Karat Packaging Inc. (KRT) SEC Filings & Earnings Calls

Tariff uncertainty

“new Section 301 tariffs ranging from 10% to 12.5% were imposed on approximately 60 trading partners effective July 24, 2026” · word for word

Raw material cost volatility

“The cost of raw materials used to manufacture our products, including polyethylene terephthalate, or PET, plastic resin, aluminum, and paper boards, may continue to fluctuate” · word for word

Dependence on one-time IEEPA tariff refunds for profitability; underlying gross margin excluding refunds is lower.

“Gross margin of 56.6 percent, including contribution of 1,890 basis points from the IEEPA tariff refunds... Gross margin for the 2026 third quarter expected to be within 35 to 37 percent, including insignificant IEEPA tariff refunds anticipated during the quarter.” · word for word

Import cost pressures from tariffs and ocean freight; product costs as % of sales increased.

“Higher import costs, including duty and tariffs and ocean freight of $3.5 million, mainly due to a 4.3 percent increase in number of containers imported and an 8.9 percent increase in average container rate compared to the prior-year quarter.” · word for word

Operating expenses increased due to shipping, marketing, and salary costs; bad debt expense also rose.

“Operating expenses for the 2026 second quarter increased to $39.6 million, from $32.6 million... driven by $3.1 million in higher shipping and transportation costs... $0.6 million increase in bad debt expense.” · word for word

Tariff-driven margin compression

“Our gross margin was 35.5% for the three months ended March 31, 2026, a decrease of 380 basis points compared to the three months ended March 31, 2025, reflecting the expected unfavorable impact from higher tariffs.” · word for word

Supply chain concentration risk

“We reduced sourcing from Taiwan from 53.7% to 46.3% and from China from 18.4% to 11.3% for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.” · word for word

Tariff and import cost pressure on gross margin; import costs rose to 13.8% of sales from 8.6%.

“Import duty and tariffs costs increased from $3.4 million for the three months ended March 31, 2025 to $10.5 million for the three months ended March 31, 2026.” · word for word

Oil price increase driving product cost inflation; price increases planned for mid-May.

“Given the sharp increase in oil prices and its impact on our product costs, we will implement price increases on select plastic items beginning in mid‑May.” · word for word

Auditor change risk

“Auditor changed from PwC to BDO; no disagreements but material weaknesses in prior years were remediated.”

Tariff exposure

“Recent trade policy shifts and regulatory developments, including increased import tariffs and the renegotiation of trade agreements, could have a material adverse impact on our business.” · word for word

Supply chain disruption

“Supply chain disruptions could interrupt product manufacturing and increase product costs.” · word for word

Raw material inflation

“Raw material inflation or shortage of available materials could harm our financial condition and results of operations.” · word for word

Elevated tariff and duty costs are pressuring gross margin; 14.5% of net sales vs 8.3% prior year.

“Duty and tariff costs increased $8.4M; import costs as % of net sales increased to 14.5% from 8.3%.”

Tariff impact on margins

“Our gross margin was 34.5% ... reflecting an expected decrease of 410 basis points ... as our cost of goods sold began to reflect inventory brought in with elevated tariffs.”

Cash flow pressure from tariffs

“During the three months ended September 30, 2025 compared to the three months ended September 30, 2024, our duty and tariff payments increased $9.1 million” · word for word

Tariff and duty cost pressure: import costs rose to 14.4% of sales from 8.6% YoY, compressing gross margin.

“import costs...increased to 14.4 percent of net sales, compared with 8.6 percent in the same quarter last year”

Trade policy uncertainty: ongoing tariff changes could impact full year guidance and margins.

“pending potential impact related to additional tariff changes” · word for word