Karat Packaging Inc. reported a solid performance for the third quarter and the nine months ended September 30, 2024, with notable increases in net sales and gross profit, although net income showed a decline compared to the previous year.

For the third quarter of 2024, net sales reached $112.8 million, marking a 6.9% increase from $105.5 million in Q3 2023. The nine-month period saw net sales of $321.0 million, up 3.5% from $310.1 million in the same period last year. The growth in sales was attributed to a favorable product mix and increased online sales, which contributed an additional $8.0 million. However, this was partially offset by a $20.3 million unfavorable pricing comparison.

Gross profit for Q3 2024 was $43.5 million, an increase of 11.7% from $38.9 million in Q3 2023, resulting in a gross margin of 38.6%, up from 36.9% a year earlier. For the nine months, gross profit increased to $124.5 million from $118.9 million, with a gross margin improvement to 38.8% from 38.4%. The increase in gross margin was driven by lower product costs as a percentage of net sales.

Operating income for Q3 2024 was $11.3 million, slightly down from $11.4 million in Q3 2023, while net income increased to $9.3 million from $9.1 million. However, for the nine months ended September 30, 2024, net income decreased to $25.0 million from $29.0 million in the prior year, primarily due to a $7.0 million drop in operating income.

Total assets as of September 30, 2024, were $306.8 million, up from $276.4 million at the end of 2023. Current assets increased to $170.1 million, with cash and cash equivalents rising to $38.9 million from $23.1 million. Total liabilities also increased to $143.2 million, up from $113.7 million, largely due to a rise in operating lease liabilities and accounts payable.

Karat Packaging declared a quarterly cash dividend of $0.40 per share on November 5, 2024, reflecting its commitment to returning value to shareholders. The company continues to focus on enhancing its operational efficiencies and addressing internal control weaknesses, with ongoing remediation efforts in place.