||||
Depreciation and amortization | 2,660 | 2.4 | 2,717 | 2.5 | 5,289 | 2.6 | 5,350 | 2.7 | |||||||||||||
Stock-based compensation expense | 940 | 0.8 | 216 | 0.2 | 1,315 | 0.6 | 493 | 0.2 | |||||||||||||
Write-off of inventory (1) | — | — | 1,710 | 1.6 | — | — | 1,710 | 0.8 | |||||||||||||
Impairment expense and loss on disposal of machinery (1) | — | — | 2,445 | 2.2 | — | — | 2,445 | 1.3 | |||||||||||||
Operating right-of-use asset impairment | — | — | — | — | 1,993 | 1.0 | — | — | |||||||||||||
Adjusted EBITDA | $ | 15,683 | 13.9 | % | $ | 21,142 | 19.4 | % | $ | 29,224 | 14.0 | % | $ | 36,396 | 17.8 | % | |||||
(1) The write-off of inventory and impairment expense and loss on disposal of machinery represent costs incurred in connection with the scaling back of production in certain locations. As part of the execution of this strategy, certain machinery and equipment was disposed of or impaired, and raw materials associated with those machinery and equipment were written-off.
Reconciliation of Adjusted Diluted Earnings Per Common Share | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Diluted earnings per common share: | $ | 0.45 | $ | 0.53 | $ | 0.76 | $ | 0.98 | |||||||
Add (deduct): | |||||||||||||||
Stock-based compensation expense | 0.05 | 0.01 | 0.06 | 0.02 | |||||||||||
Write-off of inventory (1) | — | 0.09 | — | 0.09 | |||||||||||
Impairment expense and loss on disposal of machinery (1) | — | 0.12 | — | 0.12 | |||||||||||
Operating right-of-use asset impairment | — | — | 0.10 | — | |||||||||||
Income tax impact of adjustments | (0.01 | ) | (0.06 | ) | (0.04 | ) | (0.06 | ) | |||||||
Adjusted diluted earnings per common shares | $ | 0.49 | $ | 0.69 | $ | 0.88 | $ | 1.15 | |||||||
(1) The write-off of inventory and impairment expense and loss on disposal of machinery represent costs incurred in connection with the scaling back of production in certain locations. As part of the execution of this strategy, certain machinery and equipment was disposed of or impaired, and raw materials associated with those machinery and equipment were written-off.
Reconciliation of Adjusted EBITDA by Entity: | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | |||||||||||||||||||||||
Karat Packaging | Global Wells | Eliminations | Consolidated | Karat Packaging | Global Wells | Eliminations | Consolidated | ||||||||||||||||||
Net income (loss): | $ | 9,100 | $ | 150 | $ | (23 | ) | $ | 9,227 | $ | 14,950 | $ | 510 | $ | 243 | $ | 15,703 | ||||||||
Add (deduct): | |||||||||||||||||||||||||
Interest income | (400 | ) | (133 | ) | — | (533 | ) | (618 | ) | (346 | ) | — | (964 | ) | |||||||||||
Interest expense | 29 | 519 | — | 548 | 36 | 1,036 | — | 1,072 | |||||||||||||||||
Provision for income taxes | 2,841 | — | — | 2,841 | 4,816 | — | — | 4,816 | |||||||||||||||||
Depreciation and amortization | 2,356 | 304 | — | 2,660 | 4,682 | 607 | — | 5,289 | |||||||||||||||||
Stock-based compensation expense | 940 | — | — | 940 | 1,315 | — | — | 1,315 | |||||||||||||||||
Operating right-of-use asset impairment | — | — | — | — | 1,993 | — | — | 1,993 | |||||||||||||||||
Adjusted EBITDA | $ | 14,866 | $ | 840 | $ | (23 | ) | $ | 15,683 | $ | 27,174 | $ | 1,807 | $ | 243 | $ | 29,224 | ||||||||
Reconciliation of Adjusted EBITDA by Entity: | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | |||||||||||||||||||||||
Karat Packaging | Global Wells | Eliminations | Consolidated | Karat Packaging | Global Wells | Eliminations | Consolidated | ||||||||||||||||||
Net income (loss): | $ | 10,493 | $ | 203 | $ | (19 | ) | $ | 10,677 | $ | 19,533 | $ | 412 | $ | (82 | ) | $ | 19,863 | |||||||
Add (deduct) | |||||||||||||||||||||||||
Interest income | (336 | ) | (183 | ) | — | (519 | ) | (387 | ) | (216 | ) | 17 | (586 | ) | |||||||||||
Interest expense | 8 | 565 | — | 573 | 26 | 971 | (17 | ) | 980 | ||||||||||||||||
Provision for income taxes | 3,323 | — | — | 3,323 | 6,141 | — | — | 6,141 | |||||||||||||||||
Depreciation and amortization | 2,413 | 304 | — | 2,717 | 4,743 | 607 | — | 5,350 | |||||||||||||||||
Stock-based compensation expense | 216 | — | — | 216 | 493 | — | — | 493 | |||||||||||||||||
Write-off of inventory (1) | 1,710 | — | — | 1,710 | 1,710 | — | — | 1,710 | |||||||||||||||||
Impairment expense and loss on disposal of machinery (1) | 2,445 | — | — | 2,445 | 2,445 | — | — | 2,445 | |||||||||||||||||
Adjusted EBITDA | $ | 20,272 | $ | 889 | $ | (19 | ) | $ | 21,142 | $ | 34,704 | $ | 1,774 | $ | (82 | ) | $ | 36,396 | |||||||
(1) The write-off of inventory and impairment expense and loss on disposal of machinery represent costs incurred in connection with the scaling back of production in certain locations. As part of the execution of this strategy, certain machinery and equipment was disposed of or impaired, and raw materials associated with those machinery and equipment were written-off.
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 a financial measure calculated as net income excluding (i) interest income, (ii) interest expense, (iii) provision for income taxes, (iv) depreciation and amortization, (v) stock-based compensation expense, (vi) write-off of certain inventory items outside the normal course of business, (vii) impairment expense and loss on disposal of machinery outside the normal course of business, and (viii) operating right-of-use asset impairment.
- Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by net sales.
- Adjusted diluted earnings per common share is calculated as diluted earnings per common share, plus the per share impact of stock-based compensation, operating right-of-use asset impairment, write-off of certain inventory items outside the normal course of business, impairment expense and loss on disposal of machinery outside the normal course of business, 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 core performance 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 profitability 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 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.
KARAT PACKAGING INC. AND SUBSIDIARIES NET SALES BY CATEGORY (UNAUDITED) (In thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
(in thousands) | |||||||||||||||
National and regional chains | $ | 24,052 | $ | 23,827 | $ | 45,522 | $ | 45,195 | |||||||
Distributors | 62,097 | 62,590 | 114,924 | 117,237 | |||||||||||
Online | 19,546 | 15,493 | 34,425 | 29,148 | |||||||||||
Retail | 6,905 | 6,830 | 13,342 | 12,961 | |||||||||||
$ | 112,600 | $ | 108,740 | $ | 208,213 | $ | 204,541 | ||||||||
FAQ
What was Karat Packaging's (KRT) net sales for Q2 2024?
How did Karat Packaging's (KRT) net income change in Q2 2024 compared to Q2 2023?
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