Karat Packaging Inc. (KRT) Q3 2025 Earnings Call Transcript
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Nov 07 2025
0mins
Should l Buy KRT?
Source: SeekingAlpha
Net Sales $124.5 million, up 10.4% year-over-year from $112.8 million. The increase was driven by a $9.4 million rise in volume and a $3.5 million favorable impact from product mix, partially offset by a $0.7 million unfavorable pricing comparison.
Gross Margin 34.5%, down from 38.6% in the prior year quarter. The decline was due to higher import costs (14.4% of net sales compared to 8.6% previously), partially offset by favorable vendor pricing, product mix, and reduced inventory write-offs.
Operating Expenses $34.3 million, up from $32.2 million in the prior year quarter. The increase was driven by $2.1 million higher shipping costs, $0.7 million higher rent expenses, and $0.6 million higher salaries and benefits, partially offset by a $1.4 million reduction in online platform fees.
Operating Income $8.6 million, down from $11.3 million in the prior year quarter. The decline was due to increased operating expenses and lower gross margin.
Net Income $7.6 million, down from $9.3 million in the prior year quarter. Net income margin decreased to 6.1% from 8.2%. The decline was attributed to higher import costs and increased operating expenses.
Adjusted EBITDA $13.1 million, down from $14.7 million in the prior year quarter. Adjusted EBITDA margin decreased to 10.5% from 13.0%, primarily due to higher import costs and operating expenses.
Operating Cash Flow $1.0 million, down from $19.5 million in the prior year quarter. The decline was due to increased duty and tariff payments and inventory purchase payments, partially offset by strong collections.
Working Capital $91.1 million as of September 30, 2025, reflecting financial liquidity and operational cash flow management.
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Analyst Views on KRT
Wall Street analysts forecast KRT stock price to rise
3 Analyst Rating
1 Buy
1 Hold
1 Sell
Hold
Current: 27.600
Low
22.00
Averages
28.50
High
35.00
Current: 27.600
Low
22.00
Averages
28.50
High
35.00
About KRT
Karat Packaging Inc. is a specialty distributor and manufacturer of a range of disposable foodservice products and related items, primarily used by national and regional restaurants and in foodservice settings across the United States. The Company classifies its customers into four categories. Distributors include national and regional distributors across the United States that purchase their products and provide a channel to offer their products to restaurants, offices, schools, government entities and other end users. National and regional chains typically include fast casual, fast-food restaurants and supermarket chains with locations across multiple states to which they supply specified products. Retail primarily includes regional bubble tea shops and frozen yogurt shops that often purchase their specialty beverage ingredients and related items. E-commerce/Online includes small businesses, often with only one or two locations, as well as customers who purchase for personal use.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Diversified Supply Chain Strategy: The company is actively expanding its supply chain beyond Asia to include South America and the U.S. to navigate the evolving tariff landscape, a strategy that helps reduce costs and enhance competitiveness.
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