Karat Packaging Inc. (KRT) Q3 2025 Earnings Call Transcript
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.
Trade with 70% Backtested Accuracy
Analyst Views on KRT
About KRT
About the author
Analyst Ratings Update for UPS, KRT, and RHI with Dividend Yields
- UPS Analyst Rating: JP Morgan analyst Brian Ossenbeck maintains a Neutral rating for UPS, raising the price target from $97 to $99, reflecting a 6.14% dividend yield and a 70% accuracy rate, indicating confidence in the company's stability.
- KRT Stock Rating Change: B of A Securities analyst George Staphos downgraded Karat Packaging from Buy to Underperform, cutting the price target from $27 to $22; despite a 7.21% dividend yield, the analyst's 53% accuracy suggests market concerns about its outlook.
- RHI Analyst Perspective: Barclays analyst Manav Patnaik keeps Robert Half at Equal-Weight, lowering the price target from $45 to $36; with an 8.33% dividend yield and a 73% accuracy rate, this reflects a cautious view on the company's future performance.
- Market Dynamics: In uncertain market conditions, investors are leaning towards high-dividend stocks, and Benzinga's real-time news alerts keep investors informed about the latest developments for UPS, KRT, and RHI to make more informed investment decisions.
Robert Half Cuts Price Target to $36, Dividend Yield at 8.69%
- Analyst Rating Adjustment: Barclays analyst Manav Patnaik maintained an Equal-Weight rating on Robert Half while slashing the price target from $45 to $36, reflecting a cautious outlook on the company's future performance, which may impact investor confidence.
- Weak Earnings Report: On October 22, Robert Half posted quarterly results that fell short of expectations, exacerbating market concerns about its profitability and potentially affecting its stock price performance.
- Industry Dynamics: During turbulent market times, investors tend to gravitate towards high-dividend stocks, and Robert Half's 8.69% dividend yield attracts those seeking stable income; however, the company's declining performance may weaken its appeal.
- Market Reaction: The downgrade in price target by analysts may lead to negative market reactions towards Robert Half, further affecting investor confidence in the stock within the industrial sector.
