Karat Packaging Inc. is a company dedicated to the manufacturing and distribution of various single-use consumables. These items, crafted from materials such ...
Karat Packaging Inc., founded in 2000 and headquartered in Chino, California, is a leading supplier and manufacturer of single-use disposable products, primarily serving the restaurant and foodservice sectors. The company's extensive product line includes food containers, carry-out packaging, tableware, drinking cups, lids, cutlery, straws, beverage components, and protective gloves, crafted ...Karat Packaging Inc., founded in 2000 and headquartered in Chino, California, is a leading supplier and manufacturer of single-use disposable products, primarily serving the restaurant and foodservice sectors. The company's extensive product line includes food containers, carry-out packaging, tableware, drinking cups, lids, cutlery, straws, beverage components, and protective gloves, crafted from materials such as plastic, paper, and compostable biopolymers. Many of these products are marketed under the 'Karat Earth' label, reflecting the company's commitment to environmentally friendly alternatives. Karat Packaging distributes through national and regional wholesale distributors, large restaurant chains, retail outlets, and direct online sales, and offers value-added services like product innovation, graphic design, custom printing, and logistics solutions. Led by CEO and co-founder Alan Yu, the company has grown from a modest boba shop supplier into a NASDAQ-listed enterprise, reporting a market capitalization of approximately $940 million as of the latest data. Financially, Karat Packaging has demonstrated robust performance with a gross profit margin of 40.5%, an operating margin of 12.8%, and a net profit margin of 10.2% over the trailing twelve months. The company maintains a healthy balance sheet with a current ratio of 2.17 and a debt-to-equity ratio of 0.288, indicating strong liquidity and moderate leverage. With an employee base of around 636, Karat Packaging continues to expand its footprint across the United States, serving customers nationwide from its strategic locations. The company went public in April 2021 and has since paid dividends, with a current dividend yield of approximately 3.8%. Karat Packaging's mission is to be the premier single-source provider for food packaging and disposable product needs, combining operational efficiency, innovative product development, and a strong commitment to sustainability to drive long-term growth and shareholder value.
YoYYoY means Year-over-Year. It compares the latest annual value with the previous annual value to show long-term trend strength.
QoQQoQ means Quarter-over-Quarter. It compares the latest quarter with the immediately previous quarter to show short-term momentum changes.
RevenueThe total money that came through the front door from selling things, before paying a single bill. Think of it as the grand total of every credit card swipe from customers. (YoY compares this year to last year's performance, while QoQ compares the current three months to the previous three).
$467.7M
+10.7%
+16.6%
Net IncomeThe absolute bottom line. If the company paid every single supplier, employee, banker, and tax collector, this is the actual money left in their pocket at the end of the day.
$31.5M
+5.0%
+335.1%
Gross MarginThe basic markup. If they sell a $100 pair of sneakers, this percentage tells you how much of that price tag is profit right after paying for the rubber and shoelaces, but before paying for things like store rent or TV commercials.
+36.8%
-5.4%
+64.0%
Operating MarginThe 'day job' efficiency score. Out of every dollar a customer spends, this shows how many cents the company keeps after making the product AND paying for all the everyday corporate overhead (like salaries, marketing, and keeping the lights on).
+8.8%
-1.6%
+281.2%
Net MarginThe final take-home percentage. When you strip away every conceivable cost, tax, and interest payment, this is the exact number of cents the company truly gets to keep from every dollar in sales.
+6.7%
-5.1%
+273.3%
Free Cash FlowThe holy grail of corporate cash. It's the spendable, physical money left over after the business pays for its daily operations AND buys the big, expensive upgrades (like new factories or servers) it needs to survive. This is the 'free' money they can use to pay dividends or buy back stock.
$29.3M
-33.3%
+405.0%
FCF MarginThe ultimate cash conversion rate. It shows how good the company is at turning regular sales directly into cold, hard, spendable cash. A high percentage means the business is an absolute cash-printing machine.
+6.3%
-39.7%
+333.3%
Debt / EquityThe financial risk gauge. It compares how much of the company's empire was built using borrowed money (loans) versus the owners' own money (shareholders). A high number means they are heavily leveraged and playing a riskier game; a low number means they are playing it safe.
53.4%
-10.5%
-15.9%
Current RatioThe 12-month survival check. It simply compares the cash they have right now (plus things they can quickly turn into cash) against the immediate bills they absolutely must pay this year. A score above 1 means they have enough in the wallet to cover the upcoming bills without panicking.
2.30x
-33.8%
-1.7%
Total AssetsThe absolute size of the company's empire. It bundles together absolutely everything of value they own—from the cash in the register and the inventory in the warehouse, to the software patents in the vault and the factories on the ground.
Operator: Good day, and welcome to the Karat Packaging Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Roger Pondel.
Roger Pondel: Good afternoon, everyone, and welcome to Karat Packaging's 2026 second quarter conference call. I'm Roger Pondel with PondelWilkinson, Karat Packaging's investor relations firm. It will be my pleasure momentarily to introduce the company's Chief Executive Officer, Alan Yu; and its Chief Financial Officer, Jian Guo. Before I turn the call over to Alan, I want to remind our listeners that today's call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to numerous conditions, many of which are beyond the company's control, including those set forth in the risk factor section of the company's most recent Form 10-K, as filed with the Securities and Exchange Commission, and copies of which are available on the SEC's website at www.sec.gov, along with other company filings made with the SEC from time to time. Actual results could differ materially from these forward-looking statements, and Karat Packaging undertakes no obligation to update any forward-looking statements except as required by law. Please also note that during this call, we will be discussing adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, and free cash flow, which are non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of the most directly comparable GAAP measures to the non-GAAP financial measures is included in today's press release, which is now posted on the company's website. And with that, I will turn the call over to CEO Alan Yu. Alan?
Alan Yu: Thank you, Roger. Good afternoon, everyone. We delivered record quarterly net sales of more than $136 million, reflecting the strength of our customers' demand and accelerated momentum in our online business growth. During the quarter, our sales pipeline expanded, adding four new chain accounts, which further broadened our market reach and created additional opportunities for future revenue growth. We continue to experience encouraging momentum across our business, highlighted by the strong performance of our online channel, where net sales increased 23.6% year over year. Our eco-friendly product portfolio also continued to gain traction, benefiting from the continued expansion of SKUs and growth in the paper bag categories. As a result, eco-friendly products represented 33.8% of total sales during the quarter, compared with 31.8% in the prior-year period. Our results also benefited from IEEPA tariff refunds, which reverses higher tariff costs absorbed in the prior periods, and further contributed to the strong reported profitability. While we were pleased to capture this benefit in the quarter, our focus remains on the fundamental …