Karat Q2 net sales rise 10%, beating analyst expectations
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/Miss | Actual | Consensus Estimate |
Q2 Sales | Beat | $124 mln | $123.50 mln (2 Analysts) |
Q2 Adjusted EPS | Miss | $0.57 | $0.6 (1 Analyst) |
Q2 Net Income | Miss | $11.10 mln | $12 mln (1 Analyst) |
Q2 Adjusted EBITDA | Miss | $17.70 mln | $17.80 mln (2 Analysts) |
Q2 Gross Margin | 39.6% |
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 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
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