Karat Packaging reports Q4 EPS 28c, consensus 36c

Reports Q4 revenue $101.6M, consensus $102.27M…Gross margin of 39.2 percent versus 35.7 percent in the prior-year quarter.”We finished 2024 with a strong fourth quarter, as sales volume grew 14 percent and net sales increased 6 percent, despite the out-of-period benefit of $4.8 million included in the prior-year quarter from online platform fees for the first nine months of 2023,” said Alan Yu, Chief Executive Officer. “As positive momentum continues in 2025, we are making it a priority to strengthen our supply chain resilience ahead of the tariff uncertainty. We have reduced our dependence on China for imported goods to approximately 20 percent and diversified our sourcing to countries with more favorable trade conditions and minimal tariffs, such as Taiwan, which accounted for more than 50 percent of our global sourcing for the year ended December 31, 2024. We are actively working on further reducing dependence on China and negotiating additional vendor discounts to mitigate potential negative pricing and margin impact. While we try to protect pricing, we are evaluating product pricing holistically, and have implemented pricing increases in certain categories to be effective in March and April. Combined with a strong U.S. dollar and stable ocean freight rates this year, we anticipate the recently imposed tariff should have a minimal long-term effect on margin. “Sales of our eco-friendly products in the fourth quarter increased 11 percent year-over-year and represented 35 percent of total sales. In view of more state and local government legislation requiring recyclable or compostable foodservice products, we expect demand for eco-friendly product lines will continue to accelerate. We are further developing new and innovative products to enhance our competitive position. “As previously announced, our newly-signed 187,000 square-foot second distribution center in Chino, California will provide the capacity needed, ahead of our summer peak season, to continue to grow our top-line,” Yu said.