Karat Packaging Inc. reported a notable financial performance for the second quarter of 2025, achieving net sales of $124.0 million, a 10.1% increase from $112.6 million in the same period last year. For the first half of 2025, the company recorded net sales of $227.6 million, up 9.3% from $208.2 million in the prior year. The gross profit for the quarter was $49.1 million, reflecting a gross margin of 39.6%, which is an improvement of 110 basis points compared to the previous year. Net income for the quarter reached $11.1 million, a 19.8% increase from $9.2 million in Q2 2024, while the net income margin improved to 8.9%.
The company experienced significant changes in its operational metrics, with a 36.5% increase in inventory purchases in anticipation of business expansion in the latter half of 2025. This led to a rise in accounts receivable by $9.6 million, attributed to stronger sales. However, cash and cash equivalents decreased by $1.0 million, ending the quarter at $30.5 million. The total current assets increased to $186.3 million, up from $161.0 million at the end of 2024, while current liabilities also rose to $69.5 million from $46.4 million, resulting in a working capital increase to $116.8 million.
Strategically, Karat Packaging has focused on enhancing its supply chain resilience by reducing reliance on imports from China, which decreased to 10.1% of total sourcing in Q2 2025, down from 18.4% in Q1 2025. The company has ramped up domestic production, increasing output by 17.3% compared to the previous quarter. Additionally, the company declared a quarterly cash dividend of $0.45 per share, reflecting its commitment to returning value to shareholders.
Looking ahead, Karat Packaging anticipates continued growth driven by the increasing demand for disposable foodservice products, particularly in the take-out and delivery segments. The company is also preparing for potential challenges related to fluctuating raw material costs and ongoing supply chain dynamics. Management remains optimistic about leveraging its enhanced operational flexibility and strategic sourcing initiatives to navigate these challenges and capitalize on market opportunities.
About Karat Packaging Inc.
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