Karat Packaging Inc. (NASDAQ:KRT) Q3 2023 Earnings Conference Call November 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

Ryan Merkel - William Blair

Michael Hoffman - Stifel Nicolaus

Ryan Meyers - Lake Street Capital Markets

Jake Bartlett - Truist Securities

Operator

Good afternoon, and welcome to the Karat Packaging Inc. Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's remarks, there will be an opportunity to ask questions. [Operator Instructions] Please also note this event is being recorded today.

I would now like to turn the conference over to Roger Pondel, Investor Relations. Please go ahead, sir.

Roger Pondel

Thank you, operator, and good afternoon, everyone. And welcome to Karat Packaging's 2023 third quarter conference call. I'm Roger Pondel with PondelWilkinson, Karat Packaging's Investor Relations firm. And 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, and copies of which are available on the SEC's Web site 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 now posted on the company's Web site.

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

Alan Yu

Thank you, Roger. Good afternoon everyone. We are proud to deliver a strong third quarter, with revenue in line with our expectation, and sustained meaningful improvement in margin. Sales volume increased approximately 7% over the prior year period. Although total revenue was again impacted by unfavorable year-over-year pricing comparison, along with lower revenues from logistics service and shipping charges, as anticipated. Sales of our eco-friendly product continue to improve. This category grew 15% in the third quarter over the prior-year quarter, and represented approximately 33% of total sales. For the quarter, we achieved 49% increase in net income from the prior-year quarter.