Q2 2024 Karat Packaging Inc Earnings Call Transcript
Key Points
- Net sales for the second quarter of 2024 grew by 3.5% compared to the prior year, indicating steady growth.
- Online sales increased by 26.2%, benefiting from the inclusion of online platform fees and reflecting strong digital channel performance.
- The company maintained a stable gross margin of 38.5% despite higher ocean freight costs, showcasing effective cost management.
- Eco-friendly products accounted for 32.3% of total sales, highlighting the company's commitment to sustainable products.
- Preliminary sales in July showed a more than 10% year-over-year increase, suggesting strong momentum going into the second half of the year.
- Net income for the second quarter decreased to $9.2 million from $10.7 million in the prior year, reflecting a decline in profitability.
- Adjusted EBITDA margin dropped to 13.9% from 19.4% in the previous year, indicating margin compression.
- The distributor channel remains challenging with competitive pricing pressures affecting sales.
- Higher operating expenses, including increased marketing and stock-based compensation, impacted overall profitability.
- The onboarding of new national and regional chain accounts took longer than expected, affecting sales growth projections.
Thank you for standing by. My name is Celine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Karat Packaging second-quarter 2024 conference call. (Operator Instructions) I would now like to turn the call over to Roger Pondel, Investor Relations. Please go ahead.
Thank you, operator and good afternoon, everyone and welcome to Karat Packaging's 2024 second-quarter conference call. I'm Roger Pondel with PondelWilkinson, Karat Packaging's Investor Relations firm. It will be my pleasure momentarily to introduce the company's Chief Executive Officer, Alan Yu; and its Chief Financial Officer, Jian Guo.
Before I turn this call over to Alan, I want to remind our listeners that today's call may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to numerous conditions, many of which are beyond the company's control, including those set forth in
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