Karat Packaging Stock Earnings Reports

Karat Packaging reported a strong start to 2026 with Q1 net sales of $116.9M, up 12.9% year-over-year, driven by improving demand, market share gains and notably accelerated online sales. Online revenue rose to $19.5M (up ~10% YoY) with March showing 19% growth; management expects online to continue being a major growth driver toward a $100M+ run rate this year. Gross margin was resilient at 35.5% despite higher tariffs and input cost pressures; management has taken price increases on select plastic items (mid-May) and is benefiting from a rebalanced sourcing mix (more domestic, Malaysia/Vietnam, less China/Taiwan) that should begin delivering tariff-related cost relief. Q1 adjusted EBITDA rose to $12.5M and adjusted diluted EPS to $0.34. Cost discipline improved operating cost leverage (operating expenses down as % of sales). Cash flow was strong (operating cash flow $7.2M, free cash flow $6.3M). The board approved a $0.45 quarterly dividend. Guidance: Q2 sales growth of ~8–10%, Q2 gross margin of 35–37% and adjusted EBITDA margin 11–13%; full-year 2026 expected low-double-digit sales growth, gross margin 34–36% and adjusted EBITDA margin 11–13% (both ranges exclude potential tariff refund impacts). Management noted some order pull-forward (about $2M moved from April into March) which partly explains March’s 20% growth versus the more conservative Q2 guide.