Karat Packaging Inc.
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Range $24 – $39
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About the company
Karat Packaging Inc. is a company dedicated to the manufacturing and distribution of various single-use consumables. These items, crafted from materials such as traditional plastics, paper, and environmentally friendly biopolymer-based or other compostable forms, are primarily intended for use across the restaurant and broader foodservice sectors.
- CEO
- Alan Yu
- IPO
- 2021
- Employees
- 666
- HQ
- Chino, CA, US
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- Market Cap
- $949.67M
- P/E
- 18.95
- Fwd P/E
- 17.77
- PEG
- 0.33
- P/S
- 1.92
- P/B
- 5.70
- EV/EBITDA
- 12.11
- Div Yield
- 3.78%
- Gross Margin
- 40.49%
- Op Margin
- 12.83%
- Net Margin
- 10.18%
- ROE
- 32.51%
- ROIC
- 19.02%
Latest fiscal year · YoY change
- Revenue
- $467.74M+10.7%
- Gross Profit
- $172.14M+4.8%
- Op Income
- $41.13M
- Net Income
- $31.48M+5.0%
- EPS
- $1.57+4.7%
- OCF Growth
- -29.5%
- FCF Growth
- -33.3%
- 52W High
- $50.81
- 52W Low
- $20.61
- 50D MA
- $37.49
- 200D MA
- $28.43
- Beta
- 0.79
- RSI (14)
- 72
- Avg Volume
- 131.01K
Earnings call summaries
Pick a quarter — each call distilled into takeaways, results, and a bull vs bear read.
Karat Packaging posted record Q2 net sales and strong profit growth, but much of the margin surge came from tariff refunds, while management highlighted online momentum and new distribution capacity as growth drivers.· August 6, 2026
- Net sales hit a record $136.3 million, up 9.9% year over year, driven by volume/mix growth and stronger online sales.
- Reported gross margin jumped to 56.6% and EPS to $1.46, both heavily helped by $25.8 million of IEEPA tariff refunds.
- Online sales rose 23.6% year over year in the quarter, and management said July online sales were up 37%+ with Amazon up about 49%.
- The company added four new chain accounts and expects those wins to start shipping in the fourth quarter.
- Guidance calls for low-double-digit sales growth in Q3 and full-year 2026, with full-year gross margin in the low 40% range and adjusted EBITDA margin around the mid-teens.
Second-quarter net sales were $136.3 million, up 9.9% from $124.0 million a year ago. Gross profit rose to $77.2 million from $49.1 million, with gross margin at 56.6% versus 39.6% last year; management said the margin included a 1,890-basis-point benefit from IEEPA tariff refunds. Operating income increased 127.2% to $37.6 million, net income rose 168.3% to $29.6 million, and net income attributable to Karat was $29.3 million, or $1.46 per diluted share, versus $0.54 a year ago. Adjusted EBITDA was $41.6 million and adjusted diluted EPS was $1.48. Cash flow remained strong, with operating cash flow of $33.2 million and free cash flow of $31.8 million, both benefiting from $25.2 million of tariff refunds received in the quarter. For Q3 2026, the company expects net sales growth in the low double-digit range, gross margin of 35% to 37%, and adjusted EBITDA margin of 9% to 11%, with insignificant tariff refunds anticipated. For full-year 2026, management expects net sales growth in the low double-digit range, gross margin in the low 40% range, and adjusted EBITDA margin around the mid-teens, including tariff refunds recorded in the first half.
Alan Yu emphasized record sales, accelerated online momentum, and broader customer wins as signs that the business is gaining traction. He pointed to eco-friendly products reaching 33.8% of total sales, the addition of four chain accounts, and a planned Orlando distribution center as strategic steps to improve service, shorten delivery times, and support future growth. His tone was constructive and optimistic, while noting the company is focused on operational discipline and long-term fundamentals rather than relying on the tariff refund benefit.
Jian Guo walked through the quarter’s numbers and noted that the tariff refunds were a major driver of profitability: $25.8 million of refunds lowered COGS, lifted gross margin to 56.6%, and contributed to adjusted EBITDA of $41.6 million. He also highlighted working capital of $110.8 million, financial liquidity of $42 million, and another $15.7 million in short-term investments, plus $33.2 million of operating cash flow and $31.8 million of free cash flow. On capital allocation, he noted a $0.45 quarterly dividend paid in May, $2 million of share repurchases in the quarter, about $10 million remaining on the buyback authorization, and a board-approved increase in the quarterly dividend to $0.47.
Analysts focused on SG&A pressure, the sustainability of online sales growth, and the impact of new distribution capacity. Management said higher shipping and fuel costs were a key SG&A driver, but they expect improvement from lower fuel costs, greater use of the internal fleet, and tighter labor management. On online sales, Alan Yu said July online sales were up 37%+ and Amazon was up about 49%, and he said the $100 million online revenue target for the year is on track. Regarding the Orlando warehouse and other coverage gaps, management said Orlando should improve next-day or two-day service in a key Southeast market, while Colorado and parts of North America remain possible areas for future logistics expansion.
The call showed strong underlying demand, especially online, with management describing accelerated pipeline activity, four new chain account wins, and July online sales trends that remained well above the quarter’s pace. Management also sees structural support from sourcing diversification, lower freight/fuel costs, and new distribution capacity in Orlando, which they believe should help service levels and operating leverage.
The quarter’s earnings power was meaningfully boosted by tariff refunds, so reported margins and EPS were not fully representative of ongoing performance. Management also acknowledged SG&A pressure from shipping, fuel, and labor costs, and the Q3 margin guide of 35% to 37% is far below the reported Q2 level. In addition, they still see logistics coverage gaps in places like Colorado and parts of North America, which suggests continued investment may be needed.
AI summary of the company's earnings call · Paraphrased · Not investment advice
- Free Float
- 42.7%
- Shares Outstanding
- 19.96M
- Float Shares
- 8.53M
of shares held by institutions
124 13F filers
Buy/sell ratio 1.00. Sells can include pre-scheduled 10b5-1 plan sales, not just discretionary selling.
Top institutional holders
Largest 13F positions, with quarter-over-quarter change.
| Holder | Shares | Δ Quarter |
|---|---|---|
| Vanguard Group Inc | 511.44K | ▲ 33.99K |
| Two Sigma Advisers, LP | 81.40K | ▲ 6.70K |
| Perritt Capital Management Inc | 13.00K | ▲ 3.00K |
| Cubist Systematic Strategies, LLC | 10.98K | ▼ 15.03K |
| Skopos Labs, Inc. | 10.13K | ▲ 10.13K |
| Cwm, LLC | 4.80K | ▲ 2.15K |
| California State Teachers Retirement System | 465 | ▼ 64 |
| Point72 Europe (London) Llp | 88 | ▲ 88 |
| Sunbelt Securities, Inc. | 5 | ▲ 3 |
Held by 135 ETFs
Biggest fund positions in KRT by dollar value.
Recent insider transactions
Who's buying, who's selling, and how much.
| Date | Insider | Type | Shares |
|---|---|---|---|
| Aug 13, 26 | Guo Jian | other | 4,700 |
| Aug 13, 26 | Guo Jian | other | 4,700 |
| May 15, 26 | Guo Jian | other | 2,733 |
| May 15, 26 | Yu Alan | other | 2,124 |
| May 15, 26 | Quire Daniel | other | 2,065 |
| May 12, 26 | Guo Jian | other | 8,000 |
| Mar 11, 26 | Guo Jian | other | 28,000 |
| May 12, 26 | Guo Jian | other | 8,000 |
| May 12, 26 | Quire Daniel | other | 8,000 |
| Mar 11, 26 | Quire Daniel | other | 24,000 |
A “Sell” may be a pre-scheduled 10b5-1 plan sale rather than a discretionary decision — read insider selling with that in mind.
Our KRT coverage
Recent articles, reports, and earnings notes.
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Generate KRT report →Karat Packaging to Present at Lake Street's 10th Annual Best Ideas Growth Conference, September 10
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Karat Packaging Inc. (KRT) Q2 2026 Earnings Call Transcript
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