Karat Packaging Q4 Sales Rise 13.7% to $115.6M, Net Income Up 22.8%
Record fourth-quarter net sales rose 13.7% to $115.6 million and net income climbed 22.8% to $7.2 million. First-quarter 2026 revenue is forecast to increase 8–10% with gross margins of 34–36% and full-year sales expected to grow low double-digits under current tariff policy.
1. Q4 Financial Highlights
Karat Packaging reported record fourth-quarter net sales of $115.6 million, up 13.7% year-over-year, and gross profit of $39.3 million. Net income increased 22.8% to $7.2 million, while adjusted EBITDA rose to $12.5 million with a 10.8% margin.
2. Tariff Impact and Supply Chain Diversification
Gross margin declined to 34.0% from 39.2% due to $8.4 million in higher duty and tariff costs, partially offset by product-mix improvements. The company sourced 46% of goods from Taiwan, 14% from China, 13% domestically, and 11% each from Vietnam and Malaysia.
3. 2026 Guidance Outlook
First-quarter 2026 net sales are expected to increase 8–10% with gross margins of 34–36% and adjusted EBITDA margins of 9–11%. Full-year net sales are forecast to grow in the low double-digits, with continued margin improvement under prevailing tariff policies.
4. Paper Bags Product Expansion
The new paper bags category secured a major contract with a national chain account and is generating meaningful revenue growth. Additional opportunities are in final confirmation stages, and generic bag supplies to smaller accounts are expanding market share.