NASDAQ$KRT
Karat Packaging Inc · Q4 2022 earnings
Q4 2022 earnings · · Investor relations
Briefing
Karat Packaging's financial performance for Q4 2022 and full year 2022 was reported, highlighting a slight increase in net sales and improved gross margin despite challenges from inventory write-offs and increased operating expenses.
Karat Packaging reported a 1.5% increase in net sales for Q4 2022, reaching $92.7 million. The gross margin improved by 100 basis points to 32.0%, although net income decreased to $4.5 million due to higher operating expenses and an inventory write-off. The company is focused on growth strategies, including expanding warehouses and increasing its sales team.
- Net sales increased by 1.5% to $92.7 million compared to the prior-year quarter.
- Gross margin improved by 100 basis points to 32.0% due to lower ocean freight costs.
- Net income decreased to $4.5 million from $6.0 million in the prior-year quarter.
- The company is implementing growth strategies such as expanding warehouses and increasing the sales team.
Headline financials
Revenue & EPS history
Karat Packaging · Revenue · Quarterly
$92.7M
Revenue by segment
Karat Packaging · $70.8M total across 3 segments · Q4 2022
- Chains and distributors$53.2M—75.1%
- Online$10.6M—15.0%
- Retail$7M—9.9%
Forward guidance
Karat Packaging anticipates net sales to increase by a high single-digit percentage for the full year 2023 and aims for a gross margin between 32% and 33%. Sales for the first half of 2023 are expected to be lower due to price reductions and destocking of certain inventories.
Tailwinds
- Net sales for the full year 2023 expected to increase high single digit.
- Gross margin goal for the 2023 full year: 32 percent to 33 percent.
- Gross margin continued to improve during the 2022 fourth quarter, with a significant reduction of ocean freight costs versus the same quarter last year.
- Ocean freight costs have essentially now stabilized, which is expected to enable further margin expansion for 2023.
- New contracts with chain accounts and expanded product offerings to existing customers are expected to add to the top line in the second half of 2023.
Headwinds
- Sales for the first half of 2023 anticipated to be lower due, in part, to price reductions and destocking for certain inventories, compared with the prior year period.
- Gross profit was negatively impacted by an out-of-period inventory write-off of $1.7 million.
- Adjusted EBITDA was negatively impacted by a deposit write-off of $0.5 million related to a pre-pandemic capital investment project.
- Operating expenses increased in the 2022 fourth quarter due to higher labor costs, production costs, and rental expense.
- Net income for the 2022 fourth quarter decreased due to the factors mentioned above.
Historical earnings impact
How earnings announcements have historically affected this stock's price.
Avg. return before/after earnings
Based on 20 quarterly earnings reports · overlaid with Q4 2022
-0.7%
Avg return
Earnings day
+1.2%
Avg return
5 days after
+0.8%
Avg return
30 days after
42%
10 / 24 earnings
Positive
+20.7%
Q4 2025
Best reaction
-18.6%
Q3 2023
Worst reaction
| Quarter | Report date | Reaction (Day 0) | +5 days | +30 days |
|---|---|---|---|---|
| Q1 2026 | -7.5% | -10.4% | -6.3% | |
| Q4 2025 | +20.7% | +24.4% | +33.5% | |
| Q3 2025 | -6.1% | -8.5% | -8.5% | |
| Q1 2025 | +10.9% | +10.0% | +14.2% | |
| Q4 2024 | -2.1% | +0.8% | -14.7% | |
| Q3 2024 | -0.1% | +3.5% | +5.3% | |
| Q2 2024 | -14.6% | -7.8% | -13.2% | |
| Q1 2024 | -9.0% | -5.2% | -7.7% | |
| Q4 2023 | -11.8% | -7.2% | -5.7% | |
| Q3 2023 | -18.6% | -9.2% | -5.5% | |
| Q2 2023 | +3.8% | +21.6% | +0.8% | |
| Q1 2023 | +3.6% | +6.2% | +12.5% | |
| Q4 2022 | -1.6% | -6.6% | -6.2% | |
| Q3 2022 | -2.8% | -7.6% | -5.8% | |
| Q2 2022 | +1.2% | +0.1% | +1.2% | |
| Q1 2022 | +11.6% | +16.7% | +10.0% | |
| Q4 2021 | +13.3% | +26.2% | +24.5% | |
| Q3 2020 | -10.6% | -10.8% | -9.7% | |
| Q3 2021 | -7.5% | -7.8% | -7.6% | |
| Q2 2020 | -3.7% | -6.5% | -6.1% | |
| Q2 2021 | -2.6% | -7.6% | -6.2% | |
| Q4 2020 | +6.1% | +3.7% | +6.2% | |
| Q1 2020 | +6.1% | +3.7% | +6.2% | |
| Q1 2021 | +3.5% | +8.2% | +8.2% | |
| Q4 2019 | — | — | — | |
| Q3 2019 | — | — | — | |
| Q2 2019 | — | — | — | |
| Q1 2019 | — | — | — | |
| Q4 2018 | — | — | — | |
| Q2 2018 | — | — | — | |
| Q1 2018 | — | — | — | |
| Q4 2017 | — | — | — |
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