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Karat Packaging Reports Fourth Quarter and Full Year 2022 Financial Results

CHINO, Calif., March 16, 2023 (GLOBE NEWSWIRE) -- Karat Packaging Inc. (Nasdaq: KRT) (“Karat”), a specialty distributor and manufacturer of disposable foodservice products and related items, today announced financial results for its fourth quarter and full year ended December 31, 2022.

Fourth Quarter 2022 Highlights

  • Net sales of $92.7 million, up 1.5 percent from the prior-year quarter.
  • Gross profit of $29.7 million, negatively impacted by an out-of-period inventory write-off of $1.7 million, up 4.8 percent from the prior-year quarter.
  • Gross margin of 32.0 percent, an improvement of 100 basis points over the prior-year quarter.
  • Net income of $4.5 million (net income margin of 4.9 percent), versus $6.0 million (net income margin of 6.5 percent) in the prior-year quarter.
  • Adjusted EBITDA of $9.9 million, negatively impacted by a deposit write-off of $0.5 million related to a pre-pandemic capital investment project, versus $10.9 million in the prior-year quarter.
  • Adjusted EBITDA margin of 10.7 percent, versus 11.9 percent in the prior-year quarter.
  • Strong quarterly operating cash flow of $17.0 million.

2023 Outlook

  • Net sales for the full year 2023 expected to increase high single digit.
  • Gross margin goal for the 2023 full year: 32 percent to 33 percent.
  • Sales for the first half of 2023 anticipated to be lower due, in part, to price reductions and destocking for certain inventories, compared with the prior year period.

“Gross margin continued to improve during the 2022 fourth quarter, with a significant reduction of ocean freight costs versus the same quarter last year. This, in turn, allowed us to proactively pass on savings to our customers,” said Alan Yu, chief executive officer. “Ocean freight costs have essentially now stabilized, which we believe will enable us to further expand margins for 2023.

“Net sales grew during the fourth quarter, despite multiple price reductions. Additionally, we added a number of new contracts with chain accounts and expanded our product offerings to existing customers. We expect these new agreements to materialize and add to our top line in the second half of 2023. We continue to see solid growth for our eco-friendly product lines, with sales having increased 24 percent in the most recent fourth quarter over the prior year period, and demand remains strong into 2023.

“We are implementing a number of growth strategies in 2023, including improving inventory management and fill-rate by adding warehouses in Chicago and Houston, as well as expanding rack space in our current warehouses. We also are modifying our model to be more asset-light, by scaling back manufacturing production in California, while expanding import products, which carry higher margins. We intend to increase the size of our sales team by approximately 35 percent and target geographical expansion into the East Coast and Midwest regions. Lastly, we are upgrading our e-commerce platform and initiating online sales in Hawaii and Canada,” Mr. Yu added.

Fourth Quarter 2022 Financial Results

Net sales for the 2022 fourth quarter increased 1.5 percent to $92.7 million, from $91.3 million in the 2021 fourth quarter, which was a particularly strong quarter as a result of COVID re-openings and price increases implemented due to extraordinarily higher ocean freight and other costs during this period.

Gross profit for the 2022 fourth quarter increased 4.8 percent to $29.7 million, from $28.3 million in the prior-year quarter.

Gross margin for the 2022 fourth quarter expanded 100 basis points to 32.0 percent, from 31.0 percent in the prior-year quarter. Gross margin was favorably impacted by lower and stabilized ocean freight and related costs, at 9.8 percent of net sales, compared with 12.3 percent of net sales in the 2021 fourth quarter. The gross margin was negatively impacted by an inventory write-off of $1.7 million, which represented an out-of-period adjustment to correct immaterial errors in the accounting for certain inventory items in the previously issued quarterly and annual financial statements.

Operating expenses in the 2022 fourth quarter were $24.9 million, or 26.8 percent of net sales, compared with $21.2 million, or 23.2 percent of net sales, in the prior-year quarter. The increase primarily resulted from higher labor costs of $1.5 million due to workforce expansion, higher production costs of $1.0 million due to unexpected machinery repair and an increase in rental expense of $0.6 million primarily from the two additional warehouses added in May 2022. Operating expense in the 2022 fourth quarter also included a deposit write-off of $0.5 million related to a pre-pandemic capital investment project.

Net income for the 2022 fourth quarter decreased to $4.5 million, from $6.0 million for the same quarter last year. Net income margin was 4.9 percent for the 2022 fourth quarter versus 6.5 percent in the prior year quarter. Net income attributable to Karat for the 2022 fourth quarter was $4.5 million, or $0.23 per diluted share, compared with $5.6 million, or $0.28 per diluted share, in the prior-year quarter.

Adjusted EBITDA, a non-GAAP measure defined below, was $9.9 million in the 2022 fourth quarter, versus $10.9 million in the prior-year quarter. Adjusted EBITDA margin, a non-GAAP measure defined below, was 10.7 percent of net sales, versus 11.9 percent in the prior-year quarter.

Adjusted diluted earnings per common share, a non-GAAP measure defined below, was $0.30 per share for the 2022 fourth quarter, versus $0.32 per share in the prior-year quarter.

2022 Full Year Results

Net sales for 2022 increased 16.1 percent to $423.0 million, from $364.2 million in the prior year.

Gross profit for 2022 increased 22.5 percent to $132.1 million, from $107.8 million in the prior year. Gross margin was 31.2 percent, an increase from 29.6 percent in the same period last year. The increase in gross margin was primarily due to margin expanding factors including a shift to higher margin items such as eco-friendly products, price increases implemented during the first half of the current year to partially offset higher ocean freight, product and labor costs, favorable foreign currency exchange rate from the strengthening of the United States Dollar against Taiwan New Dollar and improved operating efficiencies and productivity improvements. The increase was offset by an out-of-period inventory adjustment of $0.9 million to correct immaterial errors in the accounting for certain inventory items in the previously issued quarterly and annual financial statements.

Operating expenses for the full 2022 year were $102.1 million, compared with $84.7 million in the prior year. The increase of $17.4 million primarily included $6.0 million in payroll costs due to workforce expansion, $5.4 million in shipping and transportation costs largely during the first three quarters, $2.4 million in lease expense primarily attributable to two new properties leased starting May 2022, and $2.1 million in production expense due to higher repairs and maintenance costs.

Other income totaled $2.5 million in 2022, compared with $4.4 million for the prior year. Other income for the 2022 year primarily related to interest income of $2.2 million from the gain associated with the interest rate swap, a gain on foreign currency transactions of $1.6 million, and rental income of $0.9 million, partially offset by interest expense on the line of credit and term loans totaling $2.0 million. Other income for the 2021 year primarily related to gain on forgiveness of debt of $5.0 million, interest income of $1.5 million due to the change in the fair value of the interest rate swap, and rental income of $0.9 million, partially offset by interest expense incurred primarily on the line of credit and term loans totaling $2.9 million.

The effective tax rate for the full 2022 year was 20.5 percent, compared with 18.5 percent for the prior year. The effective tax rate was lower in the prior year, primarily due to the gain on forgiveness of debt of $5.0 million, which was a discrete item not presented for 2022.

Net income increased to $25.8 million for 2022, from $22.4 million in the prior year, which included the $5.0 million gain on forgiveness of debt recorded in the second quarter of 2021.

Net income margin was 6.1 percent in 2022, versus 6.2 percent in the prior year. Net income attributable to Karat was $23.6 million, or $1.19 per diluted share, in 2022, compared with $20.8 million, or $1.12 per diluted share, in the prior year.

Adjusted EBITDA, a non-GAAP measure defined below, increased to $45.6 million in 2022, compared with $37.0 million in the prior year. Adjusted EBITDA margin, a non-GAAP measure defined below, was 10.8 percent for the full 2022 year, compared with 10.2 percent in 2021.

Adjusted diluted earnings per common share, a non-GAAP measure defined below, rose to $1.30 per share in 2022, from $1.00 per share in the prior year.

Investor Conference Call

The Company will host an investor conference call today, March 16, 2023, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its fourth quarter and full year 2022 results.

Phone:  877-418-4045 (domestic); 412-317-6745 (international)
Conference ID: Karat Packaging Inc.
Webcast: Accessible at http://irkarat.com/; archive available for approximately one year

About Karat Packaging Inc.

Karat Packaging Inc. is a specialty distributor and manufacturer of a wide range of disposable foodservice products and related items, primarily used by national and regional restaurants and in foodservice settings throughout the United States. Its products include food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves and other products. The company’s eco-friendly Karat Earth® line offers quality, sustainably focused products that are made from renewable resources. Karat Packaging also offers customized solutions, including new product development and design, printing, and logistics services. To learn more about Karat Packaging, please visit the company’s website at www.karatpackaging.com.

Caution Concerning Forward-Looking Statements

Statements made in this release that are not statements of historical or current facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements, including, but not limited to, achieving continued increases in customer demand, along with achieving third quarter and full year financial guidance, are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance, or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including the risks discussed under the heading “Risk Factors” discussed under the caption “Item 1A. Risk Factors” in Part I of our most recent Annual Report on Form 10-K, as amended, or any updates discussed under the caption “Item 1A. Risk Factors” in Part II of our Quarterly Reports on Form 10-Q and in our other filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that occur after that date, except as required by law.

Investor Relations and Media Contacts:

PondelWilkinson Inc.  
Judy Lin Sfetcu/Roger Pondel
310-279-5980
ir@karatpackaging.com



KARAT PACKAGING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
 Three Months Ended December 31, Year Ended December 31,
 2022
 2021
 2022
 2021
 (Unaudited) (Unaudited) (Unaudited)  
Net sales$92,667  $91,334  $422,957  $364,244 
Cost of goods sold 63,002   63,024   290,871   256,417 
Gross profit 29,665   28,310   132,086   107,827 
Operating expenses       
Selling expense 7,626   8,235   35,844   32,261 
General and administrative expense (including $876 and $567 associated with variable interest entity for the three months ended December 31, 2022 and 2021, respectively, and $2,775 and $2,550 associated with variable interest entity for the years ended December 31, 2022 and 2021, respectively) 17,227   12,936   66,227   52,421 
Total operating expenses 24,853   21,171   102,071   84,682 
Operating income 4,812   7,139   30,015   23,145 
Other income (expense)       
Rental income (including $234 and $193 associated with variable interest entity for the three months ended December 31, 2022 and 2021, respectively, and $949 and $931 associated with variable interest entity for the years ended December 31, 2022 and 2021, respectively) 234   193   949   931 
Other income (expense) (including $0 and $9 associated with variable interest entity for the three months ended December 31, 2022 and 2021, respectively, and, $0 and $9 associated with variable interest entity for the years ended December 31, 2022 and 2021, respectively) 7   36   (228)  259 
Gain (loss) on foreign currency transactions 216   (65)  1,568   (412)
Interest income (including $10 and $215 associated with variable interest entity for the three months ended December 31, 2022 and 2021, respectively, and $2,171 and $1,270 associated with variable interest entity for the years ended December 31, 2022 and 2021, respectively) 65   215   2,226   1,512 
Interest expense (including $441 and $443 associated with variable interest entity for the three months ended December 31, 2022 and 2021, respectively, and $1,821 and $1,781 associated with variable interest entity for the years ended December 31, 2022 and 2021, respectively) (440)  (452)  (2,017)  (2,907)
Gain on forgiveness of debt          5,000 
Total other income (expense), net 82   (73)  2,498   4,383 
Income before provision for income taxes 4,894   7,066   32,513   27,528 
Provision for income taxes 353   1,088   6,676   5,089 
Net income 4,541   5,978   25,837   22,439 
Net income attributable to noncontrolling interest    349   2,189   1,661 
Net income attributable to Karat Packaging Inc.$4,541  $5,629  $23,648  $20,778 
Basic and diluted earnings per share:       
Basic$0.23  $0.28  $1.19  $1.13 
Diluted$0.23  $0.28  $1.19  $1.12 
Weighted average common shares outstanding, basic 19,872,681   19,786,224   19,824,911   18,409,243 
Weighted average common shares outstanding, diluted 19,936,954   19,889,817   19,925,905   18,566,260 


KARAT PACKAGING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
 December 31,
2022
 December 31,
2021
 (Unaudited)  
Assets   
Current assets   
Cash and cash equivalents (including $2,022 and $1,163 associated with variable interest entity at December 31, 2022 and 2021, respectively)$16,041  $6,483 
Accounts receivable, net of allowance for bad debt of $1,260 and $250 at December 31, 2022 and 2021, respectively (including $6 and $24 associated with variable interest entity at December 31, 2022 and 2021, respectively) 29,912   32,776 
Inventories 71,206   58,472 
Prepaid expenses and other current assets (including $191 and $63 associated with variable interest entity at December 31, 2022 and 2021, respectively) 6,641   5,141 
Total current assets 123,800   102,872 
Property and equipment, net (including $45,399 and $46,612 associated with variable interest entity at December 31, 2022 and 2021, respectively) 95,568   93,475 
Deposits 12,413   6,885 
Goodwill 3,510   3,510 
Intangible assets, net 353   380 
Operating right-of-use assets 15,713    
Other assets (including $38 and $65 associated with variable interest entity at December 31, 2022 and 2021, respectively) 818   477 
Total assets$252,175  $207,599 
Liabilities and Stockholders’ Equity   
Current liabilities   
Accounts payable (including $2 and $136 associated with variable interest entity at December 31, 2022 and 2021, respectively)$18,559  $18,470 
Accrued expenses (including $625 and $68 associated with variable interest entity at December 31, 2022 and 2021, respectively) 9,005   7,813 
Related party payable 4,940   2,003 
Income taxes payable (including $0 and $9 associated with variable interest entity at December 31, 2022 and 2021, respectively)    85 
Customer deposits (including $165 and $88 associated with variable interest entity at December 31, 2022 and 2021, respectively) 1,281   1,215 
Debt, current portion (including $957 and $1,178 associated with variable interest entity at December 31, 2022 and 2021, respectively) 957   1,178 
Operating lease liabilities, current portion 4,511    
Total current liabilities 39,253   30,764 
 December 31,
2022
 December 31,
2021
 (Unaudited)  
Deferred tax liability 5,156   5,634 
Long-term debt, net of current portion and debt discount of $216 and $200 at December 31, 2022 and December 31, 2021, respectively (including $41,558 and $35,339 associated with variable interest entity at December 31, 2022 and 2021, respectively, and debt discount of $216 and $200 associated with variable interest entity at December 31, 2022 and 2021, respectively) 41,558   35,339 
Operating lease liabilities, net of current portion 11,623    
Other liabilities (including $1,302 and $2,637 associated with variable interest entity at December 31, 2022 and 2021, respectively) 2,652   3,837 
Total liabilities 100,242   75,574 
    
Karat Packaging Inc. stockholders’ equity   
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding, as of December 31, 2022 and 2021.     
Common stock, $0.001 par value, 100,000,000 shares authorized, 19,908,005 and 19,885,005 shares issued and outstanding, respectively, as of December 31, 2022 and 19,827,417 and 19,804,417 shares issued and outstanding, respectively, as of December 31, 2021 20   20 
Additional paid in capital 85,792   83,694 
Treasury stock, $0.001 par value, 23,000 shares as of both December 31, 2022 and 2021 (248)  (248)
Retained earnings 56,118   39,434 
Total Karat Packaging Inc. stockholders’ equity 141,682   122,900 
Noncontrolling interest 10,251   9,125 
Total stockholders’ equity 151,933   132,025 
Total liabilities and stockholders’ equity$252,175  $207,599 


KARAT PACKAGING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Year Ended December 31,
  2022  2021
 (Unaudited)  
Cash flows from operating activities   
Net income$25,837  $22,439 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization 10,405   10,044 
Adjustments to allowance for bad debt 1,010    
Adjustments to inventory reserve 6   68 
Write-off of inventory 3,470   1,424 
Gain on sale of asset (32)   
Change in fair value of interest rate swap (2,159)  (1,512)
Amortization of loan fees 40   18 
Deferred income taxes (478)  (483)
Stock-based compensation 2,047   2,026 
Gain on forgiveness of debt    (5,000)
Amortization of operating right-of-use assets 3,822    
Impairment of deposit 465    
(Increase) decrease in operating assets   
Accounts receivable 1,854   (8,938)
Inventories (16,210)  (10,850)
Prepaid expenses and other current assets (1,514)  1,389 
Deposits (145)  (64)
Other assets 109   (316)
Increase (decrease) in operating liabilities   
Accounts payable 89   (1,599)
Accrued expenses 1,571   2,854 
Related party payable 2,937   (3,035)
Income taxes payable (85)  44 
Customer deposits 66   664 
Operating lease liability (3,780)   
Other liabilities 149   300 
Other payable    (794)
Net cash provided by operating activities$29,474  $8,679 
Cash flows from investing activities   
Purchases of property and equipment (2,657)  (4,175)
Proceeds from disposal of property and equipment 77    
Deposits paid for property and equipment (12,090)  (8,206)
Deposits paid for joint venture investment (5,876)   
Deposits refunded from joint venture investment 1,876    
Proceeds from settlement of interest rate swap 825    
Acquisition of Pacific Cup, Inc., net of cash acquired    (900)
Net cash used in investing activities$(17,845) $(13,281)
 Year Ended December 31,
 2022  2021
 (Unaudited)  
Cash flows from financing activities   
Proceeds from line of credit 21,100   1,470 
Payments on line of credit (21,100)  (34,639)
Proceeds from long-term debt 27,477   15,997 
Payments on long-term debt (21,572)  (39,272)
Proceeds from issuance of common stock in connection with initial public offering, net of issuance costs    67,592 
Proceeds from exercise of stock options 51   100 
Dividends paid to shareholders (6,964)   
Payments on capital lease obligations    (611)
Payments of noncontrolling interest tax withholding (1,063)   
Net cash (used in) provided by financing activities$(2,071) $10,637 
Net increase in cash and cash equivalents 9,558   6,035 
Cash and cash equivalents   
Beginning of year$6,483  $448 
End of year$16,041  $6,483 
Supplemental disclosures of non-cash investing and financing activities:   
Transfers from deposit to property and equipment$9,859  $4,981 
Acquisition price of Pacific Cup, Inc. included within deposits    100 
Gain on forgiveness of debt    5,000 
Supplemental disclosures of cash flow information:   
Cash paid for income tax$8,303  $4,836 
Cash paid for interest$1,978  $2,895 


KARAT PACKAGING INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(In thousands, except per share amounts)
 
Reconciliation of Adjusted EBITDA and Adjusted EBITDA margin:Three Months Ended December 31, Year Ended December 31,
 2022
2021
 2022
2021
 Amounts% of Net SalesAmounts% of Net Sales Amounts% of Net SalesAmounts% of Net Sales
Net income:$4,541 4.9%$5,978 6.5% $25,837 6.1%$22,439 6.2%
Add (deduct):         
Interest income (65)(0.1) (215)(0.2)  (2,226)(0.5) (1,512)(0.4)
Interest expense 440 0.5  452 0.5   2,017 0.5  2,907 0.8 
Provision for income taxes 353 0.4  1,088 1.2   6,676 1.6  5,089 1.4 
Depreciation and amortization 2,653 2.9  2,566 2.8   10,405 2.4  10,044 2.8 
Stock-based compensation expense 273 0.3  938 1.0   2,047 0.5  2,026 0.5 
IPO related expenses    58 0.1      1,055 0.3 
Out-of-period adjustment (1) 1,675 1.8      879 0.2    
Gain on forgiveness of debt           (5,000)(1.4)
Adjusted EBITDA$9,870 10.7%$10,865 11.9% $45,635 10.8%$37,048 10.2%

(1) The out-of-period adjustment represented an inventory write-off recorded during the year ended December 31, 2022, which management believes was not representative of our underlying operating performance. The adjustment was to correct immaterial errors in the accounting for certain inventory items in our previously issued quarterly and annual financial statements. The impact of the inventory write-off was an increase to cost of goods sold of $1.7 million and $0.9 million for the three and twelve months ended December 31, 2022, respectively.


Reconciliation of Adjusted Diluted Earnings Per Common ShareThree Months Ended December 31, Year Ended December 31,
 2022
 2021
 2022
 2021
Diluted earnings per common share:$0.23  $0.28  $1.19  $1.12 
Add (deduct):       
Stock-based compensation expense 0.01   0.05   0.1   0.11 
IPO related expenses          0.06 
Gain on forgiveness of debt          (0.27)
Out of period adjustment 0.08      0.04    
Income tax impact of adjustments (0.02)  (0.01)  (0.03)  (0.02)
Adjusted diluted earnings per common shares$0.30  $0.32  $1.30  $1.00 


Reconciliation of Adjusted EBITDA by Entity:Three Months Ended December 31, 2022 Year Ended December 31, 2022
 Karat PackagingGlobal WellsEliminationsConsolidated Karat PackagingGlobal WellsEliminationsConsolidated
Net income (loss):$4,552 $ $(11)$4,541  $23,648 $2,531 $(342)$25,837 
Add:         
Interest income (56) (71) 62  (65)  (56) (2,300) 130  (2,226)
Interest expense 61  441  (62) 440   326  1,821  (130) 2,017 
Provision for income taxes 353      353   6,676      6,676 
Depreciation and amortization 2,348  305    2,653   9,190  1,215    10,405 
Stock-based compensation expense 273      273   2,047      2,047 
Out-of-period adjustment 1,675      1,675   879      879 
Adjusted EBITDA$9,206 $675 $(11)$9,870  $42,710 $3,267 $(342)$45,635 


Reconciliation of Adjusted EBITDA by Entity:Three Months Ended December 31, 2021 Year Ended December 31, 2021
 Karat PackagingGlobal WellsEliminationsConsolidated Karat PackagingGlobal WellsEliminationsConsolidated
Net income (loss):$5,629$403 $(54)$5,978  $20,778 $1,920 $(259)$22,439 
Add (deduct)         
Interest income  (215)   (215)  (242) (1,270)   (1,512)
Interest expense 9 443    452   1,126  1,781    2,907 
Provision for income taxes 1,088     1,088   5,089      5,089 
Depreciation and amortization 2,263 303    2,566   8,831  1,213    10,044 
Stock-based compensation expense 938     938   2,026      2,026 
IPO related expenses 58     58   1,055      1,055 
Gain on forgiveness of debt         (5,000)     (5,000)
Adjusted EBITDA$9,985$934 $(54)$10,865  $33,663 $3,644 $(259)$37,048 
                         

Use of Non-GAAP Financial Measures

Karat utilizes certain financial measures and key performance indicators that are not defined by, or calculated in accordance with, GAAP to assess our financial and operating performance. A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the statement of operations; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable GAAP measure so calculated and presented. The following non-GAAP measures are presented in this press release:

  • Adjusted EBITDA is calculated as net income before interest income, interest expense and income taxes, depreciation and amortization, stock-based compensation expense, IPO related expenses, gain on forgiveness of debt and out-of-period adjustment.
  • Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by net sales.
  • Adjusted diluted earnings per common share is calculated as diluted earnings per common share, plus the per share impact of stock-based compensation, IPO related expense, gain on forgiveness of debt, and out-of-period adjustment, and adjusted for the related tax effects of these adjustments.

We believe the above-mentioned non-GAAP measures, which are used by management to assess the core performance of Karat, provide useful information and additional clarity of our operating results to our investors in their own evaluation of the core performance of Karat and facilitate a comparison of such performance from period to period. These are not measurements of financial performance or liquidity under GAAP and should not be considered in isolation or construed as substitutes for net income or other cash flow data prepared in accordance with GAAP for purposes of analyzing our profitability or liquidity. These measures should be considered in addition to, and not as a substitute for, revenue, net income, earnings per share, cash flows or other measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies, as other companies may calculate such financial results differently.


KARAT PACKAGING INC. AND SUBSIDIARIES
NET SALES BY CATEGORY (UNAUDITED)
(In thousands)
 
 Three Months Ended December 31, Year Ended December 31,
 2022
2021 2022 2021
 (in thousands)
National and regional chains$21,843 $22,524 $95,786 $86,017
Distributors 53,207  51,608  242,285  199,902
Online 10,613  10,481  53,697  50,271
Retail 7,004  6,721  31,189  28,054
 $92,667 $91,334 $422,957 $364,244

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