Karat Packaging Inc 2024年度报告

Dear Fellow Shareholders: We are pleased to share Karat Packaging Inc. (the "Company")’s 2024 financial results, showcasingthe Company’s strong operating performance and sustained growth. We continued to expand customerbase and our portfolio of disposable foodservice products, with the focus on growing eco-friendlyproducts, expanding logistics capabilities and scaling online sales channel. In 2024, our sales volume grew by 7.4%, and net sales rose by 4.2% from 2023. We have strengthenedour core business with continued penetration within our existing customer base and expanding ourcustomer base via new capabilities, geographies, products, services and end markets. Our strategicefforts on penetrating the supermarket segment in 2024 yielded significant results, with strongmomentum into 2025. Our e-commerce channel continued to be one of the key drivers of businessgrowth, with sales increasing 14.5% year-over-year in 2024. We achieved record gross margin of 38.9% for the year ended December 31, 2024, driven by strategicinitiatives implemented over the past two years, including expanding and diversifying global sourcing,effectively managing ocean freight and optimizing product mix. To navigate current tariff uncertainties, we have taken steps to enhance our supply chain resilienceincluding initiatives to reduce dependence on China, diversify sourcing to countries with morefavorable trade conditions and negotiate additional vendor discounts. We have significantly scaled our distribution capacity to position ourselves for growth in keygeographic markets. In the past 24 months, we added over 232,000 square feet of distribution spacethrough the opening of three new warehouses; Mesa, Arizona in 2024 and Sugar Land, Texas andAurora, Illinois in 2023. During the same period, we racked up 50,000 square feet in additional rackedspace in existing warehouses. Additionally, in March 2025, we started to operate our newest 187,000-square-foot distribution center in Chino, California ahead of the upcoming peak summer season. Weare further enhancing operating efficiency with automation and AI support. We closed 2024 with $114.6 million in working capital and financial liquidity of $67.8 million, withanother $28.3 million in short-term investments. We generated net cash from operating activities of$48.0 million and returned a total of $31.0 million to our shareholders in the form of special andregular cash dividends in 2024. We remain committed to a balanced capital allocation strategy thatprioritizes shareholder returns and long-term growth investments. On behalf of our entire team, we appreciate your continued trust and support, as we successfullynavigate today’s dynamic environment and create lasting value for all of our stakeholders. Sincerely, Alan Yu,Chief Executive Officer Forward-Looking Statements This Letter contains “forward-looking statements” within the Private Securities Litigation Reform Actof 1995. All statements other than statements of historical or current fact included in this Letter areforward-looking statements, including but not limited to statements regarding our long-term growthplans, priorities, planned investments and opportunities in 2025 and beyond. These statements areneither promises nor guarantees, but involve known and unknown risks, uncertainties and otherimportant factors that may cause Karat's actual results, performance or achievements to be materiallydifferent from any future results, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the risk factors discussed under the caption “RiskFactors” in Karat's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and itsother filings with the Securities and Exchange Commission. These risk factors could cause actualresults to differ materially from those indicated by the forward-looking statements made in this annualreport. Any such forward-looking statements represent management’s estimates as of the date of thisannual report. While Karat may elect to update such forward-looking statements at some point in thefuture, it disclaims any obligation to do so, except as required by law, even if subsequent events causeits views to change. UNITED STATES For transition period from toCommission File Number001-40336 Karat Packaging Inc. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☐No☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes☐No☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒No☐ Indicate by check mark whe