Overview

* Karat Q2 net sales rise 10.1% to $124 mln, beating analyst expectations, per LSEG data

* Adjusted EPS, net income, and adjusted EBITDA missed analyst estimates

* Co navigated tariff uncertainty with alternative sourcing, enhancing supply chain resilience

Outlook

* Karat expects Q3 net sales to rise high single-digit to low double-digits

* Company anticipates Q3 gross margin in low to mid-30s

* Adjusted EBITDA margin for Q3 expected between 10% and 12%

* Maintains full-year guidance, pending tariff impact

Result Drivers

* ALTERNATIVE SOURCING - Co successfully navigated tariff uncertainty by diversifying sourcing, reducing reliance on China to 10%, per CEO Alan Yu

* VOLUME AND PRODUCT MIX - Increase in net sales driven by $14.2 mln rise in volume and change in product mix, partially offset by $3.3 mln unfavorable pricing

* CURRENCY HEADWINDS - Despite foreign currency losses due to USD weakening against New Taiwan Dollar, co delivered record net sales and net income

Key Details

Metric Beat/Mis Actual Consensu

s s

Estimate

Q2 Sales Beat $124 mln $123.50

mln (2

Analysts

)

Q2 Miss $0.57 $0.6 (1

Adjusted Analyst)

EPS

Q2 Net Miss $11.10 $12 mln

Income mln (1

Analyst)

Q2 Miss $17.70 $17.80

Adjusted mln mln (2

EBITDA Analysts

)

Q2 Gross 39.6%

Margin

Analyst Coverage

* The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 1 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

* The average consensus recommendation for the non-paper containers & packaging peer group is "buy"

* Wall Street's median 12-month price target for Karat Packaging Inc ( KRT ) is $35.00, about 23% above its August 6 closing price of $26.96

* The stock recently traded at 16 times the next 12-month earnings vs. a P/E of 16 three months ago

Press Release:

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)