Karat Packaging Inc. (NASDAQ:KRT) Q2 2023 Earnings Conference Call August 9, 2023 5:00 PM ET

Company Participants

Roger Pondel – PondelWilkinson-Investor Relations

Alan Yu – Chief Executive Officer

Jian Guo – Chief Financial Officer

Conference Call Participants

Michael Hoffman – Stifel

Ryan Meyers – Lake Street Capital

Ryan Merkel – William Blair

Jake Bartlett – Truist Securities

Operator

Good day, and welcome to the Karat Packaging Inc. Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Roger Pondel with PondelWilkinson, Investor Relations for Karat Packaging. Please go ahead.

Roger Pondel

Thank you, operator, and good afternoon, everyone. Welcome to Karat Packaging’s 2023 second quarter earnings 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 the 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 the Risk Factors section of the company’s most recent Form 10-K as filed with the Securities and Exchange Commission, copies of which are available on the SEC’s website at www.sec.gov along with other company filings made with the SEC from time to time. Actual results could differ materially from these forward-looking statements, and Karat Packaging undertakes no obligation to update any forward-looking statements, except as required by law.

Please also note that, during this call, we will be discussing adjusted EBITDA, adjusted EBITDA margin and adjusted diluted earnings per share, which are non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of the most directly comparable GAAP measures to the non-GAAP financial measures is included in today’s press release, which is posted on the company’s website.

And with that, I will turn the call over to CEO, Alan Yu. Alan?

Alan Yu

Thank you, Roger. Good afternoon, everyone. Despite revenue being impacted by anticipated price reductions and lower revenue from logistics services and shipping charges, we achieved excellent second quarter results. Sales for our core disposable foodservice product grew during the quarter, with volume increasing 5% over the prior year period, demand for our eco-friendly product remains strong. Sales for the category grew 22% in the second quarter over the prior year period. Our 2023 objective for the eco-friendly product category is to be at about 35% of total sales.