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BUSINESS PRODUCTS & SERVICES | Packaging
karatcup.com

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Founded Year

2018

Stage

IPO | IPO

Total Raised

$1.9M

Date of IPO

4/15/2021

About Karat Packaging

Karat (NASDAQ: KRT) specializes in food and beverage packaging products such as paper cups, plastic cups, food containers, dessert cups, cup lids, and more. Its products may be mixed and matched to fulfill diverse needs and budgets, as well as be matched with most major brands such as IP, Dixie, Sweetheart, and Solo, allowing clients to effortlessly switch in between brands. In an effort to be more environmentally friendly, Karat Earth, a plant-based line of compostable products including cups, straws, and utensils, was developed. Karat and Karat Earth also offer custom printing for cups, containers, and napkins for a personalized touch.

Karat Packaging Headquarter Location

6185 Kimball Ave.

Chino, California, 91708,

United States

(626) 965-8882

Latest Karat Packaging News

Karat Packaging : Reports 2021 Third Quarter Financial Results - Form 8-K

Nov 12, 2021

11/12/2021 | 12:36pm EST Message : Net Sales Increase 35 Percent Over Prior Year and 43 Percent, Excluding Sales of PPE-Related Products CHINO, Calif, November 11, 2021 - Karat Packaging Inc. (Nasdaq: KRT), a specialty distributor and manufacturer of environmentally friendly, disposable foodservice products and related items, today announced financial results for its 2021 third quarter ended September 30, 2021. Third Quarter 2021 Highlights § § Gross profit of $29.8 million, compared with $23.0 million a year ago and $28.1 million in the 2021 second quarter. Fourth Quarter and Full Year 2021 Outlook § Net sales in the 2021 fourth quarter expected to be $93 million to $96 million, compared with $70.4 million a year ago. § Net sales in the 2021 full year expected to be $366 million to $369 million, compared with $295.5 million in 2020. Alan Yu, chief executive officer, said, "Results for the 2021 third quarter reflect robust demand and our ability to provide new products to a diverse and expanding customer base. Sales increased at a strong rate, led by our distributor, online and national channels. Excluding PPE products that we sold in last year's third quarter during the height of the COVID-19 pandemic, top-line growth was 43 percent. Sales also were somewhat constrained by inventory shortages resulting from tight labor conditions and port delays in the third quarter. "The sales increase was partially offset by freight and shipping costs that continued to rise internationally during the third quarter. Freight costs have begun to ease in the fourth quarter but remain at elevated levels compared with last year. We continue to successfully and proactively increase prices to pass on these higher costs and protect our margins. "As a result of ongoing favorable market trends, we're currently targeting net sales to be in the range of $93 million to $96 million for the 2021 fourth quarter, which we expect will lead to full year sales in the range of $366 million to $369 million. In addition, the expected growth in our high-margin online channel and our efforts to pass on higher freight and shipping costs give us confidence in our ability to continue to protect our gross margin." Mr. Yu added. 1 Third Quarter 2021 Financial Results Net sales for the 2021 third quarter increased 34.6 percent to $102.7 million, from $76.3 million in the same period last year. The increase primarily was driven by greater product penetration with existing customers, as well as new customers added in the quarter. Net sales excluding PPE products, which carry higher margins, increased 43.2 percent to $101.9 million, from $71.2 million in the same period last year. Sales rose in each of Karat's primary channels, distribution, online and national. Gross profit for the 2021 third quarter increased to $29.8 million, from $23.0 million for the same period last year, primarily due to the increase in product sales, partially offset by higher freight costs. Gross margin was 29.0 percent in the 2021 third quarter, compared with 30.2 percent in the same period last year. Gross margin in the 2021 second quarter was 29.7 percent. Operating expenses in the 2021 third quarter totaled $24.4 million, a 52.8 percent increase from $16.0 million in last year's third quarter, when Karat was still a privately owned company. The increase was primarily due to higher shipping costs, payroll expenses associated with workforce expansion, an increase in facility costs, and stock-based compensation of $0.8 million. Operating expenses in the 2021 second quarter were $21.2 million. Operating income for the 2021 third quarter was $5.4 million, or 5.2 percent of net sales, compared with $7.0 million, or 9.2 percent of net sales, for the same period last year. Operating income for the second quarter of 2021 was $6.9 million, or 7.3 percent of net sales. Net income amounted to $4.1 million for the 2021 third quarter, compared with $4.6 million for the same period last year. Net income margin was 4.0 percent for the third quarter, compared with 6.0 percent a year ago. Net income was $9.3 million, and net income margin was 9.9 percent for the 2021 second quarter. Net income for the 2021 second quarter included a gain of $5.0 million on the forgiveness of the company's Paycheck Protection Program (PPP) loan. Net income attributable to Karat Packaging for the 2021 third quarter was $3.8 million, or $0.19 per diluted share, compared with $4.1 million, or $0.26 per diluted share a year ago, and $9.6 million, or $0.50 per diluted share for the 2021 second quarter. Net income attributable to Karat Packaging for the 2021 second quarter also included the $5.0 million gain on forgiveness of the PPP loan. Adjusted EBITDA totaled $8.2 million for the 2021 third quarter, compared with $9.1 million for the same period last year, and $10.1 million for the 2021 second quarter. Adjusted EBITDA margin was 8.0 percent of net sales, compared with 11.9 percent for the 2020 third quarter, and 10.7 percent in the 2021 second quarter. Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Reconciliations of GAAP to non-GAAP results are provided in the tables following this press release. Net cash used in operating activities totaled $3.6 million for the 2021 third quarter, compared with net cash provided by operating activities of $3.6 million for the same period last year. The decrease primarily reflects working capital activity, in particular decreases in accounts receivable and in the line of credit balance. 2 Nine-Month 2021 Financial Results Net sales for the first nine months of 2021 increased 21.2 percent to $272.9 million, from $225.1 million for the same period last year. Gross profit rose 13.9 percent to $79.5 million for the first nine months of 2021, from $69.8 million for the same period last year. Gross margin was 29.1 percent for the first nine months of 2021, compared with 31.0 percent for the same period last year. Operating expenses were $63.5 million for the 2021 year-to-date period, an increase of 43.7 percent, compared with $44.2 million for the same period last year. Operating income was $16.1 million for the first nine months of 2021, or 5.9 percent of net sales, compared with $25.6 million, or 11.4 percent of net sales, for the same period last year. Other income totaled $4.5 million for the first nine months of 2021, compared with other expense of $5.1 million for the same period last year. Other income for the 2021 year-to-date period primarily reflects a $5 million gain on PPP loan forgiveness recorded for the second quarter. Other expense for the first nine months of 2021 primarily reflected a loss of $2 million on interest rate swap positions. Net income increased to $16.5 million for the first nine months of 2021, from $15.1 million for the same period last year. Net income margin was 6.0 percent for the first nine months of 2021, compared with 6.7 percent for the same period last year. Net income attributable to Karat Packaging was $15.1 million, or $0.84 per diluted share, for the first nine months of 2021, compared with $16.6 million, or $1.07 per diluted share, for the same period last year. Adjusted EBITDA totaled $25.1 million for the first nine months of 2021, compared with $31.5 million for the same period last year. Adjusted EBITDA margin was 9.2 percent for the 2021 year-to-date period, compared with 14.0 percent for the same period last year. Net cash used in operating activities totaled $1.2 million for the first nine months of 2021, compared with net cash provided by operating activities of $12.3 million in the same period last year. The net change primarily reflects working capital activity. Investor Conference Call The Company will host an investor conference call today, November 11, 2021, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its 2021 third quarter results. Phone: 3 About Karat Packaging Inc. Karat Packaging Inc. is a specialty distributor and manufacturer of a wide range of environmentally friendly, 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 This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, including, but not limited to the net sales forecast for the 2021 fourth quarter and 2021 full year, are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's registration statement for the initial public offering filed with the SEC on April 14, 2021. Copies are available on the SEC's website at www.sec.gov. Karat Packaging undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law. Investor Relations and Media Contacts: PondelWilkinson Inc. 25,094 1 We define net income margin as net income divided by net sales and adjusted EBITDA margin as adjusted EBITDA divided by net sales. Note about Non-GAAP Financial Measures Karat Packaging uses Adjusted EBITDA and Adjusted EBITDA Margin to measure its financial performance. Adjusted EBITDA and Adjusted EBITDA Margin are supplemental non-GAAP financial measures of operating performance and are not based on any standardized methodology prescribed by GAAP. Adjusted EBITDA and Adjusted EBITDA Margin should not be considered in isolation or as alternatives to net income, cash flows from operating activities or other measures determined in accordance with GAAP. Also, Adjusted EBITDA and Adjusted EBITDA Margin are not necessarily comparable to similarly titled measures presented by other companies. 8 NET SALES BY CATEGORY

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